Second-gen entrepreneurs will benefit China's new economy

The author of this article argues that contrary to some media portrayals of second-generation entrepreneurs as being "spoiled", they are increasingly playing a bigger and more important role in China's newly-globalised economy. The author suggests that many parents of private enterprises and family businesses are handing over control in areas such as business expansion, especially to overseas markets. Reasons he cites include: an overseas, Western-style education, often at elite schools and universities which gives them a more inclusive world view, fluency in English and the opportunity to make wide-ranging global contacts; and their ability to leverage the Internet, using online social media services such as WeChat, to share experiences and explore business opportunities.

New generation leverages time overseas Updated: 2016-01-22 08:37 By Watson Liu(China Daily Europe)

Children of Chinese entrepreneurs utilize language skills, global world view to advance family business

In the media world, the image of second-generation Chinese entrepreneurs is sometimes painted as a spoiled lifestyle. But in terms of Chinese enterprises' "going global", this younger generation has been playing an increasingly bigger and constructive role.

As adviser to several organizations of second-generation Chinese entrepreneurs, I would like to share my insights into the role these young people are playing in China's new globalized economy.

By second-generation entrepreneurs, I refer to the children of China's old guard of entrepreneurs, the founders of hundreds of dynamic private enterprises and family businesses.

The second generation spent their formative years studying overseas. Having receiving a Western-style education since as early as middle school, they grew up endowed with a more inclusive and globalized world view, open minds and stronger foreign-language skills than their parents.

Many of their parents' generation, recognizing their own limitations, are handing over the reins to their children - especially in the areas of business expansion and operations in overseas markets.

In 2015, the Chinese government unveiled its answer to Germany's Industry 4.0: Made in China 2025. The government's roadmap for upgrading its manufacturing industry has captured the attention of the new generation of entrepreneurs, who sense vast business opportunities in the industrial transformation to come.

These second-generation entrepreneurs visited companies working on Industry 4.0-related projects in Germany and other countries to observe the transformative effects of the new industrial revolution.

One such visitor from a well-known Jiangsu-based company leveraged assistance from strategy consultancies, investment banks, law firms and auditors to conduct due diligence ahead of potential investment or mergers with European firms engaged in Industry 4.0 projects.

This young entrepreneur's international education and background enabled him to optimally tap the expertise and capabilities of professional service organizations throughout the due diligence investigations; compared with his parents' generation, his fluency in multiple languages also made him far more effective at communicating with the executives of potential overseas partners.

The Jiangsu-based company ultimately decided to invest in a German company, which is now using the funds to ramp up R&D efforts and accelerate delivery of its products to markets worldwide - including China.

The partnership created by this young man's foray into Germany can be seen as a microcosm of Sino-German cooperation in the area of Industry 4.0.

In the summer of 2015, another group of second-generation entrepreneurs from Shanghai and Beijing set out for the United States to explore advanced management practices in hospitals and elder care facilities in Boston, New York and other locations.

The vast majority of participants had degrees from the US or Canada and, during their time in North America, had observed the growing trend of affluent Chinese citizens traveling abroad for physical examinations, medical treatment and even long-term care in nursing homes.

Their English fluency and impressive educational backgrounds at elite North American universities helped them convince these hospitals and nursing homes to accept investment from the private Chinese companies they represented.

The purpose of the visit, however, went beyond pure financial investment: by building relationships with US-based medical institutions, the group was able to gain a deeper understanding of advanced management practices and innovative business models on behalf of their parents' businesses back in China, some of which were property management companies that had already made forays into the elder care sector.

The achievements of these young entrepreneurs may offer insights into the question of how China can foster innovation and realize the future transformation of hospitals and nursing homes.

Wide-ranging connections are another advantage of the second-generation Chinese entrepreneurs.

A young man studying in Britain befriended a few classmates from powerful families in the Middle East. Leveraging these connections, his family business set up a company to engage in engineering projects and trade, as well as to export products and services from China's Ningxia Hui autonomous region, such as organic halal food products, to the Middle East.

The connectivity and accelerated growth of the young man's family business provide a prime example of participation in China's Belt and Road Initiative by private companies.

Last but not least, one of the greatest strengths of these second-generation entrepreneurs is their ability to leverage the Internet to amplify the effectiveness of private and family-operated businesses.

For example, many such young people make full use of online social media services such as WeChat to share experiences and explore business opportunities.

As young talent increasingly returns from overseas to add to the ranks of China's second-generation entrepreneurs, the voice of Chinese youth will have an even greater impact on the country's industrial and economic role in the world.

The author is a Roland Berger Strategy Consultants supervisory board member and global senior partner. The views do not necessarily reflect those of China Daily.

( China Daily European Weekly 01/22/2016 page9)