Family businesses have played an indispensable role in China’s economy since its economic reforms in 1978. Now, in the context of a post-pandemic economic recovery period, private family-run businesses will play a key part in the shaping of this era. To shed light on this pertinent topic, Cheung Kong Graduate School of Business (CKGSB) Assistant Professor of Economics Dr. Fan Xinyu, was invited to speak at the Horasis Asia Meeting on November 30 2020, to share his findings alongside IE University Assistant Professor of Leadership Dr. Ma Bin. In the online webinar, Professor Fan and Professor Ma discussed and detailed private family-run enterprises in China, and the opportunities and challenges these companies face in adapting to a world full of uncertainties.
In line with Professor Fan’s expertise on the political economy and China’s economic history, he discussed the various similarities between family businesses, and dynasties and kingdoms of the past. Drawing on ideas within his recent article in the publication, “Understanding Family Businesses in China: the Path, the Trend and the Future” jointly released by CKGSB and IE University, Professor Fan detailed the idea of a “double transformation”- a self-reinforcing cycle between digital transformations and family business transformations. He explained that the “double transformation” is a potential solution and an alternative method for second-generation entrepreneurs of family businesses, when actively implementing digital transformations in their family-run businesses.
In describing family businesses in China, Professor Fan explained that “family-run businesses have been highly agile and adaptive, and tend to have high social responsibilities.” In the context of the pandemic, he added that, “many of CKGSB’s alumni companies swiftly adapted their production lines in response to the dire demands of the market for hygiene products. Many businesses have been very supportive to the local community, when the economy was stricken by the COVID-19 pandemic.”
Taking a cultural comparison perspective, Professor Ma expounded that Chinese family businesses should not adopt the identical solutions of its western peers, given the differences in cultural features and social environments of the two, i.e. individualism vs collectivism. Instead, he advised that they should find their own solutions in moving forward. Professor Ma warned that with the trend of de-globalization, Chinese family business may face a shrinking global demand and higher barriers to entering foreign markets. Chinese family business owners, according to Professor Ma, should be conservative with their investments during the forthcoming economic recovery, and more importantly be open-minded to involving young talents in the operations of their family businesses.
Panel discussion moderator and Founder of Optimus Horizon, Margaret Chen, opened by congratulating Professor Fan and Professor Ma on the launch of the joint CKGSB and IE University report. She then shared her insights on the unique issues that family businesses in China face, particularly in the current environment of transition. Margaret detailed how China’s digitalization has brought about great change to family-run businesses. The challenges that she sees Chinese family businesses facing are, modernizing their corporate culture and having a better understanding of other cultures when doing global business.
The Horasis Asia Meeting, a prestigious regional summit hosted annually by Horasis, aims to convene experts, scholars, business leaders and officials to explore, showcase and optimize the latest economic panorama of Asia. Now in its 5th year, this year’s summit was conducted virtually, with 400 of the foremost business and political leaders from Asia and the world gathering to discuss the profound economic, political and social disruptions caused by COVID-19, and how to better shape a sustainable future for a post-pandemic Asia.