Worry about the Next Generation

Who's going to take over Dalian Wanda if Wang Jianlin's son won't?

Economists must find it interesting to watch how businesses develop in China, as private companies only began running again three decades ago.

As we have seen, some family-owned businesses have flourished spectacularly, the best example of which is Dalian Wanda run by Wang Jianlin, who recently purchased World Triathlon Corporation, which runs Ironman Triathlon Races for $650 million.

However, Wang's son, Sicong, has already said he does not want to take over the cinema and property conglomerate.

Wang Sicong's dog has two Apple watches. Does yours?

Maybe he's too busy playing with his dog, whom he recently purchased two Apple watches for each front paw.

However Wang Sicong is not alone in refusing to join the family firm. A study has found that only one in five of the mainland's second generation is keen to take over, which may spell trouble in the next decade.

The majority of second generation rich or fuerdai (富二代) would like to start their own business, while the rest would rather take traditional career paths.

The research was conducted by Peking University's Guanghua School of Management, and led by its associate dean, Professor Jin Li. The school is also launching a program in conjunction with the University of Oxford and Harvard Business School, aimed at executives of family businesses in China.

"Chinese family businesses are at a historic turning point," says Eric Thun, an associate professor in Chinese business studies at Oxford. "At the same time as confronting the challenges in the domestic market that are common to all Chinese firms, many are making leadership transitions from the first to second generation."

The study covered two years, based on interviews with more than 500 family-owned Chinese firms. Only 20.5 percent of those surveyed expressed an interest in following in their parents' footsteps, while nearly 70 percent wanted to start their own business; the rest wanted a traditional job like a doctor or lawyer.

Wang Sicong has set up his own gaming company

This latest finding spells trouble for China's economy because family-run businesses play a major role, with more than 85 percent of the country's private companies are family-owned. By July last year 747 of these firms were listed on the mainland stock exchange.

It's also an interesting contrast to family-run businesses in Europe and North America that have gone through several generations; but if not many second generation kids in China don't want to take over the family business, what's going to happen?

As expected, the profiles of the fuerdai reveal more than half of them have studied abroad, two-thirds of which majored in business management -- knowledge that would serve them well in guiding the family firm forward.

However, the study found many appeared to lack self confidence in dealing with businessmen from their parents' generation as well as senior staff within their family firm's management.

Another important issue is the kids feel too much pressure in living up to their parents' legacies, which could threaten business stability, the report said. This is the opposite thinking of the parents, who are focused on the best interests of the family and have high expectations for their child -- only child in most cases.

About two in every five entrepreneurs hoped their children would take over the business, while 55 percent said they would allow professionals to manage the company, but still have the family has main shareholders.

It sounds like there is no real nurturing of children to grow into the family business. In many multi-generational family businesses, young children are always encouraged to help out on the weekends or summer holidays, not just to have an extra pair of hands, but to see how they like the work.

And with many studying business management, but instead wanting to do something else may indicate the parents were trying to plan their children's career path without the kid having much say in what they wanted to study in university.

But the intimidation the fuerdai feel in taking over the business is palpable -- Chinese parents always seem to have very high expectations, sometimes to the point of being unrealistic. Wang Sicong has had a habit of shooting his mouth off, making outrageous comments that must leave his father red in the face with embarrassment.

So in this case maybe it's a good thing Sicong has decided not to take the reins of the family business...

Ironman's New Owner

Ironman competitors diving into the water at the start of the race

It's been an interesting week for mainland property and entertainment tycoon Wang Jianlin. On Monday, he lost an estimated $3.6 billion according to Bloomberg Billionaires Index from the rocky ride in the stock market.

But later in the week he successfully acquired World Triathlon Corporation, the American owner of Ironman races.

On Thursday Dalian Wanda Group agreed to buy WTC for $650 million, following its acquisitions of Swiss marketing company Infront and Spanish football club Atletico Madrid in the past year.

Wang Jianlin, chairman of Dalian Wanda that owns WTC

"At present, almost all the top sports events in the world are controlled by European and American companies. Acquisitions are the only way for most companies to scale up efficiently," said Wang, chairman of Dalian Wanda. "By acquiring World Triathlon Corporation, we will be able to have a world-class sports brand of our own."

WTC is the world's largest operator of ironman-distance triathlon events, and the owner of the Ironman brand. It holds more than 230 races that attract over 230,000 competitors every year.

However, not many Chinese participate in Ironman, where a full ironman-distance race involves a 3.36km swim, 180km cycle and 42km run.

Many do Ironman competitions for their personal best times

"Our next task is to introduce Ironman to more Chinese people," said Wang, 61. "Chinese people's lifestyle is changing, as they are getting rich. Running, for example, as become very popular among Chinese people in recent years. This has provided a good foundation for the development of sports like triathlon in the country."

However, analysts are scratching their heads over this latest acquisition. Yan Qiang, a Beijing-based sports industry observer didn't see how WTC fit in with the other sports brands, but conceded the Ironman brand would boost Wanda's globa profile.

"The dela came as quite a surprise," Yan said. "We could see a rather clear strategy when Wanda purchased Atletico Madrid and Infront. Yet the sport of triathlon seems to be a totally different area.

It will be interesting if more Chinese are interested in Ironman

"Unlike sports like football, triathlon is very new to China. It may take years for Wanda to warm up the market and attract fans in the country."

Ironman is more of a event people do on their own to improve their own fitness levels, not a team sport that has an audience cheering them on, unless they are friends and family. And because the race takes place over several hours, people don't necessarily have the patience to watch the entire thing.

But -- as a way to get Chinese into this ultimate level of sport is definitely intriguing.

The best publicity stunt would be for Wang to get his 27-year-old son Wang Sicong to train for an Ironman. When Apple released its watches, he bought two for his dog Wang Keke. Does he know his canine can't tell the time?

How about getting Wang Sicong training for Ironman?

He's already been ridiculed for being a spoiled rich kid and making silly off-the-cuff remarks. So a great way to rehabilitate his image would be to train for this grueling race to learn discipline, dedication, hard work and sheer physical strength. Surely his dad would approve?