As China ages, concern grows over succession at family-run firms
On mainland, with its one-child policy, concern grows that offspring of founding business owners have little desire to take over the reins
Yesterday was the Double Ninth Festival, a traditional Chinese calendar event celebrated in Hong Kong, the mainland and elsewhere in Asia where family members accompany their elders to climb hills or visit the graves of ancestors.
As the festival is also designated as the day of seniors on the mainland, it has become an occasion in recent years to highlight the enormous challenges and difficulties ahead for the country in taking care of the swelling ranks of the elderly.
The mainland is facing the developed world problem of an ageing population and low growth rate without the developed- world prosperity to ensure people maintain a decent standard of living after they retire. In short, mainlanders are getting old before they are becoming rich.
This problem has taken on even more urgency in the mainland's business community, where the founding generation is getting older but having great difficulty persuading their children to carry on their legacy and keep their business running.
The private sector already contributes about 60 per cent of the mainland's gross domestic product and that share is expected to grow as the economy powers ahead.
While putting in place a clear and effective succession plan is a universal headache for family-run businesses, it is fraught with even bigger headaches for private businessmen on the mainland.
Thanks to the one-child policy, many businessmen have just one heir, who often is uninterested in the family businesses.
According to a study published last year in Zhejiang province, where the private sector dominates the local economy, more than 80 per cent of family businesses were at the point where they needed to decide who would take over the reins in the next 10 years. But, among these families, 80 per cent of the second generation was not interested.
While there are many reasons to explain such reluctance, the deterioration in the business environment has proven to be one of the main factors.
Rampant corruption among officials, bureaucracy and widespread government controls have given the younger generation cold feet.
Indeed, the mainland media have quoted several businessmen in recent months as saying they would not like their children to carry on the business because they were fed up with fending off government intervention or navigating the tangled web of bureaucracy, or just tired of the constant need to wine and dine and bribe officials.
In August, Zong Fuli, the daughter and heir apparent to Zong Qinghou, one of the mainland's richest men, caused a stir when she told an interviewer that her biggest headache was spending too much time and resources dealing with the government.
She said the government should take a different look at her peers as she and they would not be like her father's generation and try to cultivate close ties with officials. She even threatened to move the family business overseas.
Although the elder Zong later clarified that his daughter's threat to quit the mainland was merely a slip of the tongue, her words appeared to strike a chord with many businessmen and their children.
While first-generation businessmen have little choice but to spend time and money on cultivating ties with government officials, their children - often educated at elite business schools in the West - are not prepared to go down the same road.
As the senior leaders prepare for a landmark meeting next month to discuss and approve economic guidelines for the next decade, easing the concerns of Zong's daughter and the younger-generation businesspeople should be one of their key considerations.