Family firms raising their profile in China




Family companies in China “are raising their profile, inside and outside the country,”

noted a recent article in

Knowledge@Wharton,


an online publication of the University of Pennsylvania’s Wharton School.

Family businesses are expected to emerge must faster and more actively thanks to Chinext, the new stock exchange opened last year in Shinzhen. Chinext is seen as China’s answer to Nasdaq by providing a new alternative for the country’s smaller companies to get public financing. Among the 50 companies listed on the new exchange currently, more than 90% are family businesses, with the largest shareholder stake belonging to one family.

The report noted that Wharton’s Raffi Amit and Bella Villalonga of Harvard Business School, along with Ding Yuan and Zhang Hua of the China Europe Business School in Shanghai recently conducted a study of Chinese family firms. Their study found that “[Chinese] family firms do not inhibit growth and development as is sometimes argued,” Amit told


Knowledge@Wharton

.

It also found that “the effect of family ownership on Chinese firms is very similar to elsewhere,” the article said.

The article noted that because China’s private sector is relatively new, most Chinese family firms are managed by their founders, rather than next-generation leaders. Researcher Ding told


Knowledge@Wharton

:

“We found that in a not-too-good environment, in which labor or product markets are not efficient, family ownership increases value, but excessive control destroys value more prominently.”

(Source:


Knowledge@Wharton

,

Feb. 3, 2010.)

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