China’s manufacturing industry has been hugely successful over the past decades growing into the world’s factory. However the continuation of this success is uncertain as many family-owned businesses face succession challenges. With increasing competition and rising costs these businesses’ survival often relies on effective family succession planning.
The challenges of succession planning in China’s family businesses are well documented. Many entrepreneurs are concerned about how their business will continue when they retire or pass away but they often put off planning until it is too late. Around 90% of China’s private businesses are family-owned with SMEs making up 80% of the economy; meaning a change in leadership can have a significant impact on the country's economic growth.
In recent years family businesses have turned to the younger generation for help with succession planning. The younger generation is often better equipped to take on the challenges of the digital age with knowledge of the latest technologies and changing consumer preferences.
One such business is Jiangsu Sunshine Coating Technology Co. Limited which has been passed down five generations. The founder Chen Houbin started the company in 1876 and it has since grown into a successful business. However in recent years the company has struggled with succession planning and the current CEO Chen Yunyong is looking to pass the business on to his daughter Chen Miaojuan.
Chen Yunyong believes that his daughter has the skills and passion to take the company forward. He has already started grooming her for leadership by including her in critical business decisions and ensuring she has the right education and experience.
Jiangsu Sunshine Coating Technology Co. Limited is not the only business turning to the next generation for help. Many businesses are facing succession challenges and the younger generation is being asked to step up and help the business thrive.
However passing the business down through the family is not always the best option. In some cases the younger generation may not have the skills or experience to lead the business successfully and an outsider may be a better choice. The challenge for families is how to balance the tradition of passing down the business with the need to ensure the business continues to grow and succeed.
In conclusion the continuation of China’s family businesses is critical for the success of its economy. The younger generation has a significant role to play in ensuring the businesses survive and thrive. However succession planning can be challenging and families need to balance tradition with the need for growth and success. The key to success is starting early and ensuring that the next generation has the skills experience and passion to carry the business forward.
