Passing down the business

Line of succession

"Convincing the older generation to change has always been a challenge for the second generation, who need to find an appropriate way of communicating with their parents to help them understand modern business concepts," said Roger King, director of the Tanoto Foundation Center for Asian Family Business and Entrepreneurship Studies at Hong Kong University of Science and Technology. King said that as long as both the younger and older generations have the same goal of preserving "wealth, legacy and harmony", they will be able to find a balanced way to create a smooth line of succession for the family businesses.

Yu Jiangbo (left), general manager of Zhejiang Neoglory Jewelry Co, has dinner with his parents. Yu has been working for his mother's company since 2008 after studying overseas for six years. [Photo / China Daily]

Having been her father's little follower since she was in senior high school, 26-year-old Jin Humin, the youngest child in her family, spent most of her childhood leisure time accompanying her father to business meetings and his day-to-day work.

"Although I've had limited management-related experience since graduating from Shanghai Normal University, I've witnessed the expansion of our family business by following my father and my two older brothers around since childhood," said Jin.

She now works as an assistant to her father, who is chairman of the family business - People Enterprise Group Co - a leading manufacturer of power-transmission equipment, high- and low-voltage electrical appliances, instruments and meters, electrical appliances for use in the construction industry and related accessories.

Jin said her introduction to management came at an early age, when her father told her that she should prepare to run the business with her brothers as a family unit.

To gain experience of life outside the family business, Jin took jobs as an intern in a bank and at other enterprises during her university vacations. She also worked as a teacher on the EMBA course at Shanghai Jiao Tong University for a year.

"I tried to learn how to communicate and work with others without being seen as the future boss of the company, so I would understand how the regular employees feel," she said.

Jin believes it's essential for business owners to foster a good relationship with their employees and guide them in showing a unified passion for the business.

Having worked as an assistant to her father for almost two years, Jin has learned about the overall operating process and is ready to gradually increase her involvement in the business, alongside her brothers.

Meanwhile, in 2010 the business began to diversify by investing in land used for industrial properties, and it also launched a logistics department as part of a structural upgrade.

"My oldest brother is in charge of the power-transmission section, my other brother is working on the electric appliances side, and I am trying to take over the property investment and modern service industry businesses," said Jin.

Gradual transition

Experts say it's essential that both generations prepare for the transition gradually.

"Family businesses should be prepared to pass on the succession to the next generation, which will directly lead to a promising future for the companies," said Nueno from CEIBS.

He added that business techniques, including management skills, leadership principles, financial management and a management philosophy should be passed from one generation to the next.