Keeping it in the family

Second-generation entrepreneurs in Shishi breathe new life into family-owned businesses

At a time when most of the second-generation entrepreneurs in China are developing cold feet about running family businesses, Shishi seems to be bucking the trend with more youngsters ready to shoulder leadership responsibilities and keep the spirit of entrepreneurship alive.

What also makes this a fascinating case study is that in Shishi, a city in East China's Fujian province and home to more than 90 percent of the privately owned textile companies in China, the transition has been smooth and orderly without any squabbles or acrimony.

Most of the textile firms in Shishi were founded after the reform and opening up process of 1978. Most of these entrepreneurs have now turned 50 or 60 and as such keen on passing on the baton.

Lu Qi, the 28-year-old president of Dadi Group, a textile company that owns Diking, a men's wear brand that has more than 1,600 stores in China, is one of the new generation entrepreneurs who believe that it is important for businesses to constantly reinvent themselves.

Though born with a silver-spoon as the son of Lu Peirong, one of the 1,000 richest people in China, according to the Hurun Report in 2010, the younger Lu says that he has never stopped learning and improving.

His taste of entrepreneurship started during his schooldays in Singapore, when he and some friends teamed up to form a trading company. Though it was a tough initiation, he says he was able to expand his business to Japan and even some countries in Europe.

"There was bitterness and difficulties. But it was totally worth it, as it gave me something that I can be proud of. I was proud that I had made it on my own and not because of my family," he says.

Lu, who calls himself a second-generation entrepreneur, says he had to return to Shishi in 2007, as his father wanted him to take over the family business.

He spent more than two years in familiarizing themselves with the family business in various capacities like warehouse supervisor, salesman, assistant to the marketing director and manager. "I have played virtually every role in the company," he says.

With his overseas education, Lu soon proved to be a valuable asset to the company as he floated several new ideas that proved to be successful.

In 2009, he encouraged the company to get into sports marketing by sponsoring the Italian Super Cup at the National Olympic Stadium, also known as the Bird's Nest, in Beijing. The move made Diking the first Chinese men's wear brand to be promoted in the national stadium.

Lu says the successful marketing in the stadium created more brand awareness for Diking in not only first- and second-tier cities but also in even far-flung areas. "It was also a success in terms of the realized returns (profits)."

Buoyed by the success, the company has decided to press ahead with more aggressive expansion and have at least 3,000 stores in China by 2015.

"Passing down the family business is no easy task for sure, but if it is well-planned, it can also be a great opportunity to optimize operational effectiveness and enhance profitability," he says.

Lu is not the only Shishi entrepreneur who has enjoyed the benefits of a smooth transition.

Huang Shali, the 30-year-old daughter-in-law of Wang Yanzhu, the 62-year old chairman of the board at Gaiqi Group, one of the largest T-shirt manufacturers in China, is now the head of Huaqi Textile Co, a unit of Gaiqi Group.

Though she started from the scratch, Huang has made impressive strides in a short time and says that it was her exposure to family business management at an early stage that helped her.

With technology evolving and competition becoming fiercer, Wang says her clients are often asking for new products that are not just tweaks of an old product. "This means that I have to be constantly on the lookout for innovative ways to be different."

Huang has introduced innovative printing methods by which new colors and designs can be added to the fabric in an environment-friendly manner.

Though the process of succession is anything but simple, Wang says he has been watching and mentoring his daughter-in-law constantly.

"It is not because I couldn't do it anymore, but I want to leave more room to the next generation. They are young, creative, and fast learners who will grasp the new trends quickly," Wang says.

lvchang@chinadaily.com.cn

(China Daily 01/25/2013 page12)