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PALGRAVE MACMILLAN ASIAN BUSINESS SERIES
Family Business in
China, Volume 2
Challenges and Opportunities
Ling Chen · Jian An Zhu · Hanqing Fang

Palgrave Macmillan Asian Business Series
Series Editor
Yingqi Wei, Business School, University of Leeds
Leeds, UK
The Palgrave Macmillan Asian Business Series publishes theoretical and
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Ling Chen · Jian An Zhu · Hanqing Fang
Family Business
in China, Volume 2
Challenges and Opportunities
Ling Chen Jian An Zhu
Zhejiang University Zhejiang University City College
Hangzhou, Zhejiang, China Hangzhou, Zhejiang, China
Hanqing Fang
Business and Information Technology
Missouri University of Science and
Technology
Rolla, MO, USA
ISSN 2661-8435 ISSN 2661-8443 (electronic)

Palgrave Macmillan Asian Business Series
ISBN 978-3-030-51401-3 ISBN 978-3-030-51402-0 (eBook)
https://doi.org/10.1007/978-3-030-51402-0
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature
Switzerland AG 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher,
whether the whole or part of the material is concerned, specifically the rights of translation, reprinting,
reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical
way, and transmission or information storage and retrieval, electronic adaptation, computer software,
or by similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt
from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
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regard to jurisdictional claims in published maps and institutional affiliations.
This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland
AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Contents
1 Introduction 1
1.1 Family and Family Business in China 2
1.2 Challenges and Opportunities in Chinese Family
Business 5
1.3 What This Book Is About 6
References 7
2 Family Business in China: Present Status 9
2.1 Defining Family Business in China 10
2.2 Prevalence of Family Business in China 15
2.3 Employment in Chinese Family Business 15
2.4 Economic Scale in Family Businesses 19
2.5 Individual Characteristics of Chinese Family
Entrepreneurs 23
2.6 Differences Between Family and Non-Family
Businesses 26
References 32
v
vi Contents
3 Entrepreneurship and Family Business in China’s

Modernization 35
3.1 Why Family Business When Starting a Business? 35
3.2 Business Types in China 37
3.3 The Rise of Self-Employed Entrepreneurs 39
3.4 Economy of Arbitrage 42
3.5 Innovation and Entrepreneurship in the Modern
Age 44
3.6 Crossroad: Economy of Scale and Economy
of Focus 46
3.7 Tianlong Cylinder: A Story of Family Succession
and Trans-Generational Entrepreneurship 49
References 57
4 Succession Challenges 59
4.1 Current Succession Challenges in Chinese Family
Business: An Overview 59
4.2 Mismatching Between Two Generations? 62
4.3 De-Familization? 70
4.4 Ge’s Family and the Tianle Group: A Story
of Struggled Family Business Succession 77
Reference 87
5 Succession Planning in Chinese Family Business 89
5.1 Succession Planning: An Overview 89
5.2 Wonbly and Liu Family 92
5.3 Succession Planning in China 96
5.4 “Vague” Succession Planning 99
5.5 Non-Family “Veterans” in Succession Planning 105
5.6 Succession Planning for the Single-Child Family 110
References 114
6 Governance in Chinese Family Business 117
6.1 A Family Governance Case: Lee Kum Kee 119
6.2 Family Governance in Husband-and-Wife
Enterprises 128
Contents vii
6.3 Family Governance in a Brother Consortium 133

References 135
7 Chinese Family Business in Southeast Asia 137
7.1 The Columbia Group in Indonesia 138
7.2 Chinese Family Businesses in Southeast Asia 145
7.3 Characteristics of Overseas Chinese Family
Businesses 147
7.4 Chinese Family Businesses in Hong Kong
and Taiwan 149
References 151
8 Conclusion 153
8.1 Economic Function and the Rise
of Socio-Psychological Function 155
8.2 Historical Heritage and Cultural Identity 159
8.3 Non-Family Management in Family Business 161
8.4 Rent-Seeking or Entrepreneurial? 163
References 167
Postface 169
Index 175
List of Figures
Fig. 2.1 Age distribution of Chinese family entrepreneurs 24

Fig. 2.2 Birth years of family businesses 31
Fig. 4.1 Age distribution 63
Fig. 4.2 Succession intention across different age groups 64
Fig. 4.3 Succession intention across different educational levels 65
Fig. 4.4 Distribution of succession intention among the younger
generation 68
Fig. 4.5 Professional managers’ expectations on family business
succession 70
Fig. 5.1 Succession planning in Chinese family businesses 102
Fig. 5.2 Founder’s age and succession planning in Chinese family
businesses 103
Fig. 5.3 Firm age and succession planning in Chinese family
businesses 103
Fig. 5.4 Firm size and succession planning in Chinese family
businesses 104
Fig. 5.5 Triangle of success in successor-veteran relationship 108
Fig. 6.1 Lee family tree 120
Fig. 6.2 Governance of the Lee family 124
Fig. 6.3 Roles of family members 125
ix
x List of Figures
Fig. 6.4 Decision-making styles among entrepreneurs 131

Fig. 6.5 Proportion of entrepreneurs choosing individual
decision-making 132
Fig. 7.1 History of Columbia group 140
Fig. 7.2 Family tree of Leo family 143
List of Tables
Table 2.1 Three categories to define family business in China 11

Table 2.2 Numbers of self-employed businesses 13
Table 2.3 Number and proportion of family business: Third
national economic census 16
Table 2.4 Family businesses and employment population 17
Table 2.5 Distribution of family business by annual sales 21
Table 2.6 Economic indicators of enterprises in 2018 22
Table 2.7 Size of family businesses 22
Table 2.8 Education of Chinese family entrepreneurs 24
Table 2.9 Working experiences of family and non-family
business owners 25
Table 2.10 Economic, social, and political status of family
business owners 26
Table 2.11 Corporate governance in family and non-family
businesses 28
Table 2.12 Decision-making in family- and non-family businesses 28
Table 2.13 Social performance in family and non-family
businesses 29
Table 4.1 Succession intention among family business founders 63
Table 4.2 Matrix of inter-generational (Mis)match 69
xi
1
Introduction
The People’s Republic of China1 has been established for over 70 years,
but the history of its private enterprises goes back only a little more
than 40 years. Most of these private enterprises were established after
the launching of reforms and the opening up of the economy in 1978.
Forty years later, the entire society of China has become more dynamic
and creative due to the efforts of a large group of innovative, wealth-
creating entrepreneurs who created new combinations of the production
factors that have made China a powerhouse in the world economy.
In March 2011, The Economist magazine attributed the power that
has driven China’s economic take-off to “Bamboo Capitalism.” It is not
the state-owned enterprises that are changing China, but the private
enterprises whose average return on investment is 10% higher than
that of state-owned enterprises. Thanks to the gradual deregulation
of the economy, entrepreneurial activities have sprung up like after-
the-rain mushrooms. But entrepreneurial activities in China are not
“equally distributed geographically.” In general, the coast areas have more
1 Family business, family firm, and family enterprise are interchangeably used in this book.
© The Author(s), under exclusive license to Springer Nature 1
Switzerland AG 2021
L. Chen et al., Family Business in China, Volume 2,
Palgrave Macmillan Asian Business Series,
https://doi.org/10.1007/978-3-030-51402-0_1
2 L. Chen et al.
entrepreneurs as well as a greater degree of privately-owned enterprises

compared to inland, and the south has more than the north.
Most of China’s private enterprises start from scratch and scale up
gradually from small to large. They have made great contributions to
the smooth progress of economic reform by providing sustained, stable,
and healthy growth in the national economy. China’s private enter-
prises can be roughly divided into three categories: (1) those that were
allowed to start up after the reforms of 1978, (2) derivative enterprises
that were formerly state-owned, collectives, or township, communal, and
brigade enterprises, but were transformed into privately-owned firms,
and (3) foreign private enterprises that have been established and devel-
oped through foreign capital and Sino-foreign joint ventures. With
the passage of time, the differences between the three types of enter-
prises have gradually declined. They all face challenges that are similar
to those faced by Western enterprises, including survival and develop-
ment, succession issues (especially for family businesses), innovation, and
localization/internationalization.
1.1 Family and Family Business in China

Thousands of years of political, economic, and cultural factors have
stamped a deep “family stigma” on the current social and economic
organizations’ operating management. The great cornerstone of Chinese
culture always comes back to the concept of family, which plays an
important part in the cycle of self-cultivation, family harmony, country
governance, and peace of the world. The family unit, not the individual,
is the most basic cell in Chinese society.
In fact, one important reason why the State of Qin was able to unify
China in 221 BC was due to the launching of the Shang Yang Reform2
in its early stage. One of the core contents of the reform is to use family
2 Shang, Yang (390–338 BC) introduced several social, economic, and legal reforms that funda-
mentally strengthened the power of the State of Qin. These reforms included implementing a
legal system that treated all citizens equally, favoring agriculture over commerce, encouraging
the cultivation of unsettled lands, privatizing land to farmers, assigning free land to soldiers,
and rewarding farmers who exceeded quotas.
1 Introduction 3
household as the unit to recruit soldiers. Also, in order to ensure suffi-

cient tax revenue, fathers, sons, and brothers were not allowed to live
together after adulthood. Such early legal requirements for family sepa-
ration led to the later miniaturization of Chinese families (“grown tree
gets branches, and grown adult gets independence”).
For the Chinese society, a regular nuclear family is often formed by
a husband and wife and minor children. Also, for an “ideal” family
in China, it is expected that all family members share love, trust, and
altruism. One substantial difference between Chinese and Western soci-
eties is that there is almost no dominant religious belief in China.
Instead, it is the worship of family ancestors that fulfills the function
of religious belief by regulating family members’ behaviors. People often
worship during a traditional predetermined period such as the anniver-
sary of the death of ancestors, the Spring Festival, Tomb-Sweeping Day,
or the Winter Solstice, among others. For Western society, under the
influence of the universality of Christianity, the idea that “everyone is
a child of God” weakens the ethical relationship between generations
within a family. If the long run of history counts, then the five thousand
years of family cultural heritage and ethical rules in China might have
more profoundly affected the development and inheritance of enterprises
than in any other country.
Among the private enterprises that have been born since the reforms
of 1978, the majority are owned and managed by entrepreneurs and their
families, although some of them do not claim to be family businesses, nor
do they express the hope that they can be inherited across generations.
This is partly due to the prevailing dislike of the term of “family business”
in China and also partly due to survival pressure that is created by market
competition. In fact, business operations are like sailing in the counter-
current, and Chinese entrepreneurs are so worried about their survival
that they dare not plan for the next ten or twenty years. As a result, most
of them have not formally thought about the relationship between the
family and the business. According to data from the State Administra-
tion for Industry and Commerce of China, 21.6 million new enterprises
were established in the five-year period from 2013 to 2017, so it seems
that China’s entrepreneurship is in full swing. However, the average life
4 L. Chen et al.
span of a private enterprise is only 3.7 years, and for entrepreneurs and
business owners in China, business survival is still the top priority.
Many successful entrepreneurs worry that the title “family business” is
not good for them because family private ownership may be seen as polit-
ically contrary to the economic system of a socialist country. For a long
time in China, family involvement in business has been synonymous
for “obsolete” and “outmoded.” The 40-year history of the development
of Chinese private enterprises has continuously influenced family busi-
nesses, and the sector has increasingly felt the need for traditional family
businesses to change in the direction of being more modern corporate
enterprises.
Although most family businesses cannot yet be called “modern” and
“high-level,” they should not be seen as “low efficiency” and “backward”
(e.g., Chandler, 1990). Indeed, the large numbers of family businesses
and their rapid growth show they must be doing something right. This
combination of family ownership and management, aligned with a long-
term focused orientation, gives family businesses a unique competitive
advantage demonstrating rapid decision-making, high accountability and
strong resilience. At the same time, when corporate leaders, succes-
sors, and important executives come from the same family system, a
closed family human resource pool may limit the development of enter-
prises, and complex family relationships can also hinder the growth of
enterprises.
In China, family businesses differ from other types of organizations
such as state-owned enterprises in terms of their goals and objectives,
strategic planning processes, ownership structures, and firm perfor-
mances. In order to grow their businesses, many entrepreneurs take the
initiative and choose the family governance model where the family
provides the entrepreneur with financial, human, social, and patient
capital. The family holds a high proportion of shares, and many family
members participate in operations to share the benefits of entrepreneur-
ship. Also, the relationship among family members can have a very
synergistic effect, reducing agency costs and improving organizational
performance.
1 Introduction 5
At the same time, faced with the scale discrimination and ownership
discrimination from state-owned banks and other government institu-
tions, family businesses often choose to use a pyramid control structure
in order to hide the true identity of the family. Also it is common for
family businesses to develop political and social relations in order to miti-
gate the strong risk and uncertainty stemming from the discriminations
mentioned before. Controlling families may also encroach on the inter-
ests of small and medium shareholders, which might bring in additional
agency costs to the businesses.
1.2 Challenges and Opportunities

in Chinese Family Business
At the moment, Chinese family business owners are focusing on both
business development issues (growing the business and prospering in
a highly competitive environment) and family succession issues (who
will be the next generation leader of the business). Transforming and
upgrading are necessary to address these two important issues and to
achieve long-term survival of the business.
Passing the business on from one generation to the next is the ulti-
mate goal because that will help to maintain the social and emotional
wealth of the family members. With increasing pressure from factors
such as financing difficulties and labor shortages, small and medium-
sized enterprises with thin profit margins cannot survive. They must
improve their competitive advantage by improving their technical and
market capabilities and engage in higher value-added economic activities.
As it happens, many second generations members of the owning
family have studied overseas or have work experience with broad interna-
tional exposure. This increases the chance that the two generations can
cooperate to solve inheritance issues and achieve transformation at the
same time. But assuring an effective transition is not easy. Some Western
studies suggest that the probability of success in passing the leadership
baton from the first to the second generation is only 30%, and from the
second to the third generation is only 10% (Lansberg, 1999). Such a
6 L. Chen et al.
“succession dilemma” may be more pronounced in China compared to

Western countries.
In fact, according to the “China Family Business Development Report
2011,” only about one-fifth of the first-generation entrepreneurs of the
family business surveyed were willing to hand over control to a next
generation that was actually willing to take control. About four-fifths of
families have a mismatch during succession attempts. In addition, inher-
itance is a process, not a single event on the day when the scepter is
handed over. Many business owners do not understand this, and most
Chinese families do not have a clear succession plan. One of the reasons
for this is that all private-owned enterprises were started after the 1978
reform, and they did not have experience related to trans-generational
family business succession. This contrasts with the experience of the “old
shops” that have run for hundreds of years in foreign countries, especially
Japan, the United States, Germany, and the UK.
1.3 What This Book Is About

In this book, we address several significant issues related to oppor-
tunities and challenges in Chinese family businesses since 1978.3 In
Chapter 2, we provide an overview of family business in contemporary
China—its prevalence, shared features, and contribution to economic
development. In Chapter 3, we discuss features and characteristics asso-
ciated with entrepreneurship and business ventures in China after the
1978 economic reforms. Chapter 4 focuses on the unique succession
challenges that face family businesses, such as de-familization. Chapter 5
examines succession planning in Chinese family businesses, including
“vague” and implicit planning, and planning for the one-child family
business. Chapter 6 draws attentions to the governance structures in
Chinese family businesses, while Chapter 7 discusses Chinese family
3 Family business in China before 1978 has been discussed in Family business in China, Volume
1: A historical perspective.
1 Introduction 7
businesses in Southeast Asia. Chapter 8 provides a conclusion to summa-

rize the whole book.
References
Chandler, A. D. (1990). Scale and scope: The dynamics of industrial capitalism.
Belknap Press.
Lansberg, I. (1999). Succeeding generations: Realizing the dream of families in
business. Harvard Business Review Press.
2
Family Business in China: Present Status
Before giving an overview of Chinese family businesses and their contri-

bution to the national economy, it is important to note that there is
official data on private enterprises that are frequently cited by writers.
The Chinese government uses “5, 6, 7, 8, 9” to summarize the economic
contribution of private enterprises.1 President Xi Jinping once noted that
the private economy has the characteristics of “5, 6, 7, 8, 9.” That is, it
contributes more than 50% of tax revenues, more than 60% of GDP,
more than 70% of technological innovation achievements, more than
80% of urban labor employment, and more than 90% of the number
of enterprises.2 , 3 He Lifeng, the director of the National Development
1 In a broad sense, the term “private enterprise” refers to all economic components except
state-owned and state-controlled enterprises. “Domestic-funded private enterprises” refers to the
broad private economy except the Sino-foreign joint ventures, enterprises with Sino-foreign
cooperation, wholly foreign-owned enterprises, and Hong Kong, Macao, and Taiwan-invested
enterprises. In a narrow sense, the private economy refers to the economies of private enterprises
and privately controlled corporates. We discuss the private economy in a narrow sense.
2 Xi, J. (2018, November 1). Private sector speech at the enterprise forum. Xinhua News Agency.
3 Press conference of the Second Session of the 13th National People’s Congress, March 6,
2019.

Switzerland AG 2021
https://doi.org/10.1007/978-3-030-51402-0_2
10 L. Chen et al.
and Reform Commission, also noted that “5, 6, 7, 8, 9” does not refer
to strict statistical standards, but rather to the importance of the private
sector to the Chinese economy.
Family business is the most important part of private economy in
China. Nevertheless, there are limited empirical studies on their overall
status and their economic contribution. There are several reasons for this.
First, the history of family business research is relatively short. In fact,
China has only begun to pay attention to family businesses during the
last couple of decades. Concerning the statistical evidence, it is important
for researchers to consider how to define family business, yet the interna-
tional academic community has not yet reached a consensus on how to
clearly distinguish family businesses from non-family businesses. While
there are some family business studies in Germany (Klein, 2000), Sweden
(Morck & Yeung, 2003), and the United States (Astrachan & Shanker,
2003; Heck et al., 2001), the definition and scope of family businesses
and the judgment of what constitutes a family business often diverge.
Thus, a given definition might only be applicable to certain economies.
Second, apart from the information disclosure of publicly-listed
companies, few family businesses in China publicize and disclose their
financial and organizational information. Third, while the distinction
between family businesses and non-family businesses has long been
recognized in family business research, it is only in recent inquiries that
scholars have begun to recognize that family businesses are themselves
quite heterogeneous (Chrisman & colleagues, 2012), and family busi-
nesses can have a variety of different goals, resource endowments, and
governance structures. In the next section, we discuss the various defining
standards that were used in this study.
2.1 Defining Family Business in China

Family Business Definition: Alternative Standards
The academic debate about the definition of family business has been
ongoing for years. For a long time, any family-controlled business was
considered as a family business. While admittedly it is the intersection of

the family system and the business system that captures the very essence
of family business, how to best measure family control or family “influ-
ence” remains somewhat ambiguous. Additionally, some scholars claim
that the essence of family business is best captured by the intra-family
and trans-generational succession that occurs; thus a family business
must have late-generation family members involved in the business.
In general, the family business literature tends to agree that there
might exist multiple dimensions which collectively determine whether
a business is a family business or not. These dimensions include (1)
ownership and voting rights, (2) family influence on firm strategy, (3)
family management, (4) and the participation of late-generation family
members. Using these dimensions, we can identify three different types
of definitions for family business in China (see Table 2.1).
As far as listed companies are concerned, as the family business’s equity
is diluted after the public listing, there are very few listed companies that
still have more than 50% controlling rights within the family. Therefore,
it can be argued that even companies where only 20% or even 10% of
the equity is family-held should be categorized as family businesses. Some
scholars in the United States have even proposed that a listed company
Table 2.1 Three categories to define family business in China

Condition 1 The business is owned by the family
Families have influence over the strategic
Condition 2 decision-making in the business
The owning family participates in the daily
Condition 3 management of the business
The owning family has intention for intra-family
Condition 4 trans-generational business succession
Definition Defining Standards Essence
Generally-defined Condition 1 + Condition Ownership Rights
2
Narrowly-defined Condition 1 + Condition Ownership Rights +
2 + Condition 3 Management Rights
Restrictedly-defined Condition 1 + Condition Ownership Rights +
2 + Condition 3 + Management Rights +
Condition 4 Succession
12 L. Chen et al.
with a family controlling only 5% of the shares can also be considered a

family business. But the difference between China and the United States
is that US company law allows public companies to issue both preferred
stock and common stock,4 whereas preferred shares are not allowed in
China.
Preferred shares generally do not have voting rights, but when divi-
dends are paid, preferred stocks are given priority over common stocks.
This means that the two types of equity shares have different implica-
tions regarding how much they can affect firm decisions. For example,
in the equity structure of Ford Motor Company, the Ford family is able
to obtain higher voting rights with less circulating shares, which ensures
the family’s control and influence over the whole company.
In both China and in Western countries, business enterprises can take
multiple legal forms, such as sole proprietorships, partnerships, or corpo-
rations. But in China, self-employed individuals might hesitate to define
themselves as a “business” or a “family business.” By contrast, in the
English-speaking world, a family business is any economic organization
that pursues profits through business activities such as manufacturing
and sales. It seems to transcend various specific organizational forms as
long as it participates in market economic activities. Thus, it naturally
includes self-employed people such as farmers and individual businesses.
In this study, we use the broad definition of family business, with an
emphasis on family ownership and voting rights in the business. When
applicable, we will also discuss alternative defining standards and how
that may affect empirical findings.
Defining Family Business in China
Below we discuss how we define family businesses and the overall status
of family businesses in China. There are three major points to be made.
First, there are 70 million self-employed businesses in China, and we
include them as a part of the family business population. Although often
classified as individual workers without a legal form of “enterprise” (Table
4 In Southeast Asia, business group often uses a pyramid structure of ownership in which
separate control rights might deviate from cash flow rights.
Table 2.2 Numbers of self-employed businesses

(Unit in Million) 2009 2010 2011 2012 2013
Self-employed Business Entities 32.0 34.5 37.6 40.6 44.4
Self-employed Persons 65.9 70.1 79.5 86.3 93.4
Urban Employed Persons 42.5 44.7 52.3 56.4 61.4
Rural Self-employed Persons 23.4 25.4 27.2 29.9 31.9
(Unit in Ten Thousand) 2014 2015 2016 2017 2018
Self-employed Business Entities 49.8 54.1 59.3 65.8 73.3
Self-employed Persons 105.8 116.8 128.6 142.3 160.4
Urban Employed Persons 70.1 78.0 86.3 93.5 104.4
Rural Self-employed Persons 35.8 38.8 42.4 48.8 56.0
2.2), these self-employed business people engage in economic activities

for the purpose of profit and do not adopt the registration form of “enter-
prise” as a legal person. Also, these self-employed individuals do not
evolve from small and micro-enterprises; instead, they usually operate
as husband-and-wife shops. These self-employed businesses first started
in the early days of the Open-up and Reform in China. In the past
decade, due to the government policy of encouraging entrepreneurial
activities, the increase of self-employed individuals has been particularly
pronounced. In 2009, there were only 30 million self-employed business
entities in the country, but by 2018, this number had more than doubled
to 70 million, and the number of employees had increased from 60 to
160 million.
Second, we do not classify farmers as family firms. The website of
the Chinese National Bureau of Statistics provides the latest data on
rural households. In 2012, the number of rural households was 268
million. For a family farmer, the ownership and usage of agricultural raw
materials are analogous to the use of production materials in economic
organizations, and the nature of self-employment is comparable to that
of self-employed business persons. However, Chinese peasant households
are more like the peasant economy described by Chayanov (1986). The
degree of labor input depends on the balance between the satisfaction of
family needs and the degree of labor. They bear a lower degree of uncer-
tainty and do not conform to Schultz’s idealized profitable agricultural
enterprises (Chayanov, 1986; Schultz, 1964).
14 L. Chen et al.
Third, the biggest contribution to the national economy is family

firms operating in the form of private enterprises. At the end of 2017,
there were 18.1 million legal business entities nationwide, of which 16.2
million (89.5%) were privately held companies. How many of these
private companies are family firms? In China, the term “family busi-
ness” often refers to those business units where individuals or families
own 50% or more of the controlling rights. In 2010, the ninth sampling
survey of private enterprises was jointly conducted by the United Front
Work Department of the Central Committee of the Communist Party
of China, the All-China Federation of Industry and Commerce, and
the State Administration for Industry and Commerce, in conjunction
with the China Civil (Private) Economic Research Association. That
survey revealed that 85.4% of the private enterprises are under family
control. But if family business is defined by both ownership and manage-
ment (narrow definition, Section 2.1.1), then only 55.5% of the private
enterprises are family firms according to the survey. If we add family
ownership, family management, and multi-generation family involve-
ment, then the family business population in China might be quite
limited.
Since many of the family firms in China developed only after the
reform and opening up of the economy, the number of companies that
have completed an inheritance is not large. Given these facts, in this
study we will use at least 50% family ownership as our criterion to define
family business in China. We report the characteristics of Chinese family-
owned enterprises based on the data of the 10th China Private Enterprise
Sample Survey,5 which was conducted in 2012. In this sample survey,
according to the 50% criterion, 71.3% of private enterprises are family
firms.
5 Although the national private economy sample survey data includes a large and widely
distributed sample of the national private economy, it still cannot be used as an unbiased
estimate of the family business population in a statistical sense. Therefore, according to the
data in this report, in estimating the overall situation of Chinese family businesses, attention
should be paid to possible unpredictable biases.
2.2 Prevalence of Family Business in China

According to the Third National Economic Census released on December
16, 2014, by the end of 2013, there were 13.035 million legal entities
operating in the manufacturing and service industries, of which 8.208
million were corporate entities and 2.648 million were government insti-
tutions and agencies. There were also 32.79 million unincorporated and
licensed self-employed businesses. Among the 8.208 million corporate
entities, 244,000 were state-owned and/or collectively-owned enter-
prises. There are 1.617 million corporate enterprises (including limited
liability companies and joint-stock limited companies), 5.604 million
private enterprises (3.596 million in the second national economic
census), and the number of private enterprises has increased signifi-
cantly). There are 203,000 foreign-funded enterprises, including enter-
prises in Hong Kong, Macao, and Taiwan (186,000 in the second
national economic census), and 87,000 other types of enterprises (joint
ventures or joint-stock cooperative enterprises (compared with 194,000
in the second national economic census).
As shown in Table 2.3, there are in total 40.529 million economic
units including corporate enterprises and self-employed businesses.
According to the 10th China Private Enterprise Sample Survey in 2012
and the broad definition of family business, 71.3% of private enter-
prises are family firms. So the total estimated number of family firms in
China is 37.94 million, including licensed self-employed business enti-
ties (32.791 million), part of private enterprises (5.604*71.3% = 3.996
million), and part of incorporated business entities (1.617*71.3% =
1.153 million). In conclusion, our estimates show that family business
in China accounts for about 93.6% of the total 40.53 million economic
units.
2.3 Employment in Chinese Family Business

According to the National Bureau of Statistics, at the end of 2012,
the urban employed population in China was 371.02 million. After
deducting the employment in government agencies, institutions, and
16 L. Chen et al.
Table 2.3 Number and proportion of family business: Third national economic
census
Organizational
Types
(Unit in Patterns of Enterprise Legal
Million) Categories Person Numbers
Economic Enterprise Domestic State-owned and 0.24
Units Legal Entity Enterprise Collective
Enterprise
Incorporated 1.62
Enterprise
Private Enterprise 5.60
Others 0.09
Foreign Hong Kong, 0.19
Enterprise Macao, and
Taiwan
investment,
Foreign
investment
Licensed Self-employed Business Entities 32.79
Economic Units 40.53
Family Business Number 37.94
Proportion 93.6%
social organizations, there are 168.89 million employed by the enter-

prises, of which 89.74 million were employed by family businesses.
In addition, there are 56.43 million classified as self-employed indi-
viduals. In total, family businesses absorbed 146.17 (=56.42 + 89.74)
million people in urban employment, accounting for 39.4% of all urban
employment (146.17 million), as shown in Table 2.4.
As Table 2.4 shows, nearly 40% of the urban employed population
works in family firms, and this demonstrates the employment absorption
capacity of family business. But if we expand our focus from cities and
towns to the whole country, the ability of family firms to absorb labor
may be further pronounced. The processing strategy of China’s reform
and opening up of the economy also mean “encircling the cities through
rural areas.”
The private economy first developed in the vast rural areas where
state-owned enterprises were rare, and then spread to cities and towns,
enabling it to grow in the cracks of the state-owned economy. Therefore,
considering that the majority of rural laborers with registered permanent
Table 2.4 Family businesses and employment population

Total
(Unit in Million) Categories Employment
Enterprise Legal Domestic-funded State-owned 74.29
Entity Enterprise and Urban
Collective
Enterprise
Incorporated 50.30
Enterprise
Private 75.57
Enterprise
Foreign-funded Hong Kong, 22.15
Enterprise Macao and
Taiwan
investment,
Foreign
investment
Others 1.33
Self-employed Individuals 56.43
Legal Persons in Government Agencies, Institutions, and 90.95
Social Organizations
Total urban employment population 371.02
Employment in Number 146.17
Family Business Proportion 39.4%
residence are employed in the secondary and tertiary industries other

than traditional agriculture, forestry, animal husbandry, and fishery, the
employment opportunities provided by family firms are more than those
calculated only for urban employment. For example, there were nearly
30 million rural self-employed workers in late 2012, but that number
had grown to 56 million people by the end of 2018.
There is a saying in China that “the state advances and the people
retreat,” which means that in recent years more priority has been given
to state-owned or collectively-owned enterprises compared to privately-
owned, family-based enterprises. But the employment data show that this
is not what actually happened.
According to the website of the National Bureau of Statistics of China,
private enterprises have significantly increased the absorption of urban
employment, while the employment absorption capacity of state-owned
enterprises has declined. At the end of 2012, the number of employed
persons in state-owned and collective cities and towns was 74.29 million.
18 L. Chen et al.
By the end of 2017, the number had fallen to 64.7 million, and the
proportion of the total urban employed population dropped from 20.0
to 15.2%. In 2012, the number of urban employees in private enter-
prises was 75.57 million, but that increased to 133.27 million by the
end of 2017. Thus, the proportion of the total urban employed popu-
lation that was employed in private enterprises increased from 20.3 to
31.4%. From the perspective of the proportion of urban employment
population, the market-oriented reforms in China’s economy have been
advancing, and the labor absorption capacity of the private sector has
expanded greatly. Family firms are the most important component of
the private sector, and the total number of jobs absorbed by family firms
has been increasing.
China has an obvious urban–rural dual structure system. There is a
significant difference in the way resources are allocated in urban and
rural areas. The degree of commercialization in rural areas is low, and
the government’s investment in public facilities such as education and
medical care in rural areas is not as good as those in the cities. Rural
household registration does not have unemployment and pensions. Polit-
ical participation is weak, and the percentage of council representatives
is low. The long-term existence of the dual structure is due to the exis-
tence of institutional barriers such as the household registration system6
between urban and rural areas. It is therefore necessary to look at the
contribution of the private economy, considering the comprehensive
employment data of urban and rural areas. At the end of 2012, there
were 56.43 million individual urban employees and 29.86 individual
rural employees.
We can also look at the number of employed individuals from urban
and rural private enterprises. At the end of 2012, there were 75.57
million people employed by urban private enterprises and 37.39 million
employed by rural private enterprises, for a total of 112.96 million
employees in the private sector. At the end of 2017, there were 133.27
million employed by urban private enterprises and 65.54 million by rural
6 The household registration system in China was initially established in the late 1950s. It was
designed to limit population migration especially from rural to urban areas. Right now the
system is still used to control population mobility and to determine the eligibility of social
welfare.
private enterprises, for a total of 198.81 million employees in the private

sector. During the same period, China’s total population increased from
just 1.35 billion to 1.39 billion, and the labor force only increased from
790 to 810 million.
The majority of Chinese family firms are labor-intensive. Neverthe-
less, the growth of Chinese family businesses has been restricted by the
lack of capital for the private economy, and by policy barriers in certain
industries (e.g., gas and oil, telecommunications, etc.) which tend to
discriminate against private businesses compared to state-owned enter-
prises. These two restrictions have forced family business to rely on their
own efforts in order to accumulate capitals for business growth. Typi-
cally, Chinese family businesses start in labor-intensive sectors and then
gradually diversify into capital-intensive industries as they accumulate
the necessary capital. Thus, the current industry distribution of family
businesses reflects not only the constraints of the policy environment but
also the capital accumulation efforts by family businesses.
2.4 Economic Scale in Family Businesses

The history of private enterprise in China is relatively short, so many
private businesses are still in the entrepreneurial stage or early stage of
development, so scale is generally small. By contrast, state-owned enter-
prises are relatively large in size, occupying a dominant position in major
industries; they also operate in key areas that are related to national secu-
rity and the lifeline of the national economy. This has occurred because
in the 1990s the reform process involved focusing on large companies
and ignoring small ones.
Family businesses in China account for more than 90% of the
country’s total economic units. There are large family businesses such as
BiguiYuan, Midea, Shagang, New Hope (Xinxiwang), BYD, Gome with
revenues exceeding 100 billion Yuan. However, compared with state-
owned enterprises and foreign-owned or foreign-based enterprises, the
majority of family businesses are still small in size, existing in the form
of a large number of couples’ shops and a large number of small and
micro enterprises.
20 L. Chen et al.
As shown in Table 2.5, as firm size increases the proportion of family

businesses declines significantly. The proportion of family businesses
with operating income of less than 1 million yuan is 59.5%, but family
business accounts for only 36.9% of businesses with operating income of
more than 100 million yuan. This shows that in China family business
mainly exists in small-scale enterprises. In particular, among the 69,703
enterprises coming from Hong Kong, Macao, and Taiwan, 57,868 of
those had an operating income of more than 10 million yuan. For family
businesses, only 62.0% of enterprises have revenues of more than 10
million yuan.
As shown in Table 2.6, private enterprises—which account for 86.2%
(32.60/37.80) of the total number—contribute to 52.3% (19.20/36.70)
of all fixed assets investments, 59.4% (67.40/113.30) of total operating
revenue, 62.1% (4.10/6.60) of total profits, and 62.9% (1.07/1.70) of
total business taxes. In comparison, state-owned enterprise has a higher
extent of fixed asset investment per firm. Nevertheless, it appears that
private firms earn more profits with fewer fixed assets, pay more taxes,
and as a result help improve the efficiency of the whole economy.
The results of this sample survey also show that more than two-
thirds of family businesses have less than 100 employees, one-quarter
have between 100 and 500 employees, and only 7% have more than
500 employees. In terms of annual sales revenue, 40% of the sampled
enterprises are small and micro enterprises with annual sales of less than
5 million yuan. Note that most family businesses are micro-sized busi-
nesses, and most of them are still in an early growth stage. The limitation
of external financing from either banks or other financial institutions
has also restricted the growth of family businesses. The liberalization of
the capital market in recent years might have the potential to boost the
growth of family businesses and help Chinese family businesses to grad-
ually increase their scale structure in the future. Table 2.7 reports the
size distributions of family businesses according to total equity, annual
revenue, and total employment.
The family is an ideal incubator for new venture creation, because it
can provide financial capital, human capital, and social capital support
for companies in their start-up and early growth stages. It is for this
reason that family businesses are so involved in entrepreneurial activities
Table 2.5 Distribution of family business by annual sales
Above
<1 1 ~2 2 ~5 5 ~ 10 10 ~ 20 20 ~ 50 50 ~ 100 100
Registration Enterprise # of Million Million Million Million Million Million Million Million
Type Type Enterprise (¥) (¥) (¥) (¥) (¥) (¥) (¥) (¥)
Domestic State-Owned 26,403 1872 881 2220 3860 3956 5105 2912 5597
Enterprise Incorporated 105,329 8459 2580 5639 15,561 16,775 22,444 13,566 20,305
Enterprise
Private 247,381 20,038 6825 15,989 54,209 49,728 54,698 25,675 20,219
Enterprise
Others 36,188 2124 939 2762 7577 7252 8456 3803 3275
Foreign Foreign 69,703 1273 353 1279 8930 11,967 17,972 11,179 16,750
Enterprise
Nationwide 485,004 33,766 11,578 27,889 90,137 89,678 108,675 57,135 66,146
Family Generally 248,234 20,082 6734 15,634 51,756 48,356 54,590 26,688 24,394
Business Proportion 51.2% 59.5% 58.2% 56.1% 57.4% 53.9% 50.2% 46.7% 36.9%
Note Foreign enterprises here include companies from Hong Kong, Macao, Taiwan, and other countries
2 Family Business in China: Present Status
21
22 L. Chen et al.
Table 2.6 Economic indicators of enterprises in 2018

Fixed Operating Total Business
Enterprise Type Number Assets Revenue Profit Taxes
(Unit in (Unit in (Unit in (Unit in
(Unit in Billion Billion Billion Billion
Million) Yuan) Yuan) Yuan) Yuan)
State-owned Enterprise 0.01 6.80 8.70 0.50 0.40
Private Enterprise 0.33 19.20 67.40 4.10 1.07
Foreign enterprises* 0.04 5.80 24.70 1.70 0.22
Others 0.01 4.90 12.50 0.30 0.01
National Total 0.38 36.70 113.30 6.60 1.70
Family Number 209956 64801.2 112322.7 7090.0 4698.5
Business Proportion 49.3% 15.0% 22.5% 23.2% 19.6%
Note Foreign enterprises here include companies from Hong Kong, Macao,
Taiwan, and other countries
Table 2.7 Size of family businesses

Total Equity # of Family Business % of Family Business
Below 1 Million 662 25.9
1–5 Million 616 24.1
5–10 Million 353 13.8
10–50 Million 594 23.2
Above 50 Million 335 13.1
Total 2560 100
Sales Revenue # of Family Business % of Family Business
Below 1 Million 687 21.0
1–5 Million 617 18.8
5–10 Million 296 9.0
10–50 Million 846 25.8
Above 50 Million 828 25.3
Total 3274 100
Employment # of Family Business % of Family Business
Below 100 2294 67.7
100–500 850 25.1
500–1000 135 4.0
1000–3000 86 2.5
Above 3000 22 0.6
Total 3387 100
in terms of their age and geographical distribution. In the sub-sample

of the family business in the Ninth National Private Business Survey,
the average operating life of the business was 8.8 years, and more than
half of the businesses (59%) were established after 2001, indicating that
most family businesses in the sample are in the initial and early growth
stages. Similarly, the eastern region of China, where entrepreneurial
activities are very evident, has also become the most concentrated area
for family businesses (56% of the family business sample companies
in the survey are concentrated in the eastern coastal provinces). The
central provinces account for 24% of the survey sample, and the Western
provinces account for 20%. Many startups have family support behind
them, so the family’s control over the equity of these companies is very
obvious.
According to Li’s (2011) analysis of 212 publicly-traded compa-
nies that are listed on the ChiNext (a NASDAQ-style subsidiary for
newly-created high-growth firms), 200 of them are family-controlled
companies. The average shareholding ratio of the largest family share-
holders before an IPO is as high as 54% in some areas, and 51 of them
hold more than 70% of the shares. There are also 64 companies with 50
to 70% of family control, 61 companies with 30 to 50% control, and
only 23 companies with less than 30% control. Among them, the Zhon-
glei Manguanag Electronic Company of the Li Yuezong family held 99%
of the shares before the issuance and 74% after the issuance.
2.5 Individual Characteristics of Chinese

Family Entrepreneurs
Age distribution. Among the 3,436 family entrepreneurs surveyed, 2,879
(84.1%) are male, and 545 (15.9%) were female.7 The average age of
family business owners is 47 years, of which the youngest is 17 and the
oldest is 81. The age distribution of family business owners (Fig. 2.1)
is comparable to a normal distribution and is concentrated between the
ages of 30 and 60. The number of family business owners at this stage
accounts for 97% of the total.
Education. As Table 2.8 shows, family business owners with a college
degree accounted for 33.2% of the respondents, followed by those with
a college degree or above (29.7%), followed by those with a high school
7 Twelve questionnaires were missing, which accounted for 0.3%

24 L. Chen et al.
250
200
150
100
50
0
17 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 81
Fig. 2.1 Age distribution of Chinese family entrepreneurs
Table 2.8 Education of Chinese family entrepreneurs

Junior High College
Education School High College Degree
Level and Below School Degree or Above Total
Young 10 60 84 122 276
(35 and (3.6%) (21.7%) (30.4%) (44.2%) (100%)
under)
Middle-Aged 282 784 966 837 2869
(35–60) (9.8%) (27.3%) (33.7%) (29.2%) (100%)
Old 46 63 70 36 215
(over 60) (21.4%) (29.3%) (32.6%) (16.7%) (100%)
Total 338 907 1120 995 3360
(10.1%) (27.0%) (33.3%) (29.6%) (100%)
and technical secondary school education (27%). Business owners are

divided into three groups: young (35 and under), middle-aged (35–60),
and old (over 60). The difference in education levels between the groups
is significant (p < 0.01), with the middle-aged group having the highest
level of education.
Managerial Experience. Most business owners have accumulated
management experience before starting a business (see Table 2.9). Among
the family business owners who participated in the survey, 540 had
worked in government agencies or other institutions before starting to
manage their own private enterprise, 1,452 had worked in state-owned
Table 2.9 Working experiences of family and non-family business owners

Government
Agencies or State-owned or
other Collective Foreign Rural
Institutions Enterprises Enterprises* Areas
Family Business 540 1452 217 594
Owners 15.7% 42.3% 6.3% 17.3%
Non-family 252 645 194 203
Business 18.2% 46.6% 14.0% 14.67
Owners
Note Foreign enterprises here include companies from Hong Kong, Macao,
Taiwan, and other countries
or collective enterprises, and 217 had worked in foreign-owned compa-

nies in Hong Kong, Macao, or Taiwan. Among them, the proportion
of family business owners who have worked in foreign-owned enter-
prises and companies in Hong Kong, Macao, and Taiwan is the lowest.
However, regarding the main experience of business owners before
starting a business, there is no statistically significant difference between
family business owners and non-family businesses.
Social Class. Family business owners generally consider themselves to
belong to the middle class of society, and they are active in political
participation. As a group that has a significant impact on the economy
and society, family business owners have received widespread attention.
In this survey (Table 2.10), 46.8% of family business owners believe that
their economic status puts them in the middle of society (i.e., in the 5th
and 6th steps of the 10 steps from high to low). The percentages for social
status and political status are 45.7 and 38.1%, respectively. This suggests
that family business owners’ perceptions of their economic and social
status tend to be consistent, but that their political status lags behind.
The mean analysis of self-evaluation of status confirmed this judgment.
Political status was self-evaluated at 5.96, economic status at 5.33, and
social status self-evaluated 5.36 (smaller numbers indicate higher status).
Political Affiliations. Among respondents (Table 2.10), there are 847
party members, for 24.7% of the total. About 30% of family businesses
(814) have established party organizations, but nearly 70% have not
established party organizations. Family business owners mainly partici-
pate in politics by joining the People’s Congress and the Chinese People’s
26 L. Chen et al.
Table 2.10 Economic, social, and political status of family business owners
Status Economic Status Social Status Political Status
Rank Percentage Percentage Percentage
Number (%) Number (%) Number (%)
1 45 1.4 46 1.4 36 1.1
2 99 3.0 108 3.3 109 3.3
3 405 12.2 402 12.1 315 9.6
4 436 13.2 428 12.9 348 10.6
5 919 27.7 937 28.3 736 22.5
6 634 19.1 577 17.4 510 15.6
7 347 10.5 342 10.3 344 10.5
8 264 8.0 273 8.3 358 10.9
9 120 3.6 144 4.4 279 8.5
10 46 1.4 52 1.6 242 7.4
Political Consultative Conference (CPPCC). 543 of them are deputies

in the People’s Congress (16.6%), and 868 (26.5%) are members of the
Chinese People’s Political Consultative Conference. In the questionnaire,
there is no statistically significant difference between family businesses
and non-family businesses in terms of whether they serve as a repre-
sentative of the National People’s Congress or are a member of the
CPPCC.
2.6 Differences Between Family

and Non-Family Businesses
Recall that conclusions about the number and scale of family businesses
are extremely sensitive to the definition that is adopted for the term
“family business” (Miller et al., 2007; Westhead & Cowling, 1998). In
1988, the Family Business Review magazine was founded. In the first
article of the first issue, Lansberg et al. (1988) challenged readers and
family business researchers to develop a definition of family business.
People may think they know what the term “family business” means, but
in practice it is difficult to give a simple and accurate definition. Is the
family business a zebra or a striped horse? Chua et al. (1999) found 21
definitions of family business research, and Litz (2008) found more than
30 definitions in journals of family business research, entrepreneurship

research, or strategic management.
The aforementioned definitional difficulties encountered in family
business research stem from the uniqueness of this type of organiza-
tion. What is a family business? From the perspective of organizational
typology, it is necessary to study the differences between organizations.
The classification of organizations is the actual construction and iden-
tification of types, and the allocation of organizational forms to those
recognized types (McKelvey, 1982). The key characteristics of each type
reflect the theoretical and practical importance of such organization, as
well as the differences between the types of organizations (Chrisman
et al., 1988). According to the requirements of the above organizational
typology, we must recognize the particulars of family businesses and
define them based on those particulars, if we are going to be able to
answer the following two questions: How does the behavior of family
businesses compare with that of non-family businesses? How does the
behavior of family businesses and non-family businesses impact revenue
performance? (Chrisman et al., 2005).
The concentration of management decision-making power within
leaders is a typical feature of enterprises controlled and managed by
entrepreneurs, and this is particularly evident in Chinese family busi-
nesses. Since most Chinese family businesses are still under the “shadow”
of the founders, the integration of ownership and management and the
control that exists in that situation enables family owners to be free
from internal and external constraints. The strong psychological (and
financial) ownership of the business by the entrepreneur also makes that
person pay more attention to controlling the management decisions.
Corporate Governance. In terms of corporate governance (Table 2.11),
non-family businesses are more effective than family businesses. In a
business where the family owns strong voting right, meetings of share-
holders, board of directors, and the board of supervisors are likely to
be less effective because their decisions can be overruled or otherwise
thwarted by family control.
The controlling family also is less effective in the supervision of oper-
ations and generally institutes fewer governance mechanisms. Moreover,
family businesses are less likely to have labor unions, workers’ congresses,
28 L. Chen et al.
Table 2.11 Corporate governance in family and non-family businesses

Shareholder Board of Board of
Meeting Directors Supervisors
Family Business 59% 55% 29%
Non-Family Business 66% 68% 40%
Labor Workers’ Party
Unions Congresses Organization
Family Business 48% 31% 33%
Non-Family Business 52% 34% 41%
Table 2.12 Decision-making in family- and non-family businesses

Family Non-Family
Business Business
Who makes the major Business Owners 1829 431
decisions in your (54.2%) (32.0%)
company? General Meeting of 853 461
Shareholders (25.3%) (34.3%)
Board of Directors 527 378
(15.6%) (28.1%)
Executive Meetings 160 68
(4.7%) (5.1%)
Others 4 4
(0.1%) (0.1%)
Family Non-Family
Business Business
Who is responsible for Business Owners 2225 659
the daily (65.5%) (48.5%)
management in your Executive Meetings 3487 240
company? (11.4%) (17.7%)
Professional Managers 772 435
(22.7%) (32.0%)
Others 14 24
(0.4%) (1.8%)
or party organizations, all of which reflect the controlling position of the

family owners. It is therefore difficult for other stakeholders to play a
significant role in the business.
Decision-Making. More than half of family business decisions are
made by family owners (see Table 2.12). In non-family businesses, a
greater proportion of strategic decisions are made by the general meeting
of shareholders rather than the major shareholder or the business owner.
Table 2.13 Social performance in family and non-family businesses

Pollution Pollution Environmental
Control Control Pollution Environmental
Investment Investment Control Pollution
(Unit: Ten (Unit: % of (Unit: Ten Control
Thousand Annual Thousand (% of Annual
Yuan) Sales) Yuan) Sales)
Family Business 30.9 0.94% 3.2 0.94%
Non-Family 29.0 0.63% 5.3 0.66%
Business
Charitable Donation Taxes
(Unit: Ten Thousand (Unit: Ten Thousand Yuan)
Yuan)
Family Business 16.2 456.7
Non-Family 23.3 750.1
Business
In family businesses, owners not only hold major decision-making

powers, they also exercise those powers in day-to-day management
(65.5% of family business owners are involved in day-to-day manage-
ment). In non-family businesses, nearly 50% of the decisions are made
by professional managers, which is unimaginable in a family business.
Even if a family business hires professional managers to make impor-
tant decisions, the day-to-day management of the company will still be
heavily influenced by the business owner’s views.
Social Responsibility. From the sample survey data, family businesses
have better a better record than non-family businesses (see Table 2.13).
The proportion of environmental pollution control fees to sales revenue
is higher for family businesses than for non-family businesses, although
the absolute amount paid by family businesses is lower due to their rela-
tively smaller size. The long-term orientation of the family business and
the willingness to inherit it across generations might also be a driver. For
charitable donations and the absolute amount of taxes paid to the state,
family businesses are not as good as non-family businesses, which may
also be driven by their relatively smaller scale.
Survival and Longevity. The sample data of private enterprises in
China show that family-owned businesses have a longer lifespan than
non-family businesses. The life span of an enterprise refers to the time
from the date of establishment to dissolution or bankruptcy. According
30 L. Chen et al.
to statistics generated by American scholars in the 1990s, the average

lifespan of companies including both family and non-family businesses
in Europe and Japan was 12.5 years (De Geus, 2002). A professor at
Kobe University in Japan found that the average lifespan of Japanese
companies is 35 years. Most longevity enterprises in Japan are construc-
tion and real estate companies. The longest-lived company is the Vajra
group founded in Osaka in 578 AD. It was founded by Vajra Chong-
guang, a great craftsman who built the palace for Prince Shotoku, and has
a history of 1,400 years. In addition, there are many long-lived compa-
nies in the Japanese brewing industry. Many of these companies have
a common feature: They are cautious about diversification and rapid
expansion.
Studies also show that large companies have long lifespans than
smaller companies. Fortune magazine regularly publishes a list of Fortune
500 companies and calculates their average lifespan. According to their
estimates, the lifespan of the top 500 companies is between 40 and
50 years.
Compared to Japanese and US companies, Chinese companies
(including both family and non-family businesses) have a shorter
lifespan. In 2006, Vice Minister of Commerce Jiang Zengwei pointed
out that the average lifespan of Chinese enterprises is 7.3 years. Another
survey on Chinese private enterprises in 1990 revealed that Chinese
private businesses had an average lifespan of only 3 to 5 years, and
more than 60% of them went bankrupt or closed down less than
5 years after being established. A survey of Chinese private enterprises
conducted every other year by the United Front Work Department of
the CPC Central Committee, the All-China Federation of Industry and
Commerce, the China Civil (Private) Economic Research Association,
and the State Administration for Industry and Commerce showed that
prior to 1993, the average lifespan of Chinese private enterprises was only
4 years. The 1995 statistics show that the average lifespan has increased
to more than 5 years, and the 2000 statistics show it has increased to
7 years.
According to survey data, 52% of the family businesses in China were
established before 2000, while only 41.8% of non-family businesses were
established before 2000. As can be seen from Fig. 2.2, most non-family
Fig. 2.2 Birth years of family businesses
businesses were established after 2000, while more non-family businesses

were established before 2000. Overall, these comparative data show
that the lifespan of family businesses is longer than that of non-family
businesses.
32 L. Chen et al.
References
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for classifying business strategies. Academy of Management Review, 13(3),
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involvement, family influence, and family–centered non–economic goals in
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by behavior. Entrepreneurship Theory and Practice, 23(4), 19–39.
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3
Entrepreneurship and Family Business
in China’s Modernization
3.1 Why Family Business When Starting

a Business?
In English, “entrepreneur spirit” and “starting a new business” have the
same meaning: entrepreneurship. The idea of entrepreneurship is insep-
arable from the concept of innovation. In a narrow sense, entrepreneur-
ship means creating a new enterprise, while in a broad sense, it involves
creating a market or a category of business. Entrepreneurs are faced with
various uncertainties. The price of production factors is uncertain, and so
is the price of products that are made. It is difficult to plan and predict
the future. Even possible future clients and their values are unknown
and hard to predict, leaving only the sense of “creative destruction,” or
finding new combinations of production that have a chance to survive.
Therefore, the core characteristic of entrepreneurship is not “starting
from scratch,” but rather in identifying and developing opportunities to
carry out creative business activities and create value for customers. All
of this must be accomplished under conditions of relative scarcity and
high uncertainty in the market. The definition of entrepreneurship, in

Switzerland AG 2021
https://doi.org/10.1007/978-3-030-51402-0_3
36 L. Chen et al.
one way or another way, involves the development of an innovative way

of doing business.
For family members, entrepreneurship means either creating a new
business outside the family without relying on the family or carrying out
an organizational renewal or innovation activity an existing organization
family business (corporate entrepreneurship). In this regard, the leader-
ship of a company can be passed down from parents to children only
when the company is able to sustain its operation in the future. In the
past, family business succession in China might simply have meant that
the successor was taking over the business without changing the existing
way of doing business. But times are changing, and nowadays building
a long-lived family business requires a strong entrepreneurial spirit in
late-generation family members.
There are multiple reasons why newly-created businesses in China
intentionally choose family involvement in ownership and management.
First, most founding entrepreneurs in China have been driven by the
twin passions of getting out of poverty and showing a strong sense of
responsibility toward the family. That means the family is positioned in
a central position when a Chinese entrepreneur starts a business.
Second, just like family businesses in Western economies, in China
blood relations, kinship, and related social networks between family
members often serve as the initial resources when the business is created.
Relatives and the family network often provide access to financial and
other resources with relatively low cost compared to resources provide
by non-family parties. “Don’t invest money with beginners” is common
sentiment in the venture capital business in China. In fact, even busi-
ness veterans who have outstanding experiences and skills and want to
commercialize certain inventions do not find it easy to obtain capital
from non-family parties. It is often easier to obtain financial resources
from family or family-like bonds between relatives and close friends.
Such a system is possible only when family members have a great deal
of trust in one another.
Third, compared to non-family ones, family businesses are able to
rapidly respond to changing market conditions. Internal communication
is smoother among family members, and the mutual trust among family
members makes it easier to reach a consensus on important matters.
Thus, the cost of management is lower. As a result, when the market
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often ends in slumber; it is as if Nature needed the solace of sleep to make
her forget. A colder breath of air appeared to sweep through the tree-trunks;
and, drawing her tartan plaid up around head and dishevelled hair, Lotty lay
down in the lee of the mossy stone, and, drawing up her knees, fell fast
asleep, with Wallace at her back.
Crona some hours after this heard a low, ominous growl, and, looking in
the direction whence it came, beheld the raven face and brown eyes of the
honest dog. The witch-wife was doctor to half the fisher-families that dwelt
in little villages by the sea, and she had been out wandering over the moors
and through the forests looking for roots and simple herbs, when she came
to the spot where Lotty lay.
'Poor Wallace, so your little mistress has gone to sleep? Yes, dear fellow;
but it isn't on the damp moss it is safe to lie.'
Crona's cottage was but three hundred yards away, and when Lotty
awoke she found herself lying in a gleam of sunshine on a wooden bench or
dais by the cottage door. She sat up, wondering for a moment or two where
she was, then back came all her grief, though she tried to hide it from her
fairy godmother as much as she could.
This dear soul had spread a wee table with a white cloth, and placed
thereon a cup of heather-ale—her own brewing, and she was famed for this
—with barley-meal scones, butter, and honey. There was even a vase of
fresh primroses on this little table, which she had drawn close up to Lotty's
side.
'Eat, my lamb,' she was saying. 'If young folks would live, young folks
must eat.'
She was smoothing Lotty's brow and hair. And the girl tried to eat and
drink only just to please Crona, for she felt a little shivery and of appetite
she had none. Besides, her fairy godmother's kind sympathy now touched
her heart and made the tears stream down her face afresh. Indeed,
unromantic though it may seem to say so, some of her tears fell among the
heather-ale.
'I am not a witch, dear Lotty, though they say so; but this I can tell you,
that you will, in course of time, see Frank Antony once again. So don't
mourn for him, dearie.'
'But fa-fa-father has been so unkind! Do you know what he said, dear
godmother? He sai-sai-said that by not being Grace Darling Redivivus I
was the ruin of the show and all his prospects.'
But Crona laughed and talked so quietly and nicely that she soon had
Lotty smiling also. After the witch's heather-ale and the scones the spring
air felt warmer, and something of its freshness seemed to have returned to
the greenery of woods and wilds, the crimson and yellow and white of the
flowers, and the gold of the scented furze. She felt she could even take an
interest in Crona's pets now, and was a little cross with herself for not
having asked before how little Tim was, for this affectionate mite had been
ailing; but her godmother said he was once more as hearty and robust as
before his indisposition. She told Lotty that she had journeyed six miles to
procure certain roots for Tim, and that from the very day he had begun to
nibble these there had been a marked change in both his physical and
mental condition. And he slept now every night under pussy's chin.
To-day Wallace had found Tod Lowrie just commencing to feast upon a
fine fat fowl, but which particular farmyard it had come from inquiry by
Crona had failed as yet to elicit, only she always paid for Lowrie's
extravagances. Wallace stood over Tod Lowrie for a moment, looking down
at him with his head a bit to one side.
'Dear me, Lowrie,' he said, 'you'll never get through that fowl all by
yourself. Then the bones you know—just fancy how you'd feel if a bone
stuck in your throat and you required to send for Dr Heron to take it out!
But,' continued Wallace, 'I have an excellent method of dealing with dead
fowls. Artistic in a manner of speaking. Permit me,' and he gently drew the
fowl quite away from the fox, and retired with it under the dais.
Poor Tod Lowrie had simply to sit on his haunches and look on; and,
truth to say, all his share consisted of the feet and the head and the feathers.
'Beautiful, isn't it?' said Wallace when he had finished.
'Beautiful!' said Lowrie with a deep sigh.
All Crona's pets loved each other, and agreed very well on the whole; but
of course little differences will at times arise in the best-regulated families.
Pussy and Joe to-day, for example, had a little dispute on the boards.
Cats seem cruel; but it is just their nature, and perhaps they are no worse
than human beings. Anyhow, pussy to-day had returned from the forest with
two baby hedgehogs; she had killed them both, and now kept one safely
between her forelegs until she should finish eating the other. And Joe chose
to be very nasty and sarcastic about it, though of course she wasn't bound to
go and catch young hedgehogs for him. He stood, showing an attitude of
impudent grace, some two feet from her.
'Joe's cross! Joe's cross!' he cried. 'Ho, ho, ho! Set you up indeed! Joe's
very cross!' He was looking at her with one evil eye. But pussy took no
heed. Her tail was spread right out behind her carelessly enough, and now
Joe took one long hop towards it and gave a cruel pinch. This was too much
for any respectable cat to stand; and, just as Joe was holding back his head
to laugh, puss sprang at him and gave him a box on the ear that sent him
spinning round like a feathered whirlwind. Then the cat went back to
resume the feast.
'Hallo! Why, where is the other hedgehog?'
Not echo, but Tod Lowrie could have answered 'where?' But he didn't.
He had swallowed it, and Joe was high up in a tree now, laughing that
wicked laugh of his—sarcastic, almost sardonic—'Ha, ha, ha!' and 'Ho, ho,
ho!' And the cat's ears were laid far back as she eyed him. 'Just wait till I
catch you, Master Joe,' pussy seemed to say.
Ah, well, there is one good thing about cats and dogs—they bear no
malice, and very likely at dinner-time Joe would be forgiven, and all
Crona's pets eating out of the same dish.
Her fairy godmother, as Lotty always called Crona, kept the child that
day as long as she possibly could. But duty was duty, and Lotty had to leave
at last. It was already getting dusk, and she must try to get through the
forest before the gloom of night came down over sea and land.
The girl feared nothing when Wallace was with her; the faithful dog
would have laid down his life defending his little mistress. Nor was she
afraid of losing herself; for, thanks to the foresight of her friend Chops, the
trees were still blazed. Indeed, the boy had but lately renewed the markings.
And he was to meet her to-night somewhere in the wood where the footpath
went winding through it. Footpaths never go straight, and perhaps that is the
chief charm of them. But this narrow beaten track was probably more
winding than most of them. It wound in and out and round about clumps of
the thicker, darker spruce-firs and big moss-covered rocks, down into
gloomy dells, where in the season the capercailzie gave vent to his ghostly
crow and cushat doves croodled mournfully on the tall larch-trees. Down
into one dell, over a more open hill, and down into another, where one had
to cross a brown, roaring, 'jouking' burn by a tree-bridge.
And this green hollow with the streamlet running through it was
supposed to be haunted. Real fairies, they told one, used to dwell here at
one time, before the ferns withered away. But five fairies used to be seen at
once floating downstream on a plantain-leaf, which they used as a raft—
pleasant little parties of five male and apparently rather reckless fairies, for
they danced and sang and quaffed honey-dew from acorn-cups. But they
were polite, and when a lady-fairy went floating past in a foxglove bell they
never failed to lift their hats and hide their cups for the time being, as well
as their pine-needle cigars.
But the fairies did not come back after the ferns were withered, only
ugly warty toads, and they are not fairies. And the reason why the ferns
withered in the dell was that a ghost had come to walk at midnight here. It
was the ghost of a gamekeeper, and his story was a gruesome one. He was
killed here, but the man who slew him was never found out, and that is why
the ghost walks there. Some of the gamekeeper's blood, it is said, trickled
into the stream, and that is how it has been brown ever since.
Well, something happened on this very night. At one side of the tree-
bridge was a rail, and it was pretty dark by the time Lotty had her hand on
it. And she was pausing here for a moment to listen to the gurgling song of
the brooklet, and also to hear if Chops was coming. Chops always whistled
to keep his courage up when coming through this wood at night. But she
could not hear him, nor did Wallace, else he would have barked a half-
hysterical bark of joy. She was just about to move on, when, lo! she was
startled by seeing a light like that of a candle moving straight upstream
towards her. She certainly was a little trembling, but she could not have
been called frightened.
The light stopped not far off, and bobbed about and round and round,
sometimes low to the ground as if the invisible thing that held it was
looking for something that could not be found. Lotty tried to cry 'Who is
there?' and was very much surprised that she could not say the words; all
the sound, indeed, that she made was a little pitiful 'Hoo—hoo,' like what
one hears from a dog when he is dreaming.
Then the light went suddenly out, and now Lotty ran quickly on up the
brae, and some distance from the top thereof she listened again, and now
she distinctly heard Chops whistling the air 'Fra poco a me,' and presently
she met him.
Chops listened wonderingly to her story of the strange light.
'An' it were nought else, Miss Lotty, but a dead-candle. An' more's seen't
nor you on still nights like this. An' they do say that dead-candle will never
be laid till the man as killed the keeper is found an' 'anged on 'igh on a
gallows-tree. An' ain't ye glad I've come, Miss Lotty?'
'Oh, so glad, Chops!'
'Oh Miss Lotty, I wish they was more ghostes if they'd allers make ye
glad to meet yours truly, Chops, his mark.'
'You're a funny boy; but let us get home now as soon as possible. Poor
Mary will think I'm lost.'
'Take my 'and, Miss Lotty, won't ye? It's a honest one.'
'I know that, Chops; you've always been good to me, and I'm never
going to forget you, Chops, never, never, never.'
'Miss Lotty, ye speaks queer-like to-night,' said Chops.
'Yes, I think it is because Crona and I have been talking such a lot, and it
was nearly all about Mr. Blake.'
'Ye won't hever forget he, Lotty, I'll lay.'
'Oh no, Chops, and I felt somehow that I could have dropped and died—
like—like a dead mouse or something'——
'A dead rose-lintie, eh?' Chops suggested.
'When he told me he was going away, and we might not meet again for
ever, ever so long. Ah, Chops, I've no right to think of him, even as my only
brother, which he called himself, and me only a mite of a gipsy lass. I
should have said "I only," Chops, but somehow "me only" seems sweeter.'
They had reached the cliff-top, and stars were out in the north and the
east, and glinting on the sea.
'We've often stood here together, Chops, looking at the stars and the sea.'
'Us has,' said Chops.
'Well, Chops, I won't see them much longer now.'
'Miss Lotty, wot yer a-saying of? Cold water be a-tricklin' down my
spine. Was it the dead-candle wot'——
'No, no, Chops. But I made up my mind to-night in the dark wood, when
all alone with Wallace, to—to—— Eh, maybe I mustn't tell even you.'
'Oh, Miss Lotty!'
'Well, poor Chops, to run away.'
CHAPTER XXIV.
'I SAVED IT UP FOR A RAINY DAY.'
T HE little gipsy lass was a girl who would have been easy to lead but
was rather difficult to drive. A few kind words from the man whom up
till this time she had always looked upon as her father would have
sufficed to make her do anything in reason for him, and do it joyfully too.
When one has no heart in one's work one cannot do even one's duty in the
only way it should be done—namely, as a labour of love.
'It's love and it's kindness to all around us,' Mary had often told Lotty,
'which make the wheels of life go merrily round.'
And, young though she was, Lotty could see the truth of Mary's
statement in nature everywhere around her, both in the camp, in the forest,
and on the sea itself.
Big, rough Bruin, with his jacket like a motor-driver's coat, could never
have danced so well and heartily had he not been encouraged by kindness.
The blackbird in the copse would scarce have sat so eident, so patient, and
so long on her grass-lined nest had not her beautiful orange-billed mate
been trilling his song to her from morn till dewy eve, and if she did not
know that the flute-like music was meant for her ears and her ears only.
Ay, and those sturdy, bare-legged fisher-dames, with their creels upon
their backs, would not have worked so hard had it been for themselves
alone; but their Jimmies were on the sea, and their lads of husbands loved
them, and so they blithely sang:
'The boatie rows, the boatie rows,
The boatie rows fu' weel;
But mickle lighter is the heart
When love bears up the creel.'
Then Lotty's own heart was overflowing with kindness for all creatures.
Yes, and she even had a bit of love to spare for Biffins Lee. That she was
merely a property in his eyes she knew full well; he had scolded her too, he
had pinched her arms, and several times almost dashed her from him till she
had stumbled and fell and burst into piteous tears; but—well, she had
known him so long, and perhaps he really could not help it. He had been
more cruel to her since she had shrunk from making a vulgar exhibition of
herself in the Cumberland wreck affair. She was going away though, and
she would be sorry to vex even Biffins Lee. Happy thought: she would go
and speak to him, and perhaps he would be a little more kind to her for the
last few days or weeks.
Ah! perhaps she was wrong. She did not go actually into his presence as
if she were seeking for an interview, she merely put herself in his way.
'Ah, Lot,' he cried gruffly, but not quite unkindly, 'you're there, are you?
Rather wanted to see you. I think our merman made a bit of a hit last
night'—he rattled the silver in his pocket. 'Now, if I could have you next
week to pose as the mermaid'——
'What!' cried Lotty, aghast.
'It would be the best hit in the countryside. It would make a man of me—
make a man of us all, so to speak. Another thing,' he continued without
giving her time to reply, 'is this: I don't care any too much for that witch-
wife Crona. I want you to stop going there, and I'll give Chops the same
order. She is only putting nonsense and idle stuff into your head.'
'But, father, she has been such a good and kind friend to me, and I could
not well go through the forest to the station or anywhere without seeing her.
Besides'——
'No more, no more. I don't want to lose my temper, for I'm really a good-
natured fellow.'
Again he rattled the cash in his capacious pocket.
Lotty said not another word, but went quietly back to her little caravan,
to Wallace and to Mary.
'Mary,' she said, 'what do you think?'
'Couldn't guess, dear.'
'Mr Biff—my father, I mean—wants me to pose as mermaid next week,
and he seems very determined. I wish he would tell me to go away and get
work at some other show.'
'He won't do that, Lotty. But I'll see him for you, and let him know there
will be a general strike if he attempts to make you mermaid. But it would
not be for a fortnight anyhow.'
'A fortnight!' Lotty's spirits began to rise. She hoped to be far enough
away before then. And now she was smiling as she said, 'Mary, couldn't you
tell him that you would be happy to be the mermaid?'
'Me a mermaid, wearing a very low-bodiced dress, as I'm told mermaids
do! Me a mermaid, Lotty, with my fragile, fairy-like form, twenty stone and
over. Ha, ha, ha!'
And good Mary laughed till the cups and saucers rang in the caravan
cupboard.
But Lotty grew a little serious again.
'Mary,' she said, 'I am going to be debarred from ever going to see my
fairy godmother any more. What shall I do?'
Mary put one fat arm round Lotty's waist and drew her nearer.
'I cannot ask you to disobey your father,' she said; 'but in this case, I
myself, with Skeleton, shall waddle over to Crona's to-night, and Crona will
write through me to the boss, and I think this will alter matters very much,
so that you and Chops can go to the cottage as often as you have a mind to.'
'Mary, did Crona ever tell you anything in particular?'
'No, dear; but I simply think that as a witch or palmist, or something, she
can read the boss's future, as perhaps she has read his past, and has a great
influence over him. Lotty,' she continued, 'did Crona ever tell you anything
in particular?'
'She did, Mary; but I must not mention it even to you. Some day, though,
I may.'
Mary was hard on herself when she talked about her outdoor movements
as mere waddling, for once she started she could walk very well indeed, and
at climbing hills she could make even Skeleton puff and blow a bit. Neither
Skeleton nor she had been at the witch's cottage for six months at least; but
she was made heartily welcome now, and so was her bony goodman. Even
Tod Lowrie allowed Mary to smooth his triangular head, and pussy
ensconced herself in Mary's lap and at once began to sing. 'It isn't often,' she
appeared to think, 'that I have so comfortable a lap as this to lie on, so I'll
make the best of it for an hour or two.'
Joe the raven was impudently criticising towards the Living Skeleton.
He was perched on his favourite birch-tree branch when the bony one
appeared, and chuckled low to himself. 'Ho!' he said, 'set him up! Ha, ha,
ha! Well, well, well! Ho, ho, ho!'
Then, as Skeleton took no notice of his taunts, he grew even more
insulting. He whistled like a 'glaud,' screamed like a curlew, and cackled
like a hen that has just dropped an egg somewhere. Kuk-kuk-kuk-kuk, kay-
ay-kuk! Tee-hoy-it! Tee-hoy-it! Whew-ew-ew! 'Tod Lowrie, Tod Lowrie!
Have a bone, poor boy, have a bone, kuk-kuk-kuk! Have a bone, have a hen,
a hen, a bone, a bone, bone, bone.' Scray-ay!
'Surely,' cried Skeleton at last, 'surely, Crona, that bird is possessed of an
evil spirit?'
'It's just his exuberance,' said Crona, laughing; 'but I'll march him
indoors, then we'll all have tea; for, dear me, I am pleased to see you. And,
by the way, Mrs Pendlebury, here is a letter to our dear Lotty. I told Mr
Blake to send it through me, you know.'
'Joe, Joe, come down here.'
'I sha'n't—I won't—won't, sha'n't, sha'n't, sha'n't, sha'n't. Ho, ho, ho!'
'Come at once when I tell you, sir!'
The bird came down obediently.
'Go directly into the house to your perch, sir.'
Joe obeyed and went waddling off with trailing wings. But just on the
threshold of the door he looked up at Skeleton again, and laughed so
derisively that if there had been a boot anywhere handy he would have
shied it at him.
'Ha, ha, ha! Ho, ho, ho! Set you up!'
'We'll have peace now,' said Crona.
Said Biffins Lee to Lotty that evening: 'From the way Mary puts it, I find
that Crona isn't a bad sort after all. You may visit her, and take Chops and
your dog for safety. But mind'——
'What, father?'
'The mermaid—in ten days' time.'
Lotty did not care much. There was a joy at her heart to-night. She had
just received such a dear, kind letter from her Mr Blake, and had still to read
it—for the fifth time.
. . . . . . .
Antony's caravan was going to be taken to the district station, round by
the road, with farmer Duncan's three sturdy horses, his own having been
shipped to England days ago. And the duty of packing it so that nothing
should be broken during transit was to devolve upon Mary, with the
assistance of Lotty and Chops.
Now, it is really wonderful how little a great caravan, say twenty or more
feet long, is moved or shaken during a long journey by train after the
wheels have been taken off, and she lies snugly on the trolley, her weight
supported on her own springs. Instead of going by slow luggage-train, on
which her superb varnishing, gilding, and ornamental scroll-work would
have the certainty of being smoked and soiled, however well covered up,
she was to travel special rate, by passenger-train, so that she would not
really be on the road—so the railway traffic-manager promised—more than
four-and-twenty hours, from the far north through London itself to Bristol.
And here Antony Blake had resolved to meet her himself, with his splendid
horses, and drive down to Manby Hall, in order that his people might see
for themselves what a palace-on-wheels the 'Gipsy Queen' really was.
The caravan would be protected by sheeting, soft and white but
impervious to dust and rain. This was made in different pieces, not as one
clumsy whole, nor did it hang too tightly, for if it had done so it would, with
its various ropes, tauten up during rain and injure the sides.
The skylight itself was not covered, so that the saloon and the bedroom
both had plenty of light. Indeed, the side-sheets and roof-piece had often
been put over her when doing her great winter tour in the early part of the
year; and, independent of these, the fore and aft coloured glass ports of the
large domed skylight could be carried open for fresh air.
Mary determined that the caravan should be quite ready for Antony to
step into as soon as it arrived at its far-off destination; so she carefully fixed
every vase and glass and cup in the cupboard, so that, although they could
not shift, they did not appear to be fixed. The same with his books, fairy
editions of a great many of his favourite authors, in a fairy-like bookcase. It
was Lotty herself who dusted and arranged these, and it was indeed a labour
of love, a labour to linger over, thinking sadly as she did so of the kind and
handsome friend she might never see again.
But everything was ship-shape at last, and she spent all the time she
could spare in the dear old saloon so fraught with many happy recollections.
But one night, not long before the caravan was going to start, while sleeping
in her own little cot in the 'Silver Queen,' Lotty dreamt a dream, and woke
early in the morning thinking of it. She thought that she was travelling all
by herself, not in an ordinary third-class carriage as she had intended, but in
his—Antony's—caravan.
Lotty was a brave girl, and the romance of that dream appealed to her so
much that she determined it should come true. She would only be twenty-
four hours on the road, and she could let herself out when it reached
London, and, locking the door again, find her way to Highgate Heath. Oh!
the plan was delightful above all things, if it could only be managed; and so
she confided her plans to Chops, and between their two wise heads it was
determined that carried out they could and should be.
Crona was also taken into their confidence, and so was the kindly porter
at the railway station far away over the moor. Chops had been sent across to
purchase the little lass's ticket, and told the honest fellow. He was, like
everybody else, very fond indeed of Lotty, and delighted now that she had
taken him into her confidence.
'It'll be all right, won't it, George?' said Chops.
'Ay, that it will. Lo', I wouldn't mention the matter even to the wife o' my
boozum.'
Chops and Lotty worked together an evening or two before the 'Gipsy
Queen' started as secretly as if they had been a couple of smugglers or
pirates.
There was Lotty's big box to be sent away; but that would go after her,
and he, Chops, would see to it. During her journey she would only have her
best clothes on, and one bag that she could carry.
But then there were provisions and stores to be thought of—milk and
water and fruit, and a big box of chocolates that Chops had bought her. Not
even were candles and matches nor Lotty's flashlight forgotten.
As to Wallace—who was watching the pair of them, and no doubt
wondering a good deal what was up—he was to be left in the charge of
Chops until happier days came round, when she should meet them both
again.
Well, the caravan was to start at midnight from the station, but she was
taken away to that place in the afternoon. The very last thing that Lotty did
was to gather a lapful of the wild-flowers he—Antony—loved so well, and
bedeck the saloon and bedroom therewith.
At long last Lotty had one more look round the camp to say good-bye to
Bruin. She dared not excite suspicion by saying good-bye to any one else;
but Mary noticed the poor girl had been crying, and wondered much what
was the reason of her sadness.
She only said, 'Good-night, Mary. Crona wants me to stop a while with
her, and I want to see her again.'
'See you to-morrow, anyhow,' said Mary.
That was all. And if Lotty had really told a little white fib, and she feared
she had, she was much concerned about it. She was very silent all the way
through the forest, and permitted Chops to lead her most of the way. But
just as they came in sight of Crona's cottage Chops stopped.
'Miss Lotty,' he said, 'which we've been good friends, hasn't us?'
'That we have, dear old Chops.'
'Well, ye wouldn't like to see me angry, just real angry, would ye?'
'Oh no, Chops.'
Then he popped a little paper-parcel into her bag. 'I don't want that,' he
said. 'I saved it up for a rainy day; and, oh Lotty, the rainy day has come!'
Well, so far as the poor lad's face was concerned, it had, for Chops was
crying.
CHAPTER XXV.
'WE'VE GOT A LITTLE STOWAWAY HERE, GUARD.'
I T was midnight drear, and Lotty was all alone in the dark of the caravan
saloon. She dared not light a lamp or candle, so she was feeling very
frightened and very much excited. There was much clanking of big chains
and shouting of porters, and she knew the truck in which the 'Gipsy Queen'
lay was being attached to the train that was to bear her far away from the
camp which had been her home so long. Wallace reluctantly had been left at
poor Crona's cottage till Chops returned.
The good station-porter George had sat up in the saloon with Lotty till he
dared not sit a moment longer, then, telling her to lock her door and say her
prayers, he said, 'Good-bye, darling, and God himsel' be wi' ye!' and so took
his departure.
But presently the puff-puff-puff of the starting train resolved itself into a
steady roar, and she knew she was off and away. But she was tired and
sleepy as well as very heavy-hearted and sad, so she flashed her light a little
and found a big plaid to cover her; and, arranging the pillows, she lay down
on the sofa to think. With that plaid—a good Gordon tartan it was—around
her she did not feel half so lonely. It was just as if its owner were sitting
somewhere near to her in the saloon. She said, 'Good-night, Chops,' and
Good-night, Wallace,' and 'Good-night, Mr Blake.' This, of course, was
merely make-believe. In three minutes more she was as sound asleep as
ever she had been in her life before, and it was quite daylight before she
awakened. She looked her little watch—a present from Crona herself—and
found it was nine o'clock, and past. She got up now, and, going away back
into the pantry, permitted water to flow into the basin and had a delightfully
cool wash. Then she felt hungry, and had a nice breakfast—a cold boiled
egg, nice scones and butter, and a glass of milk.
After breakfast she put her hand into her bag to get the chocolates, and
big, luscious ones they were. She found Chops's little parcel. It was rolled
in a great many pieces of newspaper and tied ever so many times with
pieces of wool; but at last it revealed two gold sovereigns, three half-
crowns, and ever so many threepenny bits.
'Dear good Chops!' she could not help saying aloud, and her eyes were
dim as she thought of him. She put it safely away, and sat down to think and
wonder how soon she could pay it all back again. But then, of course, it
wasn't spent yet, and Lotty resolved to save it all she could.
A small jewelled clock stood in a case right over the table, and this Lotty
now wound up and put right. Sometimes, when the train stopped a few
minutes at a station in comparative quiet, this clock could be heard ticking;
but whether ticking or not it was really a great comfort to her. She was so
glad there was plenty of light. What would she have done had the skylight
itself, like the windows, been closed up?
Twenty-four hours; but it would be a long, long day to her with nothing
to do! Only, she had been in caravans nearly all her life, and knew from
experience that if one lies down the time seems to pass ever so much more
quickly. So she found a nice book, and hauling the plaid up over her, for it
was none too warm here without a fire, she lay down to read and think and
dream day-dreams. But she dropped the book presently and thought she
would count these chocolates just to make them last. Oh, what a nice big,
deep box! And they were such good ones too, and coyly crisp to the teeth.
She found there were twoscore and ten all told. Well, she would have five to
begin with. But when these five were done for—five chocolates won't last
for ever—she was afraid she must have three more.
Then she resolutely put away the box and as resolutely began to read.
She was glad it wasn't a silly love-story, and felt sure that Mr Blake was far
above books of that sort. This was a volume of startling adventures far, far
away in the wild interior of Borneo. And there were terrible savages in it,
who had big holes bored through their ears and their upper lips to carry ugly
knives in; and there was much fighting with white men; and there was a
poor boy who was carried off to be fattened and eaten by a real cannibal
king, but a pretty black princess who took pity on him just as he was nearly
fat enough and doomed to be killed, and cooked with curry and rice the
very next day. So this princess cut the thongs that bound the poor boy, and
took him into the forest, and bade him keep on and on towards the eastern
sun, and after many weeks he would come to the big blue sea and be sure to
find a boat. But there was a great chase after him, and he was nearly
captured many times, and had most astounding adventures, all of which
occupied fully two hundred pages; and then, lo! it was one o'clock and time
for dinner.
Just one chocolate—no, two, and that would make the other five!
Lotty had a beautiful pie for dinner, which Crona had made for her, and
she left the half of it for supper. She had a bottle of nicely made coffee too,
though it was cold, besides some fruit. She felt ever so much better now,
and took out of her bag some knitting and set vigorously to work.
But she didn't get on very quickly, she had to pause to think so often—
sometimes about the camp, and Chops, and Crona, and Wallace, and
sometimes about Antony. Also, she spent much time in wondering what sort
of a home Chops's mother would give her, and if ever she would see the
skipper's wife of the wrecked Cumberland any more.
She put away the knitting at last and had coffee for her tea, with bread
and butter and some fruit. Then she sat down to write a letter to Mr Blake,
and to confess how wicked it was of her, and how naughty above all things
to travel in his beautiful caravan. After she had come to the words, 'This is
all at present,' she thought how foolish it looked, so she tore it up and wrote
another, and laid it down till she should address the envelope. Then she read
it over and found she had spelt saloon with two l's—thus, 'salloon.' 'But has
it one "l" or really two?' she said to herself as she began to chew the end of
her fountain pen. 'Let me see—balloon has two "l's;" what has saloon or
salloon ever done that it shouldn't have two. Oh, bother, I'll tear it up and
write one more.'
She wasn't pleased even with that, but she put it in the envelope and
dropped it into her bag to be posted. No, she wouldn't though; she took it
out again and pinned it to a book, where he would be sure to see it. 'Second
thoughts,' she told herself, 'are always best.'
She really hadn't meant to have any more chocolates; but somehow her
hand went gradually towards them, and—she had six before she halted!
Lotty took her violin out of its case now. Luckily she had brought that
with her, for it was light and easy to carry, so she fingered the strings, not
daring to use the bow, and played thus to herself for two whole hours. This
was by no means a fast train, and it made many very long stops. But
something had happened during the previous night that Lotty was not aware
of, being sound asleep. Part of the train had been detached and shunted into
a siding somewhere up near Huntly, and it had not started again till nearly
nine, when the girl awoke. She managed to hear the name of every station
they passed through, and about one hour south of Glasgow, lo! the train
stopped altogether, and Lotty could hear a stationmaster saying to porters,
'That truck with the gipsy wagon on it must be detached and lie here, to go
down with the ten-fifteen passenger to-morrow forenoon.'
This was bad news for poor Lotty, but it could not be helped. She was
angry on Mr Blake's account too, for he had paid special rates, and this was
how he was being treated.
It was now nearly eight o'clock, and everything was still and quiet
inside, for the 'Gipsy Queen' had been shunted into a siding. What was
Lotty to do? Well, she had her supper, and then some more chocolates. But
the night fell, and it was ever so lonesome, dark, and silent.
It might have been about half-past twelve when she awoke with a start
and sprang to her feet. She was trembling now like the leaves of the aspen,
for she could hear voices muttering outside the back door, and some one
tried the handle. Most girls would have screamed. Lotty did not; she drew
nearer to the door, and listened.
'This is the caravan, Lintie, a nobleman's, they say. Let's try those keys.
I'll break the lock afore I'm beaten. Plenty o' swag in here, Lintie, and
nobody'll know the crib has ever been cracked.'
Key after key was tried in vain, and poor Lotty was nearly fainting.
'Here, Lintie, the jemmy; hand it up. I'm going in whatever happens.'
There was glass in the back door; and, hardly knowing what she did,
Lotty flashed her electric light through that, full in the hideous, grimy face
of the would-be burglar. She stamped her feet at the same time, and rattled
the door-handle. The next moment, with something like an oath and a
smothered shout, the burglars made off.
But Lotty slept no more till daylight, and when she awoke the train was
far on its way to the Border. It was moving very quickly too; she knew that
from the motion. But, oh! how she hoped and prayed the train would go
right on now to London, for she determined she would leave it anywhere
rather than be shunted into the dark of a siding again. But, much to her joy,
the train went rattling on and on, so after breakfast and some more of
Chops's chocolates she forgot all her troubles, even opened the front door
and went out to sit in the coachman's seat and gaze on the beautiful
landscape gliding swiftly past her like some splendid panorama.
The sun was shining brightly to-day, the sky everywhere clear and blue,
with only a few white clouds on the western horizon. It was the sunshine of
earliest summer, a sunshine of promise, a sunshine, too, that seemed to find
an echo in this little gipsy's heart. Even the train's rapid motion accorded
with the girl's feelings, making her feel that she was leaving something of
sorrow and darkness behind her and bringing her every hour nearer and
nearer to a happier future.
Yet Lotty could not help thinking, while she sat here in the bright
forenoon sunshine, how sad it was that so much of real joy should have
been in her camp-life mingled with the embittering gall of misery. For, as
far as her relations with Biffins Lee had existed, her life had been one long
woe. She bore him no ill-will, however; he had been a hard taskmaster, and
she merely a little white slave, useful to him in his business, a mere
property, that was all. What her life as a show-girl would have been without
Crona, Chops, and Mary she could not have told you. 'Oh,' she would have
said, 'it would have been no life, for I would simply have died.'
She tried even now to think back to some little kindness of deed or even
speech of Lee's that was not born of self-interest. She could not find even
one; as regards her education, he had been most particular, and had paid her
teachers well, but this was merely in order that as a property she might have
more value.
And then, all at once, a cold hand seemed to clutch at her heart, and
some evil thing appeared to whisper to her the words: 'Biffins Lee will find
you wherever you go, and take you back by force to his show.' Poor girl!
She did not know then that he had no legal right to do anything of the sort.
But the thought, once implanted in her mind, took firm root, and grew and
increased till it made her miserable. But for the time being only. Who could
be miserable any length of time on so glad and bright a day as this? With
the fresh air on her face, she began to feel drowsy.
'But,' she said to herself, 'I might drop off to sleep, and fall right down
out of the caravan and be killed.' So once more she sought the interior,
comforted herself with a few more chocolates, carefully counted how many
were left, then got in under the plaidie to read. But to read was to feel
drowsy, and in a few minutes' time this little gipsy lass was safe in the kind
arms of Morpheus.
. . . . . . .
Chops, going back homewards through the moor and the woods, felt so
lonesome that the evening actually seemed cold, for grief has this chilling
effect at times. He was very glad, indeed, when at long and last the light
from Crona's romantic wee cot blinked out through the gloom of the
gathering night-shadows. It might have been this light that accounted for
what immediately followed, for Chops had a sudden inspiration. Although
he was a poet—or thought himself so, and few even of the best of us get
much farther—it was seldom indeed that Nature vouchsafed him a sudden
inspiration. And when this one came he stopped short at once, and a
beaming, fatty sort of a smile illumined his face to such an extent that for a
moment it might have been mistaken for a will-o'-the-wisp.
'I'll do it,' he said. 'Yes, I'll do it to-morrow mornin' right away. Wonder I
didn't think of telling Miss Lotty. But w'ich it'll be a pleasant serprise for
her.'
He hurried on now, and was soon inside the cottage; and Crona, knowing
Chops's weakness, set about laying the supper.
'Just 'ad a henspyration, Crona!'
'And what is it, dear boy?'
'The henspyration,' said Chops impressively, 'is a tillygrum.'
'A telegram, Chops? There, you'll find that a nice bit of supper!'
'A tillygrum, Crona, to-morrow mornin' fust thing. Runs with it my
single self to make sure. And that tillygrum will be to Mrs Oak, derelict of
Capting Oak of the wretched ship Cumberland, Capstan Cottage,
Shepherd's Bush, London. An' it will say—the tillygrum will say—"Meet
Lotty at King's Cross in the caravan, on Friday first as ever was.—Yours to
order, Chops."'
'Very good idea of yours, Chops; but you couldn't put all that in a
telegram. Besides, Captain Oak isn't dead, so Mrs Oak isn't a relict, let
alone a derelict. I'll write the telegram, Chops, this very night.'
. . . . . . .
The lights of London were beginning to spring up here and there in
windows as the train drew into the gloom of King's Cross, and Lotty seized
her little bag and fiddle-case, got out, locked her door, and leapt off the
truck and almost into the arms of kindly Mrs Oak and the stationmaster
himself. After the first greetings, the guard came hurrying up.
'We've got a little stowaway here, guard,' said the man with the gold
band, laughing. 'Travelled all the way from Scotland in her own caravan!'
'Well, well, well! And a pretty little stowaway she is. 'Pon my soul, if I'd
known she was with me, stationmaster, I would have been sorely tempted to
neglect my duty, and travelled with her in the same carriage.'
'Thanks, dear,' he said when Lotty gave up her ticket.
'I suppose,' said the little gipsy, 'I was infringing orders.'
'I don't know really if we have a bylaw that would cover this case; but,
depend upon it, that if your friend Mrs Oak hadn't come I should have made
you a prisoner, and taken you home to my wife, if only for the sake of
seeing a little more of so interesting and pretty a stowaway.'
For verily, verily, reader, even a stationmaster is 'gallantly personified'
where beauty is concerned.
Lotty did think it so kind and thoughtful of Chops to send that telegram,
and it certainly was a most pleasant surprise to her. She much needed rest,
too, and so she gladly went home that night with Mrs Oak to Capstan
Cottage, and was glad to meet her husband James once more. He was on
shore for just a fortnight, then bound for the West Indies in a better ship
than ever he had commanded before. But, tired though she was, Lotty did
not go to bed until she had written both to Crona and to Chops himself. And
next day Mrs Oak went with Lotty all the way to Highgate Heath.

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Family Business in China, Volume 2:

Challenges and Opportunities 1st

Family Business in China Volume 2 Challenges and

Doing Business in Kenya Opportunities and Challenges

Integrating New Technologies in International Business:

Responsible Business Operations: Challenges and

Foreign Business in China and Opportunities for

Circular Economy: Challenges and Opportunities for

Internet Philanthropy in China 1st Edition Chen

International Perspectives on Intimate Partner Violence

Ling Chen · Jian An Zhu · Hanqing Fang

More information about this series at

ISSN 2661-8435 ISSN 2661-8443 (electronic)

3 Entrepreneurship and Family Business in China’s

6.3 Family Governance in a Brother Consortium 133

Fig. 2.1 Age distribution of Chinese family entrepreneurs 24

Fig. 6.4 Decision-making styles among entrepreneurs 131

Table 2.1 Three categories to define family business in China 11

entrepreneurs as well as a greater degree of privately-owned enterprises

1.1 Family and Family Business in China

household as the unit to recruit soldiers. Also, in order to ensure suffi-

1.2 Challenges and Opportunities

“succession dilemma” may be more pronounced in China compared to

1.3 What This Book Is About

businesses in Southeast Asia. Chapter 8 provides a conclusion to summa-

Before giving an overview of Chinese family businesses and their contri-

© The Author(s), under exclusive license to Springer Nature 9

2.1 Defining Family Business in China

considered as a family business. While admittedly it is the intersection of

Table 2.1 Three categories to define family business in China

with a family controlling only 5% of the shares can also be considered a

Defining Family Business in China

Table 2.2 Numbers of self-employed businesses

2.2), these self-employed business people engage in economic activities

Third, the biggest contribution to the national economy is family

2.2 Prevalence of Family Business in China

2.3 Employment in Chinese Family Business

social organizations, there are 168.89 million employed by the enter-

Table 2.4 Family businesses and employment population

residence are employed in the secondary and tertiary industries other

private enterprises, for a total of 198.81 million employees in the private

2.4 Economic Scale in Family Businesses

As shown in Table 2.5, as firm size increases the proportion of family

Table 2.6 Economic indicators of enterprises in 2018

Table 2.7 Size of family businesses

in terms of their age and geographical distribution. In the sub-sample

2.5 Individual Characteristics of Chinese

7 Twelve questionnaires were missing, which accounted for 0.3%

Fig. 2.1 Age distribution of Chinese family entrepreneurs

Table 2.8 Education of Chinese family entrepreneurs

and technical secondary school education (27%). Business owners are

Table 2.9 Working experiences of family and non-family business owners

or collective enterprises, and 217 had worked in foreign-owned compa-

Political Consultative Conference (CPPCC). 543 of them are deputies

2.6 Differences Between Family

30 definitions in journals of family business research, entrepreneurship

Table 2.11 Corporate governance in family and non-family businesses

Table 2.12 Decision-making in family- and non-family businesses

or party organizations, all of which reflect the controlling position of the

Table 2.13 Social performance in family and non-family businesses

In family businesses, owners not only hold major decision-making

to statistics generated by American scholars in the 1990s, the average

Fig. 2.2 Birth years of family businesses