{"id":639777,"date":"2026-10-08T03:58:12","date_gmt":"2026-10-08T03:58:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/639777\/"},"modified":"2026-10-08T03:58:12","modified_gmt":"2026-10-08T03:58:12","slug":"chinas-succession-crisis-a-generation-of-entrepreneurs-is-retiring-but-are-their-children-ready-to-take-over-asia-pacific","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/639777\/","title":{"rendered":"China\u2019s succession crisis: a generation of entrepreneurs is retiring, but are their children ready to take over? | Asia Pacific"},"content":{"rendered":"

Growing up, Ayu would watch his parents put together hand made leather shoes on the ground floor of their three storey home in the Chinese city of Wenzhou. Their relatives in Europe would send photographs of designer products from Italy for the workers to base their designs on, and in the decades that followed, the tiny family-run workshop transformed into a 700 person factory.<\/p>\n

\u201cThe factory and the home were the same place. I watched them make shoes by hand, piece by piece, using small machines,\u201d Ayu recalls of watching his parents work in the 1980\u2019s.<\/p>\n

By the mid eighties, Chinese economists had a name for this type of bottom up economic growth story: the Wenzhou model. It was a system that saw small companies secure finances through family connections and operate underground factories to produce cheap goods that would end up on the busy streets of China<\/a> and beyond.<\/p>\n

But now many of the family-run manufacturing businesses that helped to fuel China\u2019s economic success<\/a> are facing a succession crisis, with the children of factory owners unable or unwilling to take them over.<\/p>\n

Ayu \u2013 who today runs an online e-commerce platform \u2013 says it\u2019s not that his generation doesn\u2019t want to take them over, but that the market is much more competitive than when their parents started, and the crucial institutional knowledge and commercial relationships that powered their success will be impossible to pass on.<\/p>\n

Personal relationships, experience and instincts are difficult to hand over to the next generation, says Hanqing Fang, an associate professor at Missouri University of Science and Technology.<\/p>\n

\u201cShares can be passed to a son or daughter overnight,\u201d Fang says. \u201cBut the heir is being asked to take over something that looks like a company on paper but, in practice, is closer to the founder\u2019s personal belongings.\u201d<\/p>\n

Ayu\u2019s family shoe factory in Wenzhou, China. Photograph: Ayu<\/p>\n

\u201cThe network is very difficult to inherit,\u201d Ayu says. \u201cYou have to build it yourself. In the end, some people inherit an empty shell. On paper they\u2019re the boss, but the people underneath them have already begun to leave.<\/p>\n

\u201cWe inherited the wealth, but we couldn\u2019t inherit the industry.\u201d<\/p>\n

\u2018I\u2019m not ready yet, because it\u2019s not easy\u2019<\/p>\n

According to HSBC Life research, two-thirds of wealthy Chinese people have no legacy plan. In a study led by the University of Ningbo, just 10 out of 114 private companies surveyed said they were being managed by the families\u2019 second generation.<\/p>\n

Many of China\u2019s second generation business owners speak of a profound anxiety about taking over the family firm.<\/p>\n

\u201cI really don\u2019t want to take over because there are so many interpersonal relationships and financial connections that I\u2019d have to handle and learn about,\u201d says Wu, a graduate who works in marketing in Hong Kong.<\/p>\n

His family own a snack processing factory in the Chinese city of Shanwei, as well as dozens of stores in Shenzhen and Hong Kong. But he is reluctant to join the family business.<\/p>\n

\u201cMost young people dream of getting rich overnight, but I know there\u2019s no such thing. When inheriting a fortune, you also have to consider all the complicated paperwork and whether you really have the ability to handle those responsibilities,\u201d Wu says.<\/p>\n

According to official estimates, China\u2019s private sector accounts for more than half of the country\u2019s tax revenue and 60% of its GDP<\/a>. Economists say unsuccessful handovers can lead to firms losing value or even closing.<\/p>\n

Because family-run companies represent such a large percentage of China\u2019s private sector, if they fail in their thousands it could threaten the country\u2019s future growth.<\/p>\n

\u201cThe risk is not that these family firms simply disappear. It is that the capabilities embedded in the founder \u2013 including the knowhow, the supplier networks and the relationships \u2013 are lost in the handover,\u201d Fang says.<\/p>\n

For Wu, the idea of one day taking control of the family business is not completely out of the question, but he concedes he still has a lot to learn.<\/p>\n

\u201cI\u2019d say that one day my parents\u2019 company will be mine. But I\u2019m not ready yet, because it\u2019s not easy,\u201d Wu says.<\/p>\n

\u201cIf I could just have the money without any responsibilities, I\u2019d take it without hesitation. But the thing is, it\u2019s not that simple.\u201d<\/p>\n

Additional reporting by Yu-chen Li in Taipei<\/p>\n

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