As China's reform and opening-up approaches its fiftieth year, the nation's first generation of entrepreneurs are collectively entering the retirement window. Unlike the gradual, century-long succession processes seen in Europe and America, tens of millions of Chinese private enterprises are confronting a generational handover under "time-space compression." This major test, which concerns macroeconomic stability, challenges not only the wisdom of individual entrepreneurs but also the capacity of legal, financial, and institutional infrastructure.
During an interview, Gao Hao, Director of the Global Family Business Research Center at Tsinghua University's PBC School of Finance, moved beyond the traditional narrative of "father-to-son succession" to analyze the structural challenges currently facing private enterprise succession from a macroeconomic perspective. He also explored how family capital can shift from speculation in real estate and stocks to supporting hard technology, becoming an indispensable source of "patient capital" within the national innovation system.
"Succession Tsunami" Arrives: Not Just a Family Matter, but a Macroeconomic Test "Previously, I described the succession of private enterprises as a wave, but now, 'tsunami' might be more accurate," Gao Hao stated directly. He pointed out that China currently has approximately 57 million private enterprises, with the first generation of entrepreneurs who started their businesses in the 1980s and 1990s now generally entering advanced age.
The severity of this process lies in its "atypical" nature. Gao Hao analyzed that enterprise succession in European and American countries occurred gradually alongside their industrialization processes, spanning two to three hundred years. In contrast, China is compressing the generational transitions that took place over long cycles in the West into a concentrated eruption within just a few decades. "This is the largest and most concentrated generational succession event in the world."
This concentration means succession is no longer just an internal management issue for individual companies. Gao Hao believes it is essential to construct an analytical framework combining micro, meso, and macro levels. The micro level concerns the survival of individual enterprises, the meso level affects the stability of industrial clusters in major private economy hubs like Zhejiang, Fujian, and Guangdong, and the macro level directly relates to the sustainable growth of the national economy.
Citing the widely discussed Wahaha incident from last year as an example, Gao Hao noted that the frequent occurrence of such cases is a microcosm of systemic pressure. The market often simplistically blames "the next generation's unwillingness to take over" or "the previous generation's reluctance to let go," but the core issue lies in the singular nature of succession models and the lag in supporting systems.
"Succession is a systematic project involving four dimensions: management rights, governance rights, equity, and wealth," Gao Hao emphasized. He stated that enterprises should not limit themselves to the single path of "sons inheriting their fathers' businesses." Using Midea Group as an example, he pointed out that Midea successfully transferred management and governance rights to professional managers while the family retained equity and wealth. "This teaches us that succession design offers a vast space for choice."
Beyond internal succession, external acquisition is also an important path. Management buyouts (MBOs), acquisitions by buyout funds, or investments by strategic investors are standard operations in mature markets. However, this requires support from well-developed financial tools, such as acquisition loans. Gao Hao specifically mentioned that equity trusts are a key legal tool for achieving equity stability, but related system construction in China still requires improvement. "The succession of Chinese enterprises is further complicated by the dual pressures of AI transformation and green transformation. Addressing this requires the joint efforts of both the first and second generations, and indeed the entire society."
Addressing Capital "Short-Sightedness": Family Offices are Natural Allies for "Investing Early and Small" As "new quality productive forces" becomes a core keyword, a key focus for policymakers and the market is how to steer vast family wealth away from the property and stock markets and into "hard tech" fields like semiconductors and artificial intelligence.
Gao Hao offered an often-overlooked answer: the Family Office. "China's capital market needs long-term capital, patient capital. Beyond insurance funds, pension funds, and sovereign wealth funds, the family capital behind private enterprises is a highly potential category," Gao Hao explained. He noted that the investment horizon for insurance and pension funds is typically measured in one generation (30-40 years), whereas the goal of family capital is intergenerational succession, theoretically allowing its investment horizon to be extended indefinitely.
This ultra-long-term characteristic makes it a natural ally for "investing early, investing small, investing in hard tech." Gao Hao cited a series of lesser-known historical details to support this view: When Tencent's early funding chain was on the brink of collapse, it was a critical $2.2 million investment from Pacific Century CyberWorks, backed by Li Ka-shing's son Richard Li, that helped it through its darkest hour. In Alibaba's early financing rounds, the lead investor was Investor AB, backed by Sweden's Wallenberg family, which co-invested alongside Goldman Sachs and Fidelity. When Tesla was repeatedly on the verge of bankruptcy, it was a $100 million personal investment from Oracle founder Larry Ellison that provided the lifeline.
"These were not hedge funds seeking short-term returns, but family capital pursuing long-term enterprise sustainability," Gao Hao stated. Precisely because of this, major global financial centers like Hong Kong (China), Singapore, and the UAE are competing for family office resources. The goal is not only to develop the wealth management industry but also to attract this capital to invest in their local technological innovation ecosystems.
He suggested that China should accelerate the improvement of the policy environment related to family offices, closely integrating the succession needs of private enterprises with the national science and technology innovation strategy. This would help build a virtuous ecosystem, encouraging more "enterprise second-generation" or "entrepreneurial second-generation" individuals to dare to undertake disruptive innovation attempts.
Capital Flows Under Dual Circulation: The Next Five Years Won't Be a "Single-Choice Question" Faced with the current complex geopolitical environment, the market often worries: will Chinese private capital firmly remain in the A-share market as an "anchor," or will it continue to flow overseas?
In response, Gao Hao's answer reflected macroeconomic strategic resolve. He believes this should not be an "either-or" single-choice question. "Whether deeply cultivating the domestic market or integrating into the Belt and Road Initiative, these are rational choices for enterprises in different industries and at different development stages," Gao Hao stated. He noted that China possesses the world's largest market and still relatively high economic growth rates. This "vast ocean" contains boundless innovation opportunities, particularly in cutting-edge fields like embodied intelligence and AI, where the creativity of the younger generation is bursting forth.
Simultaneously, he acknowledged the world-class competitiveness demonstrated by Chinese enterprises expanding overseas. In Gao Hao's view, mature private enterprises will flexibly serve and expand into both international and domestic markets based on their own development strategies. "The dual circulation development pattern advocated by the nation precisely requires us to manage our own affairs well while also radiating China's advanced management models and innovation capabilities to the global population of 8 billion."
Looking ahead five to ten years, Gao Hao appeared cautious yet optimistic. He pointed out that by 2035 and even 2050, China's economy will play an even more significant role on the world economic map.
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