As tributes poured in for Wenzhou's most famous entrepreneur, who died last week in Shanghai, the question on everyone's lips is whether the company he founded will survive without him. Wang Junyao, 38, died on November 7 of stomach cancer, leaving the Junyao Group with assets of 3.5 billion yuan, most of it in property and also in aviation and dairy products, 4,000 employees and a listed A-share firm he acquired in July. China's corporate landscape is littered with the remains of family companies that started with a bang, before collapsing beneath a weight of debt due to runaway diversification, lack of supervision over the board and power struggles among family members. 'The biggest problem for such companies is the weight of family obligations and the need to do favours to relatives,' said Bao Yujun, director of the Private Economy Research Centre in Beijing. 'Private companies operate at a disadvantage in China. They lack proper legal protection and the stock market is virtually closed to them. They face ideological obstacles. And it is hard for them to attract high-quality managers, of which there is a shortage in China anyway,' he said. He said that the tragedy of Wang's death was that his company was in the transition from a family-run firm into a modern enterprise, with diverse shareholders and a system of corporate checks and balances. The firm insists the transition will not be interrupted by the death of its founder. Last Tuesday, at the first board meeting after his death, four of the six directors were not family members. They selected his two brothers, Junjin and Junhao, as chairman and deputy chairman. The company said that Junyao had known of his cancer - diagnosed at a late stage - in November last year, giving his staff a long time to prepare for his passing and that his two brothers had worked with him for many years, giving them hands-on experience of running the business. In December last year, Junyao said that he had been the core until then. 'But in future it will be the management team. Before, I was the engine of the company and, once I have arranged things, it will be the team.' In a speech last month at the EU-China Business School in Pudong, Junjin admitted the group could not entirely escape the common malady of family companies. 'The biggest problem of family firms is the personnel system, part of the intimacy of ties that is peculiar to Chinese culture. We cannot avoid this problem. Members of the family will take positions in the firm. If they are not up to the job, then we will set up a foundation to look after them and not kick them out. We believe that this system suits the Chinese situation.' To offset this, in August last year, Junyao hired as a director an experienced manager Wang Hao, who had served as deputy president of Ping An Securities and run a large private company in Shenzhen for 10 years. He was one of the six at last week's board meeting. 'The best shareholding is one-third family, one-third the public and one-third senior managers,' Junyao said last year. 'Managers receive shares as long as they stay with the company. If they leave, they cannot take the shares with them but receive a payment commensurate with their contribution during their time of service.' Junyao tried hard to list his company but, like most private firms, was frustrated because treasured places in the listing queue are almost exclusively for state firms. So he was left with no alternative but to buy a listed firm, Wuxi Commercial Mansion, in July this year. He beat eight other competitors and paid just over 200 million yuan for a controlling stake in the company. He became famous in 1991 for securing the first private licence for a charter plane service, between Changsha and his native Wenzhou. But regulatory restrictions prevented him expanding his aviation business. Last year he purchased a controlling stake in Yichang airport, in Hubei province, the first private company to buy a Chinese airport, but the acquisition did not receive the approval of regulators in Beijing and it was sold instead to Hainan Airlines. These restrictions mean that, from his aviation business, Junyao will earn a profit of only 40 million yuan this year on sales of 1.6 billion yuan. In dairy products, another core business, the competition is so severe that the firm will earn a profit this year of about 10 million yuan on sales of 350 million yuan. So the group has become heavily dependent on property, which accounts for more than half of its assets and profits. Its biggest asset is a skyscraper in the Xujiahui commercial district of Shanghai, for which it paid 500 million yuan in 2002 and which is now worth more than one billion yuan. It also has the Junyao International Plaza in Yichang, worth 500 million yuan, and the Junyao Hotel in Wenzhou. Junyao's last corporate decision was to appoint as his heir his eldest son, 10. After the publication of his will, the son has 40 per cent of the group, with 35 per cent for Junyin and 25 per cent for the other brother, Junhao. Junyao had two sons and one daughter. According to China's strict one-child family planning laws, the younger son and daughter are illegal. But, like many rich people, Junyao was able to get round the law by paying a fine to turn his children from 'black' to 'white', enabling them to go to school. Many people blame his death on a punishing work schedule, and the need to eat and drink copiously while entertaining clients and government officials to obtain the licences and approvals he needed.