2nd-generation entrepreneurs take up family business baton, seek innovation

When Ye Kaifeng, a Ningbo native, returned home in 2004 after studying abroad, he was reluctant to step into his father’s shoes and take over the papermaking family business. Instead, he started his own pig-raising business.

“As a returned overseas student, I believed I should do something different, suspecting that I wouldn’t make any difference to my family or the papermaking industry,” Ye said.

It took him over a decade to come to terms with taking up the baton from his father’s hand in 2018. Then, Ye was already a successful entrepreneur in the eco-breeding business.

The challenge of management transition is widely shared by tens of thousands of private enterprises in Cixi, a county-level city under the administration of Ningbo, east China’s Zhejiang Province. There are more than 1.8 million residents and roughly 60,000 private enterprises in Cixi.

It is also a common problem facing the country’s bustling economic hubs where the management transition of family enterprises holds implications for regional economic prospects. Many second-generation entrepreneurs have risen to the challenge of maintaining continuity while seeking innovation.

Transition

The majority of private enterprises in Cixi were founded following China’s reform and opening-up. Among them, more than 2,000 are manufacturers of small home appliances. As the founding entrepreneurs have come to retirement age in recent years, a transition is inevitable.

Passing the baton to heirs is the most common choice, in 95 percent of all cases in Cixi. Private enterprises have exhibited a great deal of prudence with the transition, which usually takes years.

Among 418 private enterprises with an output value exceeding 100 million yuan (US$14 million) in Cixi, 146 companies, or 35 percent of the total, have been completely or largely taken over by second-generation owners. About 200, or 48 percent, are still in the midst of transition, according to data from local authorities.

Ye realized the importance of leveraging the financial market for corporate growth while studying abroad. Over the years, he’s been persuading his father to get ready for public listing, but to no avail. His father was content with maintaining the status quo — a company with an annual turnover of 2 billion yuan.

After Ye took over the company in 2018, he began pressing ahead with an initial public offering. The company is on the trajectory of going public in 2025. Ye, always eager to make a difference, has already envisioned ambitious plans for the company after it goes public.

In 2017, after finishing his studies in the United States, Luo Lujin embarked on the journey of taking over the home appliance company his father founded.

“During my studies in the US and my visits to many other companies, I’ve learned plenty of good practices and managerial concepts that I cannot wait to put into practice in running my family company,” said Luo, 30.

“However, the company was running largely like a mom-and-pop shop back then,” said Luo, adding that he was anxious seeing nothing he’s learned could be applied, and he was overwhelmed by the pressure of steering the company out of a “bottleneck period.”

Fortunately, his father was willing to hear his opinions. He helped his father find the niche market of air fryers, and the company has embraced a period of rapid growth since then. Orders are rolling in, and new plants are about to be constructed, according to Luo.

Shen Ze, 31, the general manager of

Kadiya home appliance company, foresaw the importance of e-commerce to the industry of small home appliances when still in college.

Shen took over the company after graduating in 2016. He wasted no time in building his e-commerce marketing team. Since then, the business of Kadiya heaters has boomed, and the sales volume of e-commerce represents more than 60 percent of total sales.

In China’s southern metropolis of Shenzhen, many second-generation entrepreneurs are also navigating unchartered waters. Zheng Jiming has expanded the business map of the company his father founded from the construction sector to cross-border ecommerce, seizing the opportunity of Shenzhen introducing an upgrading plan for its bonded area.

In 2012, Zheng turned an old factory building of his company in a bonded area into a demonstration and trading center for import and export goods, providing one-stop services for cross-border e-commerce trading. The company now boasts total fixed assets exceeding 2 billion yuan and more than 200 employees.

Government’s role

The succession and development of enterprises hold implications for the social and economic development of the region, therefore, local authorities should play their roles, said Lin Jian,