Family Business Succession in East Asia

What are the key success factors that Chinese entrepreneurs and family managers need to consider during the succession process? What are the eligible criteria for the choice of the successor? How to manage the expectations of the non-family top management team members when the future successor is a family member?

These are some of the questions that I had the opportunity to discuss with Chinese first and second-generation entrepreneurs and business managers at the event organized by Comité France-Chine in Paris today.

Among the points that I stressed, successful succession in East-Asian family businesses seems distinct as compared to Western family businesses since it depends heavily on the Guanxi transfer among generations while building on the value of respect towards the elder generation. In the same time, the motivation of the next generation to join the family business, its engagement with stakeholders (such as through corporate philanthropy), and entrepreneurial spirit are key determinants of the business performance and succession success in East-Asian family businesses.

I was very pleased to interact during this event with Olivier Mellerio who shared with us his 15th generation family business' experience around succession as well as the fruits of his field work through the reports and books he has written on the topic. Added to this, delightful exchanges with thoughtful Chinese businessmen/women whose entrepreneurial stories are not only fascinating but built to last as they are aware of the importance of family business succession and the learning journey to move from theory to practice. Last but not least, I felt optimistic with the speech that Deputy Natalia Pouzyreff held at the event, with a positive tone about the prospects for business investments and growth in France despite the current hectic times.

Our family businesses are predominantly present in our economy. A sustainable economic growth depends significantly on their growth and their entrepreneurial long-term orientation. Eastern and Western collaborations will hopefully allow to cross-fertilize the efforts in that direction. In the same time, as mentioned in my speech, the history of China leads to family businesses with relatively recent experience around the first and second generation as compared to the history of Old Europe and the Americas with older family businesses. The good news for Chinese businesses is that the academic research has significantly developed since the past three decades which would allow them to benefit from the research outputs and continue to thrive and prosper while learning from the mistakes of older Western family businesses. Contextualizing the research efforts is finally the key so collaborations should not only be on the business levels but also on the research levels between France and China.