China faces tidal wave of exits by ageing tycoons. Their succession plans will shape China’s future
- Huge leadership change coming for private companies, but many hard-charging offspring are looking beyond the family business
- Chinese tycoons less likely to have handover plans in place than global peers
China is getting ready to be hit by a wave of retirements of ageing business titans who built the private companies that fuelled the country’s economic boom and created its middle class.
These companies are nearly all family owned, headed mostly by men who forged empires largely in real estate and manufacturing since China began experimenting with capitalism 40 years ago.
The changes at the top will hugely impact China’s future, as it speeds up its shift from manufacturing to technological innovation in sectors like e-commerce and artificial intelligence.
But what might seem an obvious succession plan – ageing parent handing over control to groomed adult child – isn’t turning out to always be the rule.
Some scions – many educated in the West – want to prove themselves by creating their own businesses or seizing other opportunities. Some of them are happy to have non-family professional managers brought in to run the core family firm. Meanwhile, others in the second generation are working within their families to diversify the original business by adding in more tech-savvy offshoots, creating what one analyst calls “the business family” to replace the family business.
“Succession in private businesses is crucial to China’s economic health and stability,” said Song Qinghui, chief economist for Shenzhen-based Qinghui Research.
