China has produced a class of successful entrepreneurs whose wealth rivals the “old money” of the west. Their success has created a novel phenomenon in China: “fu-er-dai” or “2Rich,” – the second generation of the rich. While their parents earned their money through their own hard work and thus respect in society, the 2Rich have a reputation of spending lavishly and driving expensive sports cars.
While mature economies go through slow wealth transfer over multiple generations, wealthy first-generation entrepreneurs and their descendants are entirely new in fast-growing emerging economies like China. These entrepreneurs are now in their 50s and 60s and beginning to look at retirement and the question of leadership succession in their family-run businesses. Will they hand the reign over to non-family professional managers or their children? Would the 2Rich be willing and ready to continue the family tradition?
In 2013 we launched a multi-year research project and have completed a group of face-to-face interviews with China’s 2Rich to shed light on this important subject. Here are some key findings so far.