Reuters reported that China is in the midst of a succession problem as its first-generation entrepreneurs retire. There are three million privately-owned businesses in the world's second largest economy and families are unwilling to hire outsiders out of fear that the business will be taken away from them. The lack of professional managers in China as well as the rarity of private equity involvement and domestic acquisitions also compounds the problem.
With first-general enterprises valued at USD 611 billion, any succession crisis could hamper the growth of the world's second-largest economy. Chinese University of Hong Kong Finance Professor Joseph Fan studied the problem and said that the national economy could suffer if succession issues are not managed well. "If all companies in a country experience a succession problem in the same time period, that could pose a systemic risk to the country," he told Reuters.
The problem is continuity. Many wealthy mainland Chinese couples have educated their only child abroad-and the younger Chinese are not anymore interested in other carrier opportunities other than running the family business.
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