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With the might of the Chinese government supporting them, family businesses in China have flourished in the last 40 years. But while business is thriving, many are facing succession challenges borne from a lack of heirs willing to take the helm. Susan Lingeswaran takes a look
n 13 December, 1978, not long after China was out of the grip of Mao’s Cultural Revolution, then-leader Deng
Xiaoping delivered a radical speech to his Communist Party proposing China learn from richer countries, allow workers and peasants to compete to get ahead, and give enterprises the power to make decisions or try new ventures. Just five days later, a council of
300 party elite agreed to adopt Deng’s vision, and China kicked off its journey from economic seclusion to becoming the world’s factory. It was after this agreement
that almost all mainland China’s private family enterprises were formed and since then, China’s government has issued a series of policy measures to encourage and support the development of the private sector. Although the
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number of family businesses in the country is unknown, PwC’s Global Family Business Survey 2018 says there were 27 million private enterprises by the end of 2017, with family businesses forming the majority. The All- China Federation of Industry and
KEY CHALLENGES FOR MAINLAND CHINESE COMPANIES IN THE NEXT
TWO YEARS Need to innovate
Economic environment
Professionalisation of the business 52%
Data management Domestic competition 50% 48%
Sources: PwC Global Family Business Survey 2018—China Report
58% 77%
Commerce previously estimated 80% of private enterprises are classified as family businesses. Whatever the true number, private
enterprises have emerged as a vibrant force in the nation’s economic development, providing more than 60% of China’s GDP, 75% of technological innovation, 80% of employment, and 90% of new urban jobs, according to the government. Such is their significance to
China’s economy, privately-owned businesses are being vigorously supported by government policies. In September 2017, the Communist Party and the State Council jointly released a guideline encouraging entrepreneurship to drive market confidence, while last year, China’s 19th Congress report called for “supporting the growth of private businesses” and getting rid of regulations and practices that
ISSUE 75 | 2019
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