Research Into The History Of Development Of Family Business In Modern China

Family business has been an old yet ever-changing mode of corporate organization. Having gone through a long and bumpy road, family business still plays an important part in the arena of the world economy. Having gone through a long and bumpy road, family business still plays an important part in the arena of the world economy. With the further developments of the reform and opening-up to the outside world, private enterprises are gaining an increasingly important position in China, and meanwhile, a series of favorable policies have been introduced to improve the related legal system. As the main force of private enterprises, the thriving family business is also faced with various underlying challenges. Revolution in the right of control, the issue of trust, and the crisis of succession are the headaches for their owners to cope with. A sheer reliance on restructuring and excluding inefficient family members from family firms would not work effectively for family business to grow and break the law of"the first generation creating, the second maintaining, and the third ending". How to expand and strengthen family business, and sustain its growth, is a question to be answered urgently for its sustainable development in China.This paper, with a study of the history of China's reform and opening up as the background, strictly based on the specific historical conditions of"transformation and development", divides the history of changes and developments of China's family business into three periods. The first period (1978-1992) is a stage of inception and pioneering exploration. In the second period (1992-1997), family business had gradually developed and a few distinguished firms had become mature. The third is the years since 1997, with the economic globalization and importance of the non-public sectors of the economy being generally acknowledged, China's family business has entered a new phase of rapid development.Analyses must be based on facts. After describing the macroeconomic backgrounds in each period of development, presenting the major forms and scales of family business, and origins of the owners, this paper summarizes the characteristics of the development of family business in China over the past three decades, from the three perspectives of its overall development, changes in its internal system, and changes in its external environment, and then concludes that the family firms in China are still highly centralized small and medium-sized enterprises with"the two rights"controlled in only one hand, that its production and operation are highly benefit-oriented, lacking in a long-term strategic plan and a complete internal system of management, and that these small and medium-sized enterprises are still confronted with a serious domestic situation as well as international competition, despite an ever-improving overall economic situation and better macro-policies, in that China's transition of its economy entails a changing picture of its policies, and the small and medium-sized enterprises most frequently become victims of the readjusting process of the policies.Family business in China has long been influenced by its unique cultural traditions and ideologies, and thus a research on it will not be convincing if without an insight into the social background of traditional Chinese culture. Therefore, this paper, through applying the related theories from institution economics and economic sociology, analyzes the formation of its current situation of development, taking the historical and cultural traditions, the outside market and the policy environment, and characteristics of its internal system into consideration, and conducts a comparative study on the features of management and the issue of trust in family businesses in China, Western countries and East Asia (only those of Chinese origins), in an attempt to anticipate the future developmetal tendency of China's family business.It is theoretically and realistically significant for the sustainable development of domestic enterprises and even the economy in China to carry out a research into the changes and developments of China's family business, revealing the reasons for its historical changes and laws of its development, into its successful experience and lessons about failure, with a reasonable prediction of its developmental tendency. Family firms in China need to choose their own way in accordance with their organizational conditions and features of the sectors they are in. Big and medium-sized enterprises can establish modern family business by regulating their internal environment, namely, innovating and integrating their organization, system and management; small and medium-sized ones can choose to form family business networks through exchanging innovations and coordinating with other family firms, thereby enhancing their competitiveness. Considering all of the above, this paper puts forward the following recommendations concerning the government, the market, and family firms in order to achieve sound development of China's family business: first, standardize government behavior, clarify the government-enterprise relationship, and perfect the social and legal environment for healthy development of family business in China; second, further establish and improve its outside market; third, gradually better the internal organizational system of family firms and prolong the valid period when the rights of management and ownership have not been separated; fourth, adopt the strategy of relying on the networking pattern of development (focusing on aggregation). In the end, this paper provides an overview of a few beneficial reforming attempts by some outstanding family firms, with the aim of offering helpful experience for the other family firms'reform and innovation.