Transition blues for aging entrepreneurs

Younger generation refusing to inherit family enterprises in China as they want to strike own path

Li Da felt that he had learned and seen enough to make a life decision after just one year at a university in France: turn down his father's offer to take over his business.

His decision sent shock waves through the private clubs, tea houses and foot-massage parlors where the swashbuckling first-generation entrepreneurs of Wenzhou, Li's hometown in Zhejiang province, love to gather and exchange tips on properties, stocks or coal.

These aging entrepreneurs, who have spent their lifetime building up businesses that have aided in China's rapid growth, want nothing more than to hand over their businesses to their children.

Yet these handovers, which seem so natural in the minds of these Chinese entrepreneurs, don't necessarily proceed as smoothly as they expect.

Li's father was willing to send him to any university he chose on the condition that he would come back to work at the family-owned factory that produces lighters of many sizes and shapes in bulk, says Li. But upon graduating from University of Paul Valery-Montpeller, Li stayed behind to work in Paris.

Embracing the French lifestyle, Li broke the news to his father that he had no interest in his family business. Instead of returning to Wenzhou, the 24-year-old Li decided to start his own bakery specializing in French bread.

"I don't want to follow my father's lighter business as I am not a smoker who can devote his passion toward the lighter," Li says. "I also failed to see the potential development of the lighter industry as a whole."

Li is not alone in trying to break out from under his father's shadow. According to a survey conducted by an international bank in 2008, only about 40 percent of these heirs to businesses are willing to take over the family businesses. While another 20 percent of family enterprises have already found successors, there are still another 40 percent of family enterprises that have prospects.

For Li, it was after taking a part-time job in an original French bakery that he found his interest and talent in baking and making pastries.

"France is famous for its baking industry," he says. "Bread and cakes are essential elements in daily life so I firmly believe that learning baking skills in Paris was the wisest decision I've ever made."

Encouraged by his supervisor, the senior baker in the bakery, Li obtained a cake- and pastry-baking certificate in France.

While Li worked in his father's lighter company for one year after returning from France in 2008, he insisted on opening his own bakery to follow his interests.

"My father has run the high-end lighter company for nearly 20 years and the company has already got its own business model that is unchangeable," Li says.

Li says the global anti-smoking trend would narrow the market for lighters, especially those expensive luxurious ones manufactured by the company.

After discussions with his father, Li left the lighter company and opened his first bakery, Vseice Donout, in December, bringing the original taste of French pastry to Wenzhou.

"I've visited well-known French bakeries in Shanghai, Hong Kong and Beijing and invited my former supervisor in Paris to come over to make sure the taste of all products are authentic," Li says.

To attract attention from local customers, Li changed the simple outlook of French pastry into localized design patterns but still retained the original flavor.

"It's still quite difficult for Chinese residents to like the simple square shape of French pastries with few toppings. So I have to create adaptations of my cakes and bread for customers," he says.

Li's former supervisor from Paris flies to Wenzhou quarterly to give the staff proper training in the bakery to ensure the quality of the products.

"The baking industry is one of the newest concepts introduced to China in the last 10 years, which is also suitable for me," Li says.

Li also received financial and emotional support from his father who wanted him to be a successful businessman.

"There are more young people refusing to inherit the family enterprises as they want to live their own lives and achieve their goals including my son," says Li Zhongjian, Li's father and the founder of Tung Fong Lighter.

Li senior says the lighter industry is losing its place in the market and that he was quite happy his son had found his way out of a dead end industry.

Li junior hopes to develop his bakery into a national chain.

"I plan to open two more bakeries in Wenzhou by next year and introduce original French pastry to local customers. Hopefully I can develop three stores, a national chain of bakeries and even a global brand," Li says.