During the spring semester of 2015 the School of Economics and Management at Tsinghua University introduced a new class that focuses on a unique, but large, segment of the business community, family operated businesses. With the help of professors, Bo Ji and Rose Lau, and Zhu Hengyuan, the family business class was supported by many students who are in the precarious position of being a part of their own families business. This semester the class was structured into four sessions, business succession planning, challenges of operating a family owned business, critical issue management, and a final presentation in which the students present their work regarding an issue with their own businesses. Some students have even invited the family members in their company to join in the final presentation.

Globally family businesses account for 60-80 percent of all businesses, and they account for 70-90 percent of the GDP. In the Fortune 500, 40 percent listed are family operated/owned businesses. Some of the top companies in the world are managed by families, such as the Walton family and Walmart and generations of the Hermes family owning the esteemed brand in their name. This exemplifies how important this issue is to students of the MBA program, because even if they are not inheriting a piece of a family business now, the aspirations to build one of their own is very likely.   

One of the critical concerns for all members of a family business is how the company will generationally succeed in the future. The course discusses the common problems with succession planning, which sometimes involves a lack of planning or interest, and it gives the tools for the students to mitigate the risks in their own businesses. Another issue is aligning the goals of the generations, because the vision of the founder may not align with that of the inheriting children. There is a way for the goals to align if the families work together, however if the goals never align the class teaches the students how to pursue their own interests without damaging relationships.

Professor Bo Ji stated that “keeping the vigor of the family business may be the most important task.” The problems are not exclusive to family conflict, there may also be problems with outside investors who lose trust when there is an unplanned or difficult succession. When this happens there may be up to a 60 percent drop in value for the company. Sometimes the succession is successful allowing confidence and market value to eventually rebuild, though other times the company is destroyed in just a short time, whether by a lack of confidence of investors or by an incapable successor. Another important lesson is the regional differences in a family business structure, because as an investor you may bet that a company will be willed to the capable sister who is already working with the company, but instead because of filial piety it is left to the incompetent son. The dynamics of cultural influences have a huge effect on the way a family business is managed.

The structure and management of a family business is especially important to the family involved, however it is also important to stockholders and consumers. As business school student’s, the development of an understanding of all business structures is fundamentally crucial, therefore family businesses are especially important, because they are a huge part of markets all over the world. As China continues to develop family business management and structure is especially imperative, and it is the students of this class that will successfully navigate this important business terrain.