World starts to see new breed of rich
China’s second-generation wealthy children are emerging into the spotlight, especially with the country’s first wave of successful private firms reaching the succession stage.
Unlike family businesses in mature Western markets, China’s leading family businesses were established mostly after the country’s reform and opening-up started at the end of the 1970s.
A lack of succession plans is understandable, given that the unprecedented economic growth that China has had in the past 30 years has meant the country’s top entrepreneurs never dreamed of the wealth they would achieve.
Meanwhile, many of China’s second-generation wealthy children, educated abroad, are independent minded with their own career aspirations that don’t necessarily include returning to family firms. According to a survey of 500 Chinese family firms released last year, only 20.5 percent of the children want to take up the baton from their parents.
“The future development of Chinese family firms is very significant because private firms are the future drivers of China’s economy as it now enters a stage of structural shift, and most of these private firms are family-owned,” said Eric Thun, associate professor in Chinese business studies at Said Business School at the University of Oxford.
More than 85 percent of the country’s private companies are family-owned businesses, and by July, 747 of these firms were listed on China’s stock markets, according to the survey.
In the past few years, “family offices”, which advise the rich on wealth management, succession and other issues, mushroomed in China.
“Exposure to an international environment is important because they can learn from other established family businesses in Europe, and take these lessons back to China,” said Anton Davidenko, of the London-based family office Oracle Capital Group.
Hence, the young leaders of China’s future family firms are mostly likely to be internationally educated. “They could become powerful bridges between China and the West,” Thun said.