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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
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
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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
Astrachan, J. H., & Shanker, M. C. (2003). Family businesses’ contribution to
the US economy: A closer look. Family Business Review, 16 (3), 211–219.
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Kerblay, & R. E. F. Smith (Ed.).
Chrisman, J. J., Chua, J. H., & Steier, L. (2005). Sources and consequences of
distinctive familiness: An introduction. Entrepreneurship Theory and Practice,
29 (3), 237–247.
Chrisman, J. J., Hofer, C. W., & Boulton, W. B. (1988). Toward a system
for classifying business strategies. Academy of Management Review, 13(3),
413–428.
Chrisman, J. J., Chua, J. H., Pearson, A. W., & Barnett, T. (2012). Family
involvement, family influence, and family–centered non–economic goals in
small firms. Entrepreneurship Theory and Practice, 36 (2), 267–293.
Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business
by behavior. Entrepreneurship Theory and Practice, 23(4), 19–39.
De Geus, A. (2002). The living company. Harvard Business Press.
Heck, R. K., Jasper, C. R., Stafford, K., Winter, M., & Owen, A. J. (2001).
Using a household sampling frame to study family businesses: The 1997
national family business survey. In Databases for the study of entrepreneurship.
Emerald Group Publishing Limited.
Klein, S. B. (2000). Family businesses in Germany: Significance and structure.
Family Business Review, 13(3), 157–182.
Li, J. (2011). The essence of the ChiNext issue is that family listed companies
dominate. Economic Information Daily.
Lansberg, I., Perrow, E. L., & Rogolsky, S. (1988). Family business as an
emerging field. Family Business Review, 1(1), 1–8.
Litz, R. A. (2008). Two sides of a one-sided phenomenon: Conceptualizing
the family business and business family as a Möbius strip. Family Business
Review, 21(3), 217–236.
McKelvey, B. (1982). Organizational systematics: Taxonomy, evolution, classifica-
tion. University of California Press.
Miller, D., Le Breton-Miller, I., Lester, R. H., & Cannella, A. A., Jr. (2007).
Are family firms really superior performers? Journal of Corporate Finance,
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Morck, R., & Yeung, B. (2003). Agency problems in large family business
groups. Entrepreneurship Theory and Practice, 27 (4), 367–382.
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London: Yale Univesity Press.
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methodological rethink. Entrepreneurship Theory and Practice, 23(1), 31–56.
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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from 3 to 10 on each node. The scars of successive nodes often
alternate in position, and thus form more or less regular vertical
series as shown in fig. 102. The most obvious feature as regards the
arrangement of the branch-scars is their spiral disposition on the
surface of the pith-cast. The internodes are fairly uniform in length,
and there is no periodic recurrence of narrower internodes as in
Calamitina. From an examination of specimens of Eucalamites in
which the pith-cast is covered with a coaly layer representing the
carbonised remains of the wood and cortex, it would appear that the
surface of the stems was practically smooth. The coaly investment
on Eucalamites casts varies considerably in thickness[814]; it is very
unsafe to make use of the thickness of this layer as a test of the
breadth of the wood in Calamitean stems. The branch-scars as seen
in a surface-view of a stem are situated a little above the nodal lines,
while depressions on the pith-casts occur in the slight nodal
constriction or immediately above it. Small leaf-scars have been
described as occurring on the nodes between the branch-scars in
specimens showing the surface features[815].
The species long known as Calamites cruciatus Sternb. is usually
taken as the type of the sub-genus Eucalamites. Weiss[816] has
subdivided this species into several ‘forms,’ which he bases on the
number of branch-scars on each node and on other characters; a
more extended subdivision of C. cruciatus has recently been made
by Sterzel[817], who admits the impossibility of separating the specific
forms by means of the data at our disposal, but for purposes of
geological correlation he prefers to express slight differences by
means of definite ‘forms’ or varieties. The more comprehensive use
of the specific name cruciatus as adopted by Zeiller in his Flore de
Valenciennes[818] is, I believe, the better method to adopt. The
specimen shown in fig. 102 affords a good example of a typical
Calamites cruciatus, it was found in the Middle Coal-Measures near
Barnsley, Yorkshire.
Fig. 102. Calamites (Eucalamites) cruciatus, Sternb.
From a specimen in the Barnsley Museum, Yorkshire. ½ nat. size.
Calamites (Eucalamites) cruciatus (Sternb.). Fig. 102.

1826. Calamites cruciatus, Sternberg[819].
1828. Calamites cruciatus, Brongniart[820].
1831. Calamites alternans, Germar and Kaulfuss[821].
1837. Calamites approximatus, Lindley and Hutton[822].
1877. Calamodendrofloyos cruciatus, Grand’Eury[823].
1878.
Calamodendron cruciatum, Zeiller[824].
1884. Calamites (Eucalamites) cruciatus ternarius, Weiss[825].
1884. „ „ „ quaternarius, Weiss[825].
1884. „ „ „ genarius, Weiss[825].
1884. „ „ multiramis, Weiss[825].
1888. Calamites (Calamodendron) cruciatus, Zeiller[826].
This species occurs in the Upper, Middle and Lower Coal-

Measures[827]. The casts of the cruciatus type have been found
associated with wood possessing the structural features of the sub-
genus Calamodendron[828], but our knowledge of the structure of the
stem, and of the fertile branches of C. cruciatus is very imperfect. A
restoration of Calamites (Eucalamites) cruciatus is given by Stur[829]
in his classic work on the Calamites, but he does not make quite
clear the supposed connection with the stems and the fertile shoots
of the Asterophyllites type[830] which he describes. Another member
of the Eucalamites group, which is better known as regards its
foliage-shoots, is Calamites ramosus, a species first described by
Artis[831] in 1825. Stems of this species have been found in
connection with the branches and leaves of the Annularia[6] type,
bearing Calamostachys[832] cones. In all probability pith-casts
included in the sub-genus Eucalamites belonged to stems with
foliage-shoots and probably also with cones of more than one form.
NOMENCLATURE.
In the above account of a few common pith-casts it has been

pointed out that there is occasionally satisfactory evidence for
connecting certain casts with wood of a particular structure, and with
sterile and fertile foliage-shoots of a definite type. It is, however,
impossible in many cases to recognise with any certainty the leaf-
bearing branches and strobili of the different casts of Calamites; it is
equally impossible to determine what type of pith-cast or what type
of foliage-shoots belongs to petrified stem-fragments in which it is
possible to investigate the microscopical features. The scattered and
piece-meal nature of the material on which our general knowledge of
Calamitean plants is based, necessitates a system of nomenclature
which is artificial and clumsy; but the apparent absurdity of attaching
different names to fragments, which we believe to be portions of the
same genus, is of convenience from the point of view of the
geologist and the systematist. As our material increases it will be
possible to further simplify the nomenclature for Calamarian plants,
but it is unwise to allow our desire for a simpler terminology to lead
us into proposals which are based rather on suppositions than on
established fact. If it were possible to discriminate between pith-
casts of stems having the different anatomical characters designated
by the three sub-genera, Arthropitys, Arthrodendron and
Calamodendron, the genus Calamites might be used in a much
narrower and probably more natural sense than that which we have
adopted. The tests made use of by some authors for separating pith-
casts of Calamodendron and Arthropitys stems do not appear to be
satisfactory; we want some term to apply to all Calamitean casts
irrespective of the anatomical features of the stems, or of the precise
nature of the foliage-branches. As used in the present chapter,
Calamites stands for plants differing in certain features but
possessing common structural characters, which must be defined in
a broad sense so as to include types which may be worthy of generic
rank, but which for convenience sake are included in a
comprehensive generic name. The attempts to associate certain
forms of foliage with Arthropitys on the one hand and with
Calamodendron on the other, cannot be said to be entirely
satisfactory; we still lack data for a trustworthy diagnosis of distinct
Calamarian genera which shall include external characters as well
as histological features. If we restricted the genus Calamites to
stems with an Arthropitys structure and an Asterophyllitean foliage,
we should be driven into unavoidable error. Within certain limits it is
possible to distinguish generically or even specifically between
petrified branches, and we already possess material enough for fairly
complete diagnoses founded on internal structure; but it is not
possible to make a parallel classification for pith-casts and foliage-
shoots. For this reason, and especially bearing in mind the
importance of naming isolated foliage-shoots and stem-casts for
geological purposes, I believe it is better to admit the artificially wide
application of the name Calamites, and to express more accurate
knowledge, where possible, by the addition of a subgeneric term. In
dealing with distinctions exhibited by Calamitean stems it may be
advisable to make use of specific names, but we must keep before
us the probability of the pith-cast and petrified stem-fragment of the
same plant receiving different specific names. If the structural type is
designated by a special sub-genus, this will tend to minimise the
anomaly of using more than one binominal designation for what may
be the same individual.
CALAMITES AND EQUISETUM.
The following summary may serve to bring together the different

generic and subgeneric terms which have been used in the
foregoing account of Calamites.
CALAMITES.
Subgenera having Subgenera Genus proposed for
reference to the method of founded on roots of Calamites before
branching as seen in casts anatomical their real nature was
or impressions of the stem- characters in recognised. The name
surface or in pith-casts. stems and refers to anatomical
Calamitina, branches. characters.
Eucalamites, Arthropitys, Astromyelon.
Stylocalamites. Calamodendro
n,
Arthrodendron
(new sub-
genus
substituted for
Calamopitys).
Genera of which some Generic Genus including

species, if not all, are the names applied impressions of Calamite
leaf-bearing branches of to strobili roots.
Calamites. belonging to Pinnularia.
Calamocladus (including Calamites.
Asterophyllites), Calamostachy
Annularia. s,
Palaeostachya
,
Macrostachya,
etc.
IV. Conclusion.
A brief sketch of the main features of Calamites suffices to bring
out the many points of agreement between the arborescent Calamite
plants and the recent Equisetums. The slight variation in
morphological character among the present-day Horse-tails,
contrasts with the greater range as regards structural features
among the types included in Calamites. The Horse-tails probably
represent one of several lines of development which tend to
converge in the Palaeozoic period; the Calamite itself would appear
to mark the culminating point of a certain phylum of which we have
one degenerate but closely allied descendant in the genus
Equisetum. We shall, however, be in a better position to consider the
general question of plant-evolution after we have made ourselves
familiar with other types of Palaeozoic plants. Grand’Eury’s[833]
striking descriptions of forests of Calamites in the Coal-Measures of
central France, enable us to form some idea of the habit of growth of
these plants with their stout branching rhizomes and erect aerial
shoots.
By piecing together the evidence derived from different sources
we may form some idea of the appearance of a living Calamite. A
stout branching rhizome ascended obliquely or spread horizontally
through sand or clay, with numerous whorls or tufts of roots
penetrating into swampy soil. From the underground rhizome strong
erect branches grew up as columnar stems to a height of fifty feet or
more; in the lower and thicker portions the bark was fissured and
somewhat rugged, but smoother nearer the summit. Looking up the
stem we should see old and partially obliterated scars marking the
position of a ring of lateral branches, and at a higher level tiers of
branches given off at regular or gradually decreasing intervals,
bearing on their upper portions graceful green branchlets with whorls
of narrow linear leaves. On the younger parts of the main shoot rings
of long and narrow leaves were borne at short intervals, several leaf-
circles succeeding one another in the intervals between each
radiating series of branches. On some of the leaf-bearing branchlets
long and slender cones would be found here and there taking the
place of the ordinary leafy twigs. Passing to the apical region of the
stem the lateral branches given off at a less and less angle would
appear more crowded, and at the actual tips there would be a
crowded succession of leaf-segments forming a series of
overlapping circles of narrow sheaths with thin slender teeth bending
over the apex of the tree.
Thus we may feebly attempt to picture to ourselves one of the
many types of Calamite trees in a Palaeozoic forest, growing in a
swampy marsh or on gently sloping ground on the shores of an
inland sea, into which running water carried its burden of sand and
mud, and broken twigs of Calamites and other trees which
contributed to the Coal Period sediments. The large proportions of a
Calamite tree are strikingly illustrated by some of the broad and long
pith-casts occasionally seen in Museums; in the Breslau Collection
there is a cast of a stem belonging to the sub-genus Calamitina,
which measures about 2 m. in length and 23 cm. in breadth, with 36
nodes. In the Natural History Museum, Paris, there is a cast nearly 2
metres long and more than 20 cm. wide, which is referred to the sub-
genus Calamodendron.
E. Archaeocalamites.
In the Upper Devonian and Culm rocks casts of a well-defined
Calamitean plant are characteristic fossils; stems, leaf-bearing
branches, roots and cones have been described by several authors,
and the genus Archaeocalamites has been instituted for their
reception. Although this genus agrees in certain respects with
Calamites, and as recent work has shown this agreement extends to
internal structure, it has been the custom to regard the Lower
Carboniferous and Devonian plants as genetically distinct. The
surface features of the stem-casts, the form of the leaves, and
apparently the cones, possess certain distinctive characters which
would seem to justify the retention of a separate generic designation.
We may briefly summarise the characteristics of the genus as
follows:—
Pith-casts articulated, with very slightly constricted nodes; the
internodes traversed by longitudinal ribs slightly elevated or almost
flat, separated by shallow grooves. The ribs and grooves are
continuous from one internode to another, and do not usually show
the characteristic alternation of Calamites[834]. Along the nodal line
there are occasionally found short longitudinal depressions, probably
marking the points of origin of outgoing bundles. Branches were
given off from the nodes without any regular order; a pith-cast may
have branch-scars on many of the nodes, or there may be no trace
of branches on casts consisting of several nodes. The leaves[835] are
in whorls; in some cases they occur as free, linear, lanceolate
leaves, or on younger branches they are long, filiform and repeatedly
forked. The structure of the wood agrees with that of some forms of
Arthropitys. The strobili consist of an articulated axis bearing whorls
of sporangiophores, and each sporangiophore has four sporangia.
Our knowledge of the fertile shoots is, however, very imperfect.
Renault[836] has recently described the structure of the wood in
some small silicified stems of Archaeocalamites from Autun. A large
hollow pith is surrounded by a cylinder of wood consisting of wedge-
shaped groups of xylem tracheids associated with secondary
medullary rays; at the apex of each primary xylem group there is a
carinal canal. The primary medullary rays appear to have been
bridged across by bands of xylem at an early stage of secondary
thickening, as in the Calamite of fig. 83, D.
Our knowledge of the cones of Archaeocalamites is far from
satisfactory. Renault[837] has recently described a small fertile branch
bearing a succession of verticils of sporangiophores; each
sporangiophore stands at right angles to the axis of the cone and
bears four sporangia, as in Calamostachys. It is not clear how far
there is better evidence than that afforded by the association of the
specimen with pith-casts of stems, for referring this cone to
Archaeocalamites, but the association of vegetative and fertile
shoots certainly suggests an organic connection. The cone
described by the French author agrees with Equisetum in the
absence of sterile bracts between the whorls of sporangiophores. It
is an interesting fact that such a distinctly Equisetaceous strobilus is
known to have existed in Lower
Carboniferous rocks.
Stur[838] has also described
Archaeocalamites at considerable length;
he gives several good figures of stem-casts
and foliage-shoots bearing long and often
forked narrow leaves. The same writer
describes specimens of imperfectly
preserved cones in which portions of whorls
of forked filiform leaves are given off from
the base of the strobilus[839]. Kidston[840]
published an important memoir on the
cones of Archaeocalamites in 1883, in
which he advanced good evidence in
support of the view that certain strobili,
which were originally described as
Monocotyledonous inflorescences, under
the generic name Pothocites[841], are the
fertile shoots of this Calamarian genus.
Kidston’s conclusions are based on the
occurrence on the Pothocites cones, of
leaves like those of Archaeocalamites, on
the non-alternation of the sporangiophores
of successive whorls, and on the close
resemblance between his specimens and
those described by Stur. Good specimens
of the cones, formerly known as Pothocites,
may be seen in the Botanical Museum in
the Royal Gardens, Edinburgh; as they are Fig. 103.
in the form of casts without internal Archaeocalamites
scrobiculatus
structure it is difficult to form a clear (Schloth.).
conception as to their morphological From a specimen in the
features. Woodwardian Museum,
Cambridge. From the
The fossils included under Carboniferous
Archaeocalamites have been referred by limestone of
different authors to various genera, and
considerable confusion has arisen in both Northumberland. ½ nat.
generic and specific nomenclature. The size.
following synonomy of the best known
species, A. scrobiculatus (Schloth.) illustrates the unfortunate use of
several terms for the same plant.
Archaeocalamites scrobiculatus (Schloth.). Fig. 103.

1720. Lithoxylon, Volkmann[842].
1820. Calamites scrobiculatus, Schlotheim[843].
1825. Bornia scrobiculata, Sternberg[844].
1828. Calamites radiatus, Brongniart[845].
1841. Pothocites Grantoni, Paterson[846].
1852. Calamites transitionis, Göppert[847].
—— Stigmatocanna Volkmanniana, ibid.
—— Anarthrocanna tuberculata, ibid.
—— Calamites variolatus, ibid.
—— C. obliquus, ibid.
—— C. tenuissimus, ibid.
—— Asterophyllites elegans, ibid.
1866. Calamites laticulatus, Ettingshausen[848].
—— Equisetites Göpperti, ibid.
—— Sphenophyllum furcatum, ibid.
1873. Asterophyllites spaniophyllus, Feistmantel[849].
1880. Asterocalamites scrobiculatus, Zeiller[850].
For other lists of synonyms reference may be made to Binney[851],
Stur[852], Kidston[853] and other authors.
Some of the best specimens of this species are to be seen in the
Museums of Breslau and Vienna, which contain the original
examples described by Göppert and Stur. An examination of the
original specimens, figured by Göppert under various names,
enables one to refer them with confidence to the single species,
Archaeocalamites scrobiculatus. The generic name
Archaeocalamites, which has been employed by some authors, was
suggested by Schimper[854] in 1862, as a subgenus of Calamites, on
account of the occurrence of a deeply divided leaf-sheath, attached
to the node of a pith-cast, which seemed to differ from the usual type
of Calamitean leaf. The specimens described by Schimper are in the
Strassburg Museum; the leaf-sheath which he figures is not very
accurately represented.
The example given in fig. 103 shews very clearly the continuous
course of the ribs and grooves of the pith-cast. Each rib is traversed
by a narrow median groove which would seem to represent the
projecting edge of some hard tissue in the middle of each principal
medullary ray of the stem. The specimen was found in a
Carboniferous limestone quarry, Northumberland; there is a similar
cast from the same locality in the Museum of the Geological Survey.
Affinities of Archaeocalamites.
This genus agrees very closely with Calamites both in the
anatomical structure of the stem and in the verticillate disposition of
the leaves. The strobili appear to be Equisetaceous in character, and
there is no satisfactory evidence of the existence of whorls of sterile
bracts in the cone, such as occur in Calamostachys and in other
Calamitean strobili. The continuous course of the vascular bundles
of the stem from one internode to the next is the most striking feature
in the ordinary specimens of the genus; but it sometimes happens
that the grooves on a pith-cast shew the same alternation at the
node as in Calamites. This is the case in a specimen in the Göppert
collection in the Breslau Museum, and Feistmantel[855] has called
attention to such an alternation in specimens from Rothwaltersdorf.
In the true Calamites, on the other hand, the usual nodal alternation
of the vascular strands is by no means a constant character[856].
Stur[857], Rothpletz[858], and other authors have pointed out the
resemblance of Archaeocalamites to Sphenophyllum. The deeply
divided leaves of some Sphenophyllums and those of
Archaeocalamites are very similar in form; and the course of the
vascular strands in Sphenophyllum may be compared with that in
Archaeocalamites. But the striking difference in the structure of the
stele forms a wide gap between the two genera. We have evidence
that the Calamites and Sphenophyllums were probably descended
from a common ancestral stock, and it may be that in
Archaeocalamites, some of the Sphenophyllum characters have
been retained; but there is no close affinity between the two plants.
On the whole, considering the age of Archaeocalamites and the
few characters with which we are acquainted, it is probable that this
genus is very closely related to the typical Calamites, and may be
regarded as a type which is in the direct line of development of the
more modern Calamite and the living Equisetum. Weiss[859] includes
Archaeocalamites as one of his subgenera with Calamitina and
others, and it is quite possible that the genus has not more claim to
stand alone than other forms at present included in the
comprehensive genus Calamites.
The student will find detailed descriptions of this genus in the
works which have been referred to in the preceding pages.
CHAPTER XI.
II. SPHENOPHYLLALES.
I. SPHENOPHYLLUM.
The genus Sphenophyllum is placed in a special class, as
representing a type which cannot be legitimately included in any of
the existing groups of Vascular Cryptogams. Although this
Palaeozoic genus possesses points of contact with various living
plants, it is generally admitted by palaeobotanists that it constitutes a
somewhat isolated type among the Pteridophytes of the Coal-
Measures. Our knowledge of the anatomy of both vegetative shoots
and strobili is now fairly complete, and the facts that we possess are
in favour of excluding the genus from any of the three main divisions
of the Pteridophyta.
In Scheuchzer’s Herbarium Diluvianum there is a careful drawing
of some fragments of slender twigs, from an English locality, bearing
verticils of cuneiform leaves, which the author compares with the
common Galium[860]. As regards superficial external resemblance,
the Galium of our hedgerows agrees very closely with what must
have been the appearance of fresh green shoots of Sphenophyllum.
A twig of the same species of Sphenophyllum is figured by
Schlotheim[861] in the first part of his work on fossil plants; he regards
it as probably a fragment of some species of Palm. Sternberg[862]
was the first to institute a generic name for this genus of plants, and
specimens were described by him in 1825 as a species of the genus
Rotularia. The name Sphenophyllites was proposed by Brongniart[863]
in 1822 as a substitute for Schlotheim’s genus, and in a later work[864]
the French author instituted the genus Sphenophyllum. Dawson[865]
was the first to make any reference to the anatomy of this genus; but
it is from the examination of the much more perfect material from St.
Étienne, Autun, and other continental localities, the North of England
and Pettycur in Scotland, by Renault, Williamson, Zeiller and Scott,
that our more complete knowledge has been acquired.
The affinity of Sphenophyllum has always been a matter of
speculation; it has been compared with Dicotyledons, Palms,
Conifers (Ginkgo and Phyllocladus), and various Pteridophytes, such
as Ophioglossum, Tmesipteris, Marsilia, Salvinia, Equisetum and the
Lycopodiaceae[866].
DEFINITION.
We may define the genus Sphenophyllum as follows:—

Stem comparatively slender (1·5–15 mm.?), articulated, usually
somewhat tumid at the nodes; the surface of the internodes is
marked by more or less distinct ribs and grooves which do not
alternate at the nodes, but follow a straight course from one
internode to the next. A single branch is occasionally given off from a
node. Adventitious roots are very rarely seen, their surface does not
show the ridges and grooves of the foliage-shoots.
The leaves are borne in verticils at the nodes, those in the same
whorl being usually of the same size, but in some forms two of the
leaves are distinctly smaller than the others. Each verticil contains
normally 6, 9, 12, 18 or more leaves, which are separate to the base
and not fused into a sheath; the number of leaves in a verticil is not
always a multiple of six. They vary in form from cuneiform with a
narrow tapered base, and a lamina traversed by several forked
veins, to narrow uninerved leaves and leaves with a lamina
dissected into dichotomously branched linear segments. The leaves
of successive whorls are superposed.
The strobili are long and narrow in form, having a length in some
cases of 12 cm., and a diameter of 12 mm.; they occur as shortly
stalked lateral branches, or terminate long leaf-bearing shoots. The
axis of the cone bears whorls of numerous linear lanceolate bracts
fused basally into a coherent funnel-shaped disc, bearing on its
upper surface sporangiophores and sporangia.
The strobili are usually isosporous, but possibly heterosporous in
some forms.
The stem is monostelic, with a triarch or hexarch triangular strand
of centripetally developed primary xylem, consisting of reticulate,
scalariform and spiral tracheae; the protoxylem elements being
situated at the blunt corners of the xylem-strand. Foliar bundles are
given off, either singly or in pairs, from each angle of the central
primary strand. The secondary xylem consists of radially disposed
reticulate or scalariform tracheae, developed from a cambium-layer.
The phloem is made up of thin-walled elements, including sieve-
tubes and parenchyma. Both xylem and phloem include secondary
medullary rays of parenchymatous cells. The cortex consists in part
of fairly thick-walled elements; in older stems the greater part of the
cortical region is cut off by the development of deep-seated layers of
periderm.
The roots are apparently diarch in structure, with a lacunar and
smooth cortex.
• • • • •
The branch of Sphenophyllum emarginatum Brongn. given in fig.
109 shows the characteristic appearance of the genus as
represented by this well-known species which Brongniart figured in
1822. The Indian species shown in fig. 111 illustrates the occurrence
of unequal leaves in the same whorl, and in fig. 110, B, we have a
form of verticil in which the leaves are deeply divided into filiform
segments. A larger-leaved form is represented by S. Thoni, Mahr.
(fig. 110, A), a species occasionally met with in Permian rocks.
No specimens of Sphenophyllum have so far been found attached
to a thick stem; they always occur as slender shoots, which
sometimes reach a considerable length. One of the longest
examples known is in the collection of the Austrian Geological
Survey; the axis is 4 mm. in breadth and 85 cm. long, bearing a
slender branch 61 cm. in length. The manner of occurrence of the
specimen as a curved slender stem on the surface of the rock
suggests a weak plant, which must have depended for support on
some external aid, either water or another plant. The anatomical
structure and other features do not favour the suggestion of some
writers that Sphenophyllum was a water-plant[867], but there would
seem to be no serious obstacle in the way of regarding it as possibly
a slender plant which flung itself on the branches and stems of
stronger forest trees for support.
A. The anatomy of Sphenophyllum.

The following account of the structural features of the stem and
root is based on the work of Renault[868], Williamson[869] and
Williamson and Scott[870]. We may first consider such characters as
have been recognised in different examples of the genus, and then
notice briefly the distinguishing peculiarities of two well-marked
specific types.
a. Stems.
i. Primary structure.
In a transverse section of a young Sphenophyllum stem such as
that diagrammatically sketched in fig. 105, A, we find in the centre
the xylem portion of a single stele with a characteristic triangular
form. The primary xylem consists mainly of fairly large tracheae with
numerous pits on their walls; towards the end of each arm the
tracheids become scalariform, and at the apex there is a group of
narrower spiral protoxylem elements. In the British species there is a
single protoxylem group at the apex of each arm, but Renault has
described some French stems in which the stele appears to be
hexarch, having two protoxylem groups at the end of each of the
three rays of the stele. The primary xylem strand of Sphenophyllum
has therefore a root-like structure, the tracheids having been
developed centripetally from the three initial protoxylem groups. This
type of structure is typical of roots, but it also occurs in the stems of
some recent Vascular Cryptogams.
Fig. 104. Diagrammatic longitudinal section of Sphenophyllum.
c, outer cortex; b, space next the stele, originally occupied by phloem
etc.; a, xylem strand. (After Renault[871].) × 7.
As a rule the tissue next the xylem has not been petrified, but in
exceptionally well-preserved examples it is seen to consist of a band
of thin-walled elements, of which those in contact with the xylem may
be spoken of as phloem, and those beyond as the pericycle.
Succeeding this band of delicate tissue there is a broader band of
thicker-walled and somewhat elongated elements, constituting the
cortex. The specimen drawn in fig. 105, A, shows very prominent
grooves in the cortex opposite the middle of each bay of the primary
wood. It is these grooves that give to the ordinary casts of
Sphenophyllum branches the appearance of longitudinal lines
traversing each internode. In a longitudinal section of a stem, the
cortical tissue (fig. 104, c) is found to be broader in the nodal
regions, thus giving rise to the tumid nodes referred to in the
diagnosis. The increased breadth at the nodes does not mean that
the xylem is broader in these regions, as it is in Calamite stems.
Small strands of vascular tissue are given off from the three edges of
the triangular stele (fig. 105 A) at each node; these branch in
passing through the cortex on their way to the verticils of leaves. The
space b in the diagrammatic section of fig. 104 was originally
occupied by the phloem and inner cortex. In some species of
Sphenophyllum the apex of each arm of the xylem strand, as seen in
transverse section, is occupied by a longitudinal canal surrounded by
spiral tracheids, as in the primary xylem of the old stem shown in fig.
105, C.
Fig. 105. Sphenophyllum.
A. Transverse section of young stem.
B. Transverse section of the wood of a young stem; px, protoxylem; x,
secondary xylem. (A and B. Sphenophyllum plurifoliatum.) × 20.
C. Transverse section of an old stem; (S. insigne); a, phloem; b,
periderm; c, fascicular secondary xylem; d, interfascicular
secondary xylem. × 9. (No. 914 in the Williamson Collection.)
D. Longitudinal section of the reticulate tracheae and medullary rays; r, r,
r, of S. plurifoliatum. × 36.
E. Similar section of S. insigne. × 75. (D and E after Williamson and
Scott.)
ii. Secondary structure.

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Family Business in China, Volume 2:

Challenges and Opportunities 1st

Family Business in China, Volume 1: A Historical

The Changing Role of SMEs in Global Business: Volume I:

Internet Philanthropy in China 1st Edition Chen

Doing Business in Chile and Peru: Challenges and

Oil and Oilseed Processing: Opportunities and

Herbal Bioactive-Based Drug Delivery Systems:

Artificial Intelligence in the Gulf: Challenges and

International Management: Strategic Opportunities and

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