"Unfavorable succession, worse than the financial crisis."
Mao Lixiang, founder of Fangtai Group, once said. He also pointed out that the development of private enterprises is facing handover problems, and 2 million enterprises will be eliminated.
This is not unfounded worry.
Fuyao Glass strongly acquired Fujian Sanfeng Group, only to force his son to go home and take over; Haixin Steel bid farewell to its main business and became a player in the capital market; Pusi Capital invested hundreds of millions of dollars in its start-up money to live broadcast, and e-sports suffered Waterloo...
Every major business event with "family business inheritance" as the key word reminds the fact that the second generation has a weak willingness to succeed, the differences in business philosophy between generations, and the newcomers but shoulder heavy responsibilities. They have become the ultimate source of family inheritance for the ultra-rich. The sword of Moklis.
It is difficult to start a business, and even more difficult to maintain a career. How can the family wealth of the ultra-rich people be transferred smoothly across generations?
The "gaze" behind
Zhu Ziqing's "Back View" portrays typical Chinese fathers who love their children deeply and wish to "watch" their children alone with tears. But for the super-rich in China, inheriting the father's business is still the first choice.
According to the "2020 China Family Office White Paper" (hereinafter referred to as the "White Paper") issued by Ping An Private Bank and Forbes, the scale of China's private wealth market has increased fivefold in the past ten years. There are approximately 1.58 million high-net-worth families and ultra-high-net-worth families. There are about 105,000 in number, and the overall scale of investable assets held by individuals has reached 165 trillion yuan.
Most of this huge number of ultra-rich people are at the age of choosing a successor. The white paper shows that 57.6% of the survey participants are over 40 years old, and 52.3% of the participants said they are first-generation entrepreneurs. Due to the increasing age of the first generation of entrepreneurs in China, the "second generation" succession is in full swing.
| "2020 China Family Office White Paper", the average age of survey participants
Huge wealth, starting from scratch, has increased the expectations of China's super-rich people for "children's inheritance", and it has also increased the difficulty of a smooth succession. Ping An Private Bank's family office brand promotion film "Family Letter" vividly reveals the contradictions and pain points.
| Ping An Private Bank's Family Office Brand Promotional Video "Family Letter"
"In 1990, I gave up my golden rice bowl, chose to start a business in the sea, used all my belongings, and opened my first factory." This is almost the epitome of most of the first generation of super-rich Chinese in their infancy. I went in the rain, I was in business and accountant, and I was able to do everything."
It is not only the hardships of starting a business, but also the opportunities of the times that cannot be replicated, which are even more treasured by the first generation of entrepreneurs in China. After the reform and opening up, our country has experienced three waves of wealth. "Following the trend of the times and making some money", they not only changed the life of the family, but also rebuilt the Chinese economy and created a source of livelihood for thousands of ordinary working families.
However, a survey from the Chinese Academy of Social Sciences showed that 82% of the second-generation family businesses were “unwilling and unwilling to take over.”
Even if the second generation is willing to inherit the family business, the differences in business philosophy and business foundation between generations are still inevitable. "This project must be stopped!" As shown in the "Family Letter", a brand promotional video for the family office of Ping An Private Bank, family conflicts caused by business operations are not a minority.
| "2020 China Family Office White Paper", the conception differences between family heirs and families
"It is impossible to retire completely. I hope that young people will do the work in the front, and I will watch from the back. If there is a mistake, it can be corrected in time." A billionaire once said in an interview.
How hard is it to let go
The fundamental reason why the super-rich people can't rest assured is that family inheritance is a complex proposition that "will affect the whole body".
According to the white paper, participants believe that the main risks they currently face in business management include regional and industry policy risks, the overall downturn in the industry in which the company is located or increased competition, and the difficult process of corporate transformation. In addition, in addition to the willingness of the second generation to succeed, the potential risks caused by changes in the overall environment, changes in the company's shareholding structure, and changes in the marriage of family members cannot be underestimated.
| "2020 China Family Office White Paper", the main risks faced by families in the process of managing business
Take the heir marriage relationship that all families will face as an example. A marriage relationship will not only cause changes in the number of family members and the birth of third-generation heirs, but also cause property loss risks, company ownership changes, stock market fluctuations, and groups Many problems such as internal instability.
More importantly, for a family, social assets such as corporate responsibility and public welfare undertakings also require capital injection, and multi-management is far from achieving the best allocation of investment and public welfare.
Wealth accumulation, asset planning, family inheritance, children's education, and charity do not exist in isolation. This is an issue that requires financial, legal, and fiscal and tax considerations. At the same time, the requirements of different industries and different entrepreneurs vary greatly, and there is no standard solution for family inheritance. To continue the long-term sustainable development of family businesses, the inheritance is not only the transfer of property, but also the inheritance of values, entrepreneurship and sense of mission.
Both financial inheritance and spiritual inheritance, the complexity and multi-dimensionality of family inheritance call for customized one-stop solutions.
The family office came into being.
In Europe and the United States, family offices have become a common choice for the rich and super-rich. Especially during the epidemic, the importance of family offices has become more prominent.
According to the white paper, in this epidemic, 50% of family offices changed their investment strategies for family wealth management and invested in more stable categories, and 31.3% increased protection insurance tools, which meets the need for high-net-worth users to maintain asset value during the epidemic. Or value-added services, investment advice, risk aversion advice". Among the ultra-rich people who have not used family offices, as high as 48.5% have not taken any measures. The role of family offices in risk management and asset preservation is self-evident.
| "2020 White Paper on Family Offices in China", the main measures taken by family offices to allocate family wealth during the epidemic
At present, most of the family offices used by the top rich are foreign investors. But under the new international situation, overseas background has also become a new risk.
And it is different from the management system of overseas professional managers. It stems from the tradition of "children's father's business" in Chinese culture. Chinese entrepreneurs are more inclined to choose their children to inherit.
The unique Chinese national conditions have determined that Chinese entrepreneurs need a family office that "knows more about Chinese families".
The white paper pointed out that professional and reliable wealth inheritance services, privacy protection and comprehensive financial advantages are the three most important criteria for China's ultra-rich people when choosing a family office.
However, there are still 86% of family entrepreneurs whose assets have not been separated, and about three-quarters of the surveyed said that there is no standardized family governance mechanism in their families. This is related to the early development of China's wealth management market.
However, changes are already taking place.
A new choice for the rich
"With the family charter, I can rest assured about the inheritance of the family business and the growth of my children." Ping An Private Bank's family office brand promotional video "Family Letter" mentions a new choice for the contemporary rich.
As a family office of a local bank in China, Ping An Private Bank Family Office, while continuing the international universal family office management method, is rooted in Chinese culture and simultaneously considers family members, family businesses, and family wealth to provide one-stop inheritance and comprehensive wealth Management services.
This allows multiple aspects of family inheritance to be integrated and unified, allowing asset planning, corporate management, inheritance education, charity, investment management, corporate governance, and wealth inheritance to form a synergy.
According to the white paper, the pain points of Chinese families' needs for family inheritance and family management are concentrated in the four major aspects of "family heirs, family business and family property rights boundaries, intra-family conflicts, and family taxation."
This is what the family office of Ping An Private Bank strives to solve. The "family charter" mentioned in the promo is the guiding principle of family service.
"Father's love, brotherhood, husband and wife, family is fat." Baben Saiyuan, a clear family governance structure and family values are the foundation for the continuation of family wealth.
In the family charter drafting service provided by the Family Office of Ping An Private Bank, the family culture and family style and rules, family inheritance needs, family assets, etc. will be clarified to help high-net-worth individuals achieve the smooth inheritance of family material wealth and family spirit.
With the increase of generations, family members doubled, a general plan for inheritance of family traditions and financial inheritance can guide the family's path forward from the overall framework design, and resolve family members' differences at all times.
In addition, in the UBS "2020 China Family Wealth Management and Family Office Survey Report", the interviewed families all mentioned the difficulties encountered in finding and retaining suitable external talents.
The emergence of the family office of Ping An Private Bank undoubtedly provides a solution. It brings together a professional team of experts in multiple fields, proficient in investment, product strategy, law, taxation, charity, etc., to meet the needs of customers in all aspects of legal structure design, corporate governance, heir education, charity and public welfare, and is in the first place. Time to identify various risks. For example, family arrangement risks, asset allocation risks, family business equity structure risks, inheritance risks, wealth isolation risks, and family members’ marriage risks, take precautions and take precautions.
It is worth noting that Ping An Private Bank won the "Best Family Office" award from "Asia Currency" this year. In addition, it also won the "Best Inheritance Service Award for Family Office of Financial Institutions" selected by "TOP50 Chinese Family Management Leaders" and The "Family Office of the Year" award at the 17th Asia Pacific Wealth Management Annual Conference, whose family office model has been recognized by the industry and society, has also provided a demonstration for the industry.
The family inheritance of the ultra-rich in China is not only related to the wealth inheritance of the wealthy group, but also a major event related to the Chinese economy and hundreds of millions of Chinese families.
In Xiaojia, it is family inheritance, and in the country, it is economic reconstruction. To avoid risks, boost the economy, and cultivate China's new economic leaders, the family office has a long way to go.
We look forward to more professional consultant teams like Ping An Private Bank's family office to provide Chinese entrepreneurs with one-stop inheritance and comprehensive wealth management services that are more in line with the Chinese family model.