China has more than 10 million private companies that account for about 60 percent of GDP. At the end of 2011, more than 80 percent of private firms were classified as family businesses, according to the All-China Federation of Industry and Commerce.
That importance to China’s economy means the generational handover of family businesses will be closely watched by investors and politicians. A chief concern among academics is that professional management will not be an option for some time.
“China’s professional market is also first generation. There’s no mature market for professional managers and no proper incentive system to recruit, retain, promote and compensate provisional managers,” Fan said.
For now, Liu Fang is among the luckier ones. Her son, Gong Chen, took over the family’s Fangzi Beauty Salon business, which has 56 salons across China, after working there for eight years when he returned from studying in London.
“In the beginning, I just wanted to help my parents, but later a sense of responsibility grew inside me,” he said.