Family businesses thrive outside the box

As China's traditional industries evolve, a growing number of younger-generation entrepreneurs are bringing digital tools and unconventional ideas into long-established family businesses.

According to the China Private Economy Research Association, family businesses account for more than 80 percent of the country's private enterprises, and between 2017 and 2022, roughly three-fourths of these faced the challenge of leadership succession.

"In this era of new retail, the new generation of successors of family businesses often surpass their parents in terms of catching online traffic. Through platforms such as Douyin and Xiaohongshu, they build personal brands and reach consumers directly, selling not just products but also experiences and lifestyles. This sets them apart from previous generations of successors," said Zhu Jian'an, a professor at Hangzhou City University and associate dean of the Institute for Entrepreneurs at the School of Management, Zhejiang University.

For Qiu Yixuan, 26, a native of Wuyishan, Fujian province, one of China's best-known tea-producing regions, returning to her family's tea factory after studying law in Xiamen was not simply about inheriting the business, but about finding a way to reconnect younger consumers with Chinese tea culture.

She joined her family's tea business in 2022, as the industry struggled to survive the impact of the COVID-19 pandemic, declining sales and growing inventory pressure. Unlike many manufactured goods, processed tea does not have an indefinite shelf life, and tea plantations require year-round maintenance that incurs hefty labor costs.

"At that time, my parents still had loans, and they employed dozens of workers whose livelihoods depended on the business. I felt the pressing urge to understand the industry — from production to sales, as well as the overall market," Qiu said.

The family operates more than 66 hectares of ecological tea plantations, including over 20 hectares of old-bush tea gardens. Her parents are both traditional tea makers and inheritors of intangible cultural heritage skills. Her mother is among the first recognized inheritors of narcissus tea-making techniques and her father a municipal-level inheritor of Xiaobaicha tea craftsmanship.

Their factory had long worked with other brands, and when Qiu officially started building her own consumer label in 2022, the business was under financial pressure and lacked stable cash flow. "At the beginning, I did everything myself, including product photography, videos, posters, packaging design and market research. The process was difficult, but at least I believed the direction was right," she said.

Eventually, Qiu separated the business into two parallel segments. Her parents continued serving long-term business clients through tea processing, while she focused on building their Liushuiyan brand and expanding direct-to-consumer sales through livestreaming and online platforms.

She recalled that older markets in Fujian, as well as in Guangdong province, preferred heavily roasted tea, while younger consumers favored lighter, fruitier flavors. This shift required changes across the entire production process — from tea picking and fermentation to charcoal roasting — and meant retraining workers who had spent decades at the factory, she said.

To improve efficiency and quality control, Qiu introduced an artificial intelligence-powered monitoring system for their tea plantations, and used sensors and tracking devices to analyze growing conditions in real time.

"Our tea is harvested only once a year, but the maintenance work lasts the whole year. There is a saying in the tea business that 30 percent depends on craftsmanship while 70 percent depends on the mountain and the environment," she said.

Qiu's company now relies heavily on livestream e-commerce, with some sessions generating between 800,000 yuan ($117,920) and 1 million yuan in sales, and several newly developed products each selling more than 10,000 units.

She is also working to make tea culture more enticing through collectible packaging and tea-related cultural products. Earlier this year, she started creating social media content, gaining more than 30,000 followers on Xiaohongshu within two months. She is now setting her sights on overseas platforms.

"I don't think traditional tea culture should change its core simply to follow the trends. What we are trying to do is use contemporary expressions, designs and means of communication to help more people first become interested in tea, and then gradually understand the culture behind it," Qiu added.

The dichotomy between preserving tradition and embracing new platforms is not unique to the tea industry. In Hangzhou, Zhejiang province, Chen Ying faced a similar challenge when she returned to her family's automobile repair business — a sector where digital disruption arrived faster and the window for adaptation is narrower.

Chen's parents founded the company more than 20 years ago. It now has four repair shops and more than 50 regional franchise stores in Hangzhou, focusing on vehicle maintenance, modification, accident-related repairs and detailing services.

After completing her postgraduate studies at Shanghai University of Sport, Chen returned to Hangzhou in 2024. Working as a service consultant, she often had to turn to veteran mechanics for help to answer customers' queries. Her understanding of the business improved while filming videos for her father, who would explain technical details during the process.

"I soon realized that ... if I had to devote myself here long term, I wanted something where my own ideas and creativity could be implemented," the 28-year-old said.

Chen gradually shifted the company's focus toward short-video platforms and digital operations. What began with her handling filming, editing and scriptwriting alone has since grown into a small team managing more than 10 social media accounts across different platforms.

Unlike her father, who prefers highly technical explanations, Chen has adopted a more lifestyle-oriented and entertaining approach. "At first, I only wanted to make professional content. But I realized that it wasn't always convincing for a young woman to explain technical things, especially when she looks inexperienced. So I started approaching content from a more relatable perspective, focusing on practical, everyday driving problems," she said.

This strategy reshaped the company's customer base. Chen said their online business now accounts for around half of their total operations, while customers born after 1990 make up roughly one-third of the company's clientele.

Within one year of Chen taking over the company's digital operations, online customer transactions in yuan have exceeded seven figures and online orders are about 30 percent higher in value on average compared with offline ones.

The next step, Chen said, is rolling out the same digital playbook across all franchise stores and integrating AI-assisted tools into customer service and store management.

"Traditional industries can no longer rely only on experience and long-established customer relationships. For businesses like ours, taking charge also means constantly finding new ways to connect with younger consumers to keep the industry moving forward," she added.

The ambition driving entrepreneurs like Qiu and Chen is part of a broader generational pattern.

"We are seeing successors shifting their family businesses from serving corporate clients to reaching consumers directly through livestreaming, influencer collaborations or personal branding. They are also adding local culture and emotional value to products, turning functional goods into lifestyle propositions," said Zhu, the professor from Hangzhou City University.

He noted that many of these young entrepreneurs have formed online and offline communities to share their experiences and learn from each other. They tend to seek out areas their parents are unfamiliar with — from e-commerce two decades ago to cross-border trade a decade later, and digital operations today, he said.

According to the 2024-25 China Family Wealth Sustainable Development Report, compiled by CCB Trust and Beijing King & Capital Law Firm, 75 percent of business owners want their children to take over, but fewer than 13 percent of family businesses survive until the third generation.

Zhu pointed out that succession is never easy. "The founding generation is typically strong, charismatic leaders, and filling their shoes is difficult. Successors usually go through different stages of adaptation — from basic preparation to building their own identity," he said.

Many young entrepreneurs have returned to help family businesses grow after realizing that independent financial investments carry more risks, Zhu added.

While Qiu and Chen rebuilt their family businesses through content and digital channels, the challenges are different when the industry operates on an industrial scale. Tang Ke found that out when he took over his family's copper materials factory in Changzhou, Jiangsu province.

Tang, now 33, graduated from the University of Toronto in 2015, worked briefly at a funding company in Shanghai, and had originally planned to return to Canada. But his grandfather, founder of Jiangsu Xinhai High Performance Conductive New Materials, fell ill in 2017, prompting him to return home.

"My grandfather and I were very close; I simply wanted to spend more time with him. I didn't come back with the idea of managing the company," Tang said.

Founded in the 1980s, the factory produces copper conductive materials widely used in new energy vehicles and photovoltaic inverters. It currently employs more than 1,000 people, and annual sales reach around 30 billion yuan.

Tang joined his grandfather's company as an assistant to an externally hired manager, and slowly learned about the manufacturing process and industrial operations. He later moved to sales, eventually becoming the company's sales director.

"As our products upgraded from basic materials to more deeply processed materials, communication with clients also became much more complex. You need to understand technology, finance and the customer's own products at the same time," he said.

One of the company's biggest turning points came in 2019, when the family sold most of its equity to a larger listed industrial group. The move brought in significant investment for new equipment, land and factory expansion, helping annual sales grow manifold.

"Manufacturing today is no longer only about production capacity; it's about technology upgrades, refined management and continuous investment," Tang said.

He is now focused on pushing the company further downstream into more advanced products, expanding into overseas markets and establishing additional production bases in southern China.

According to the 2025 Survey on China's New Generation of Entrepreneurs, jointly released by Cheung Kong Graduate School of Business and Family Business magazine, 41.58 percent of next-generation entrepreneurs surveyed chose to directly take over their family businesses. They were inclined to innovate within inherited structures, opening new business lines or exploring new models alongside existing operations.

Few have taken that approach as far as Hu Sihui, who chose not only to continue his family's existing business but also to build an entirely new one alongside it.

Hu studied law at Shanghai University of Finance and Economics, before earning dual law master's degrees from the University of Southern California in the United States, and he envisioned a career far removed from factory floors and production lines. He spent years in venture capital and angel investment before entering manufacturing in 2020, a shift that surprised even his own family. "My parents had initially hoped that I would pursue a more stable and less demanding career outside manufacturing, but I found myself increasingly drawn to building something tangible," Hu said.

Today, the 42-year-old runs Tianjin Chaoren Technology Co, maker of the XOX bicycle component brand, with a factory in Tianjin and a smaller research and production base in Shenzhen, Guangdong.

Six years ago, the bicycle decal factory owned by Hu's family was relatively stable, but had limited room for growth. His father took Hu to visit other factories and suppliers to better understand the industry. Instead of continuing the original business model, Hu chose to establish a new factory focused on bicycle braking systems and related components.

"The decal business has technological requirements too, but it was difficult to turn it into a true brand. Braking systems are different. International brands dominate this sector, and I felt there was more room for tech development and brand building," Hu said.

The transition marked a move from peripheral manufacturing into more technologically demanding core components — one that proved far more complicated than Hu had anticipated. "I underestimated how difficult manufacturing could be. In finance, a project can end once the investment is made. But in manufacturing, problems surface every day, and you have to keep solving them," he said.

Hu recalled nights when products were ready for shipment, but key components failed inspection, forcing the team to stay overnight to modify parts before delivery.

The transition also exposed differences in management philosophy between generations. Hu's parents, who built their factory through decades of experience, were more accustomed to lean operations focused on production. Hu, however, introduced a more modern corporate structure with dedicated departments for research and development, marketing, quality control, logistics and human resources.

"In my parents' eyes, some of these positions didn't directly generate profit. But for us, building a modern management system was also a form of long-term investment," he said.

Hu's company has now entered a faster growth stage, employing around 150 people and generating annual sales worth about 80 million yuan. His client base is already larger than that of his parents' business.

The company, which previously focused almost entirely on the domestic market, has started exploring overseas opportunities and international trade exhibitions, while experimenting with sports-focused branding and collaborations with professional cyclists. It is part of a broader push to become one of China's top three brands for bicycle components within five years, with a focus on balancing both business-to-business and consumer-facing markets, as well as continuing to expand internationally.

"In manufacturing, you build something that lasts. As long as the product is strong and the company keeps improving, there is always room for growth," Hu said.

Zhu, the professor, noted that the business environment the successors are inheriting is fundamentally different from the past, because it is shaped by slower domestic growth and global uncertainty, where the old playbook of scale-driven expansion no longer applies.

Many are thus adopting a "one-meter-wide and 100-meter-deep" strategy, focusing on sound expertise and long-term competitiveness, supported by AI and other digital tools, he said.

This new approach "gives China's family-owned businesses a real opportunity to produce world-class enterprises that neither Germany nor Japan, despite all their strengths, have been able to build in the digital age", Zhu added.

Contact the writer at sunnyu923@163.com