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UPDATED: July 6, 2015 NO. 28 JULY 9, 2015
Is the Rich Second Generation the Government’s Responsibility?


In China, children from wealthy families are usually referred to collectively as "the rich second generation." They are an elite group of young people who wear designer clothes, drive luxury cars and are sometimes prone to ostentatiously flaunting their wealth. It is doubted by some if such mollycoddled generation can successfully take the wheel from their parents at family businesses and manage to keep the enterprises ticking over.

The government of Siming District in Xiamen, southeast China's Fujian Province, recently organized a training program for the children of successful business people of Fujian origin, attracting in excess of 70 attendees from across the country. The program offers courses on traditional Chinese culture and modern corporate management. Organizers hope to prepare the young people for the huge level of corporate and social responsibilities that will soon fall on their shoulders.

The move has been the subject of much public debate, with some admonishing the Siming District Government for meddling in matters that do not directly concern it while neglecting more pressing social affairs. Opponents argue that the real reason that business people have sent their children to attend the program is their desire to get closer to the "seat of power." However, others maintain that it is necessary to prepare the rich second generation for operation of their family businesses, as these large private enterprises represent pillars of their respective local economies, and should they collapse due to poor management by unqualified successors, these local economies will inevitably suffer. From this perspective, the government is thus justified in providing them with the relevant training.

A worthwhile attempt

Han Jin (www.eastday.com): An investigative survey based on an sampling of 1,947 private enterprises in 21 provincial-level regions across China shows that only 21.4 percent of China's family businesses can be successfully handed down from original founders to their children and only 2.3 percent of them can be handed down to a third generation and still remain viable. Today, many of the first generation of successful private business people are retiring, but many of their children are unwilling to take over the business or are incapable of doing so.

By organizing the training program, the local government of Siming District means to develop a sense of national pride and responsibility in these affluent young members of the community. Most of the entrepreneurs who managed to succeed in their businesses in the 1980s do not possess a strong educational background. They become rich after having endured a poor life, so they tend, understandably, to spoil their children. Making sure that these spoiled children can successfully carry on with their family businesses must be somewhat a headache for them.

The party with the best chance of nurturing these potential successors is undoubtedly the government. The government-organized training of these private businesses heirs should be regarded as being in the long-term public interest. Of course, enterprises should also play their part, financially speaking.

Tang Wei (www.scol.com.cn): The members of this rich second generation are actually no different from anybody else. Since others are free to receive training services from the government, this group should also be able to avail themselves of this privilege. In most people's eyes, the term "rich second generation" is a pejorative one, fueled by frequent unflattering reports on misbehavior of this group. If the training can help them improve their personalities and get rid of bad habits, they may also rehabilitate their image in the eyes of the public.

Crossing the line

Xue Jiamin (www.dahe.cn): In the coming five to 10 years, around 3 million entrepreneurs in the private sector will retire and hand over the reins to their children. Owing to the serious lack of familial education within this cohort, many lack a sense of responsibility and like to live the high life, free of consequences. If the fate of the businesses were to be left in the hands of such a group, it is foreseeable that the fortunes of these family enterprises could plummet. As a result, most of those enterprises' employees will probably be laid off and the governments of their locations will lose a major source of tax revenue. In a very real sense, the government does need to worry about the education of the rich second generation.

But the current training program is unlikely to swiftly and effectively produce responsible and industrious heirs to the throne. Even if the program is able to some extent to help the younger generation develop certain virtues required of a successful entrepreneur, this is, nonetheless, not the government's remit. The government is not supposed to interfere with the education of individuals who come from already wealthy backgrounds. Instead of taking responsibility for educating the rich second generation, public resources should be better employed to help underprivileged groups such as unattended children in the country's vast rural areas. As opposed to their affluent counterparts, these children are actually struggling to survive.

Guan Dongke (New Express Daily): It seems that the government is doing the rich second generation's parents a favor and that the wealthy parents are only too happy to cooperate. However, once the program was initiated by the government, it' hard to say if this was done at the parents' behest, although the local government has claimed that this was the case.

The program's course curriculum treads familiar ground, covering common subject areas such as traditional Chinese culture and corporate management theories. If the government's training program is limited to these courses, then it could be argued that they are redundant, as similar courses are offered by many training institutions. It could thus be concluded that it was unnecessary for the local government to intervene at all.

Liu Xiao (www.cnhubei.com): In many economically developed regions, similar training programs have been launched by prestigious universities, sometimes carrying the endorsement of celebrities, but none of them have been so warmly embraced by business people as this government-organized training program. This phenomenon reveals Chinese entrepreneurs' awed reverence of "government power." In the process of operating a business and making a fortune, these people have found themselves closely tied to the government, and they know how important it is to maintain and further develop these connections. They are fully aware that they must take this opportunity so that their children can also take advantage of the connections they build up in the training program in the future development of their businesses.

The development of private enterprises matters to ordinary people and also to the government, so the government does need to support these enterprises, but not by organizing training programs for children of their owners. How they choose to educate their progeny is the parents' own business. Meanwhile, entrepreneurs should also begin to pay more attention to their children's education in terms of knowledge and also personality. It's also important to break with the traditional concept that family enterprises must necessarily be handed down through successive generations, so that the next generation can have the freedom of choosing jobs that they are really interested in.

Xiang Xiangrong (Qianjiang Evening News): The government is worried that if some large private enterprises collapse, huge losses will be incurred, leading to economic instability. It is commendable that the government wants to help avoid the collapse, but I'm afraid their solution goes against societal rules. Suppose one family enterprise breaks up owing to poor management—there would be no waste of resources, as the resources in question would be redistributed to other enterprises. Also, in this kind of cycle, more creativity and innovation can emerge. Therefore, when the government organizes training programs for children of wealthy business people, it means to virtually guarantee that existing enterprises will perennially exercise control over their wealth, no matter whether or not the next generation is fit to run a business. This is actually unfair to the rest of the society.

As for the rich second generation, they have the freedom to choose how to live. If they don't want to take over family businesses from their parents, it's better not to force them to do so. What the government should really be concerned about is not the survival of a small number of family enterprises, but the overall market order and the formation of a fair environment for all kinds of enterprises to compete and grow effectively.

Copyedited by Eric Daly 

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