Succession and the transfer of social capital in chinese family businesses : understanding guanxi as a resource – cases, examples and firm owners in their own words

Abstract

At present, possibly no other economic region attracts as much attention as China. Certainly, it would be redundant to list all topics of note, from growth rates to governmental control, from patent protection to spending power. And yet, some topics so far remain barely examined. One of this “blind spots” is the issue of family businesses. The reason for that neglect might be that commonly no one thinking about China takes into account family firms. When mentioning China, the public – especially in Western countries – might rather think of statecontrolled or state-influenced companies. However, there are indeed familybusinesses in China; in fact, there are a lot of them. Xing Ke from Chongqing in China, author of this book, states: “[U]ntil April 2015, there were about 19.3 million registered enterprises, of which 85.6 % are private enterprises, and about 51.4 million registered individual industrial and commercial businesses. Together a population of ca. 260 million is currently employed in the private sector (SAIC, 20151 ). The majority of the private firms and almost all the individual businesses are family-owned and managed. Not only small to medium sized firms are commonly owned and ran by families, but also are some large publicly traded firms controlled by families. According to Forbes China’s Chinese Family Business Survey carried out in July 2014, 58.7 % of the 2528 firms listed on China’s A-share market are private enterprises, of which 50.3 % are family businesses2 .” Nowadays Chinese family firms see themselves confronted with a challenge very well known to their counterparts in other countries: the issue of succession. It is in the nature of things that Chinese family firms sail into unchartered waters now: The ascent of private entrepreneurship after the Great Leap Forward and the Cultural Revolution as well as the economic restrictions of that period implicates that the firms now are situated in their first phase of succession in the firm’s history