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Frank Chen

Many Chinese tend to label the offspring of the country’s nouveau riche private business founders with the pejorative “fuerdai”, literally “second-generation rich”.
They are seen as scions, waiting in the wings to inherit their family’s enterprises and the massive wealth their parents oversaw, a life in the lap of luxury guaranteed.
In reality, many of these transitions are plagued by a clash between generations, as the younger generation is unwilling – or unable – to keep the family business going, let alone allow it to thrive.
The private sector, the backbone of China’s economy and employment, is now facing a growing succession crisis – one which may see businesses wind down or fold, observers warn, as family matters threaten to send broader tremors throughout the country.
In regions like China’s eastern Zhejiang province, a major economic centre, questions over inheritance are becoming more pressing.
“I cannot – and probably should not – take over from my father,” said Li Fante, whose family’s factory, like many other businesses in Zhejiang’s city of Wenling, has maintained steady profits.
However, he said the work was neither exciting nor lucrative enough to lure him in.
“We may not do as well as our parents have done, and the business is boring,” Li said.
There is no consensus over how to run a business. So why bother?
Li Fante, Wenling, Zhejiang province
When Li’s parents were approaching 70 years old, he said he made an agreement with them to wind down the family business, which produces rubber and plastic parts, after more than 30 years in the trade.
He said that disagreements in the family had contributed to the decision.
“For us, taking over from our fathers means the beginning of endless quarrels and clashes,” he said. “There is no consensus over how to run a business. So why bother?
“Business drive and acumen may not automatically pass from one generation to the next.”
Li, who is in his early 30s, used the proceeds from the sale of the factory’s land and its assets to invest in stocks and Shanghai property.
Although ostensibly a family matter, Li’s decision – and those taking place among wealthy households across the country – could impact the future of China’s private sector, which accounts for 60 per cent of gross domestic product and 80 per cent of urban employment.
More than 85 per cent of the country’s private enterprises are family-run, according to data from the All-China Federation of Industry and Commerce, and Zhejiang is a major site of succession debates.
The province is one of China’s richest, and its private sector contributes 70 per cent of local GDP and employs many of its residents.


The average age of founders from Zhejiang’s top 100 biggest private enterprises was 64 years old, according to a 2025 report from the local government.
“This means enterprises entering the succession phase are not isolated ones, but a huge swathe of the most vibrant and productive part of China’s private economy,” provincial authorities said.
Data from Wenling’s United Front Work Department showed that, in 2025, close to 60 per cent of local private firms with an annual industrial output of 100 million yuan (US$14.9 million) were in need of “urgent succession planning” to ensure continuity in operations as their founders reached 60 years old.
Of 114 private firms surveyed throughout Ningbo and neighbouring cities, including Wenling, 90 were still led by their founders, some aged 70 or older, and about 60 firms had neither a designated successor nor any second-generation family members in management.
Only 10 companies of the 114 covered in the survey, conducted between 2023 and 2025 by Ningbo University of Finance and Economics (NBUFE), had come under the control of the second generation.
A related NBUFE survey also found close to 20 per cent of the second-generation members of the 114 firms explicitly declined to take over, while 45 per cent remain undecided or prefer to pursue a career other than their family’s business.
Su Saier, a deputy professor at NBUFE who led the survey, said most private entrepreneurs in Ningbo – and across Zhejiang broadly – showed limited awareness of succession planning and lacked systematic, long-term arrangements.
“Founders have limited willingness to ‘relinquish’ control and there is also a lack of resilience and entrepreneurial drive among their children,” she said.


The risks of investment reduction, business closures and broader impact on the economy have researchers worried.
“The succession and continuity of private enterprises is no longer a family matter, but a question of regional economic vitality and industrial ecology,” Su warned.
“This is particularly true in regions known for their private sector that are China’s economic pillars, like Zhejiang, Jiangsu and Guangdong, where numerous private firms are embedded in industrial and supply-chain networks.
“If succession is not smooth at one enterprise, it could put employment, upstream and downstream production and even the broader industrial ecosystem on the line,” she said.
Tang Dajie, a senior researcher at the China Enterprise Institute, a private think tank in Beijing, likened family-operated factories to capillaries in the massive Chinese economy.
“These factories may not be massive conglomerates themselves, but collectively they could be foundational to the Chinese manufacturing ecosystem,” Tang said.
“They usually specialise in a single component, or a minor link in the supply and production chain, that larger manufacturers usually outsource. If they shut down as their founders grey, the resilience and cost-effectiveness of Chinese manufacturing may be at stake going forward.”
Li, from the family factory in Wenling, agreed.




“The ageing of founders at many factories that do not have a successor may mean potential supply disruptions,” he said.
His family factory was one of many producers established in the late 1980s and early 1990s. It now sells moulded plastic auto parts to carmakers like Geely and BYD.
Handling succession is not just a test for business owners, but also a challenge for local cadres. If businesses in their jurisdictions wither, officials will have to tackle the subsequent impact on sentiment, jobs and fiscal income.
In one recent example, listed kitchenware maker Zhejiang Meida sold a controlling stake to an outside bidder for 1.29 billion yuan in July after its 85-year-old founder failed to convince his children to take over the business. Its stock price subsequently fell.
Meida is one of the largest listed firms in its home base of Haining, and employs thousands of workers. Local officials have stepped in following the sudden announcement to save local jobs and retain the local production base, according to people there familiar with the matter.
The succession issue has also caught the attention of top policymakers in recent years, with some viewing it as an issue that will make or break the future of the private sector of the world’s second-largest economy.


A 2023 Communist Party policy statement on promoting the private economy noted the need for “mentoring and guidance” for the younger generation of private entrepreneurs to ensure “orderly handover and succession”.
A dedicated law on the private economy, in effect since May 2025, requires qualified private entities to establish and improve their modern corporate governance system as an institutional foundation for sustainability and intergenerational succession.
Specific proposals, like recruiting professional managers to help run and modernise family businesses, have been raised.
But Li said this would not help much.
“By design, the founding family retains ownership, while professional managers brought in from the outside can leverage their knowledge and management skills to grow the company and get paid with salary, bonus and shares,” he said. “This idea sounds good on paper.
“The crux of the issue is that for a small family business, nothing is institutionalised,” he added.
“Many business decisions still rest on the founder’s experience, risk-taking, personal connections and even intuition and gut feeling. There is no business model. How can one modernise such a business?”
But NBUFE’s Su argued that to make more private businesses more sustainable, the test was how to transform them, regardless of who sat at the helm.
Succession is becoming the sternest test for Zhejiang businesses, and everyone has a stake in it to address the challenges
Zhejiang Daily
“The challenge goes beyond whether the second generation is willing to take over or not, but rather whether modern governance transformation can replace the founder’s personal abilities, experience and authority and adapt the company to the competitive environment of the new era.
“The key is who can drive the company’s sustainable development.”
Some high-profile examples can provide a model for such a transition.
On August 17, Li Shufu, founder of auto giant Geely Auto, put his long-time deputy An Conghui in the driving seat of the 345-billion-yuan business empire, passing over his children.
“The most feasible approach is to retain the advantages of the ‘family system’ so that shares can be held by the family, but management positions should be opened to the public, as much as possible to talent outside the family,” wrote Zhejiang Daily – a press organ of the provincial government – in a commentary piece following Li Shufu’s retirement.
“The goal is a modern enterprise system with clear property rights, well-defined boundaries between family and business executives for a sound corporate governance structure.”
Officials in the province are determined to tackle the issue, as time appears to be running out.
“The first generation of Zhejiang entrepreneurs who rose to prominence after the reform and opening-up since the 1980s are now seniors. For them – and local officials and governments as well – handing over the business has become a sword hanging overhead, and the window of time is steadily closing,” Zhejiang Daily said.
“Succession is becoming the sternest test for Zhejiang businesses, and everyone has a stake in it to address the challenges.”


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About 85 per cent of the private sector is family-run, and family matters may become an economic issue as children decline to inherit operations


About 85 per cent of the private sector is family-run, and family matters may become an economic issue as children decline to inherit operations.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}About 85 per cent of the private sector is family-run, and family matters may become an economic issue as children decline to inherit operations

About 85 per cent of the private sector is family-run, and family matters may become an economic issue as children decline to inherit operations