Chinese family businesses at a crossroads amid structural changes in economy
The days of getting rich quick on lucrative export sales are over for China’s family-run manufacturers, as the economy shifts to one driven by domestic consumer demand
Mainland China’s accelerated transformation process to a “New Normal” and the concurrent economic slowdown that is hindering efforts by entrepreneurs to sustain profitability have ratcheted up pressure on family businesses to adjust their strategies and undergo revamps.
By definition, a family business refers to companies owned and controlled by a family.
In China, the majority of family businesses which started in the 1980s or 1990s are small and medium-sized manufacturers. They flourished between the late 1990s and 2000s, securing plenty of export orders while taking advantage of the mainland’s inexpensive labour and land costs to strike it rich.
However, since 2009 when the global financial crisis took its toll on a wide range of industries amid dwindling external demand, these entrepreneurs have been struggling to keep their businesses afloat.
“In hindsight, it was easy to start a business and make a fortune,” said Yuan Lamei, a Jiangsu province-based entrepreneur who owns a garment making business. “But it’s difficult to sustain growth. To be precise, you have to keep the businesses running because it’s your responsibility.”
