BEIJING (Bloomberg) - Liu Chang, the daughter of a billionaire industrialist, went to boarding school in the US, travelled the world, and married a hip Chinese film director. Next move in her charmed life: Running one of China's largest pig feed and dairy companies.
"With my background, I am almost an outsider to the family business. Once I step in, I can bring new perspectives, new thoughts, fresh ideas," says the 37-year-old, now being groomed to take over New Hope Group, the US$15 billion (S$20.4 billion) agribusiness company founded by her father, 66-year-old Liu Yonghao.
Family firms, which make up about 90 per cent of China's 21.6 million private businesses, are on the cusp of a sweeping succession wave that may be the biggest the world's seen yet. Some three million founders will hand over the reins in five to ten years, Wu Xiaobo, author of a book on the history of China's private companies, wrote in a commentary published last year.
China hasn't experienced such a wealth transfer of this scale before. Private firms didn't emerge until after the country abandoned its socialist path for market reform in 1978.
"Deng Xiaoping only allowed private businesses starting in the 1980s, so these family businesses are all relatively young," says Roger King, director of Tanoto Center for Asian Family Business and Entrepreneurship Studies at The Hong Kong University of Science and Technology.
"Now their founders are reaching retirement age."
Already some big name Chinese entrepreneurs have done the handover.
Zong Qinghou, the 71-year-old, chain-smoking founder of beverage maker Wahaha, has named his daughter 35-year-old Zong Fuli as president.
Yang Guoqiang, 62 and founder of Foshan-based real estate and private education giant Country Garden, in 2005 transferred management and ownership to his daughter Yang Huiyan. She now has a net worth of US$19.2 billion and is now the sixth richest person in China, according to the Bloomberg Billionaires Index.
The succession shift won't always be seamless. Many Chinese family businesses are in traditional industries like export manufacturing and face challenges such as rising labour costs. Younger executives are gravitating toward fast-growth sectors like e-commerce.
Only 40 per cent of the next generation heirs (usually just one given China's one-child policy) are willing to take over the firms, and often do so only because of pressure from their parents, says Science and Technology University's King, citing the 2015 Chinese Family Business Succession Report.
Then there is the generation gap. Many of the second generation have been educated overseas.
By contrast, their fathers often never finished high school and adult life has been focused on building their companies. That can add up to huge differences in management style between the scrappy founders and their offspring, says Rebecca Wang, an expert on family businesses and a partner at PwC China in Shanghai.
Thirty-nine-year-old Sun Meng, who in 2013 took over from his 63-year-old father Sun Dawu as president at Hebei Dawu Agriculture and Animal Husbandry Group, said that the elder partners who joined the firm early on have criticised him for focusing too much on his family.
Sun takes his daughter to school every day which they frown on, he says.
"My uncles thought I was like a playboy. I had many conflicts with them," says Sun, using the respectful term for the senior partners.
"But I believed you should have a balance between life and work, so even until today we quarrel about that." Some company founders are likely to look outside the family for successors.
Wang Jianlin, the former PLA soldier who founded real estate and entertainment giant Wanda, last year publicly said his 29-year-old son Wang Sicong will not take over the company.
The younger Wang who studied in London has become a controversial social media sensation, notorious for showing off his wealth by posting pictures of his pet Siberian Husky "Coco" with the gold Apple watches and iPhone 7's he gave her. (There is even a word for spoiled second-generation kids: fuerdai).
"I've asked my son and he said he didn't want to live a life like mine," said the elder Wang in a speech in Beijing last December.
"Perhaps it's better to hand it to the professional managers."
The track record for transferring power within Asian family firms isn't encouraging, warns Joseph Fan, a professor at The Chinese University of Hong Kong.
Over the five years before and three years after a company transfers management from the founder to the next generation, about 60 per cent of a family firm's stock value dissipates on average, Fan's research on Chinese businesses in Hong Kong, Taiwan, and Singapore shows.
That's likely to be also true with family firms based in China, he says, though he adds not enough firms have completed succession yet to carry out a rigorous study.
"To flourish in China, business must depend heavily on intangible assets such as relationships," including with government officials and business partners, says Fan.
"But those values are very hard to transfer to a son or daughter. So that is why succession usually means loss of value."
With many family firms now exiting low-end, low-margin manufacturing and instead developing brands and service businesses, relying on old relationships may be less important. Instead, having management savvy about changing consumer tastes and e-commerce will be key.
That's what the father-daughter Liu's are counting on as New Hope Group expands into areas including health care and new finance.
"Service and experience are what our generation cares most about," says the younger Liu, adding that she convinced her father to introduce consumer centres to monitor customer needs. "Liu Chang is young and fashionable.
She can bring innovative, Internet-related ideas," says the elder Liu. "This traditional company needs to be transformed."