Dying out? China's young shun family firms
By Lavinia Mo
HONG KONG (Reuters) - Dai Yintao, 21, is the only son of the millionaire owner of Chinese real estate, pharmaceutical and mining companies. He has no interest in taking over his father's business, opting instead to work on a building site in Guiyang in Guizhou province, arriving each day in a Porsche.
"I work here because I don't want to take money from my father," Dai says. "Freedom means everything."
As China's first-generation entrepreneurs hit retirement age, more than 3 million private businesses will have to deal with succession issues in the next 3-8 years, according to data from the Chinese Academy of Social Sciences.
This is not unique to China, of course, but it poses particular risks in a country where there are few professional managers, and families are reluctant to hire outsiders anyway for fear they will take control of the business. Domestic acquisitions and private equity involvement are also rare, giving first-generation owners fewer exit options.
Wealth research firm Wealth-X estimates the value of China's first-generation entrepreneurial businesses at $611 billion, so any succession crisis could severely dent a key growth engine of the world's second-biggest economy.
"If all companies in a country experience a succession problem in the same time period, that could pose a systemic risk to the country," said Joseph Fan, finance professor at the Chinese University of Hong Kong, who has studied the issue. "Succession issues poorly managed could hurt the national economy."
Most mainland Chinese couples have only one child, and many of those have been educated overseas and now have little interest in taking over the family business, preferring other - potentially more glamorous - career opportunities. Continued...