Reference no: EM133028064

Assignment:

China faces family business succession crisis

China is facing a large-scale social problem - many productive and profitable businesses are not going to be inherited by successors of their original founders. Many successful Chinese businessmen and businesswoman cannot count on their children to take over the businesses, once they are ready to retire. Chinese millennials, usually children of successful entrepreneurs that studied abroad, prefer to start their own business. Professor Fan, co-director of the Centre for Economics and Finance at the Chinese University of Hong Kong, who is researching this managerial issue claims that "China is [potentially] facing a big social and economic loss. A lot of productive businesses will stop...In my expert opinion, it is more than six in 10 children of business owners who are unwilling to take on the family business...Many of those children were raised by their grandparents and then often sent to the West[ern countries] for boarding school and university. The bonding with the family is not very strong, and those who return to China come back full of new ideas and aware of other career options."

Li Xin, a recent graduate from Warwick University in the United Kingdom, after returning to China decided not to start working with his father and consequently not to inherit his successful construction business. He decided to launch his own health and fitness business - teaching personal trainers Western style physical exercise disciplines like CrossFit. "I guess it was my experience studying in Britain... and traveling to the United States...[learning about the latest trends in the fitness industry] that inspired me to do this... I hope that [my father] will find an adequate buyer or CEO, so he can just retire... China is changing. When my dad started out perhaps China did not have enough buildings, so we needed companies to construct them. But now we have different problems such as obesity and chronic diseases like diabetes. What China needs now is companies that can help people construct not better buildings, but better bodies. So, I want to solve this new problem."

Required:

Question: How would you describe the new entrepreneurship culture in China? Explain the consequences it may have on the Chinese economy.