After three decades advising Chinese entrepreneurs, we’ve seen one theme rise steadily in importance: the next generation.

Succession is the issue that often makes self-made Chinese founders who’ve exercised near-total control over their businesses feel powerless. It’s a complex topic fraught with questions of longevity, family, and legacy—we’ve seen transition projects launched with urgency, only to stall or be quietly abandoned. As one entrepreneur who created a $10 billion retailing empire tells us, “With business matters, I can make decisions very quickly, often in minutes. I can rely on my years of pattern recognition. On succession, everything feels unclear.”

And yet, paralysis isn’t inevitable. Founders who confront leadership transitions early and put in place structures to professionalize and institutionalize companies that, for decades, have been driven by entrepreneurial instinct and personal relationships improve their odds of success. The stakes are rising, as the Chinese private sector faces a wave of similarly aged founders facing retirement amid rapid market change and cultural constraints. The companies that endure will be the ones that codify authority before they transfer it.

“Entrepreneurs naturally assume that their children will take over one day,” says Roger King, a finance professor at the Hong Kong University of Science and Technology and co-founder of its family business center, “but given how short business cycles are these days, it’s never too early to plan ahead. Most Chinese entrepreneurs leave it until far too late.”

One company that defied this pattern is the agribusiness giant New Hope, which managed a real handover. Founder Yonghao Liu built the company from scratch in 1982, eventually turning it into China’s largest animal feed producer and pig farmer. He didn’t cling to the wheel, and his heir didn’t inherit an empty title. He planned early, arguing that succession was “ not meant for just one person, but for a team and a system.” The philosophy took shape early, even at home. Yonghao has said he deliberately gave his children responsibility through small but concrete tasks from a young age.

By thirty-three, his daughter, Chang Liu, had become CEO of New Hope Liuhe, the group’s largest operating company. Yonghao imparted upon her real authority to prune underperforming executives, redirect investments, and professionalize the company—even when it unsettled long-standing relationships. When a prolonged crash in pork prices dragged the company into years of losses, Chang doubled down on systems, tightening governance and building management depth. “ I’m not like the heroes of the founding generation… I am the result of a process,” Chang has said.

These days Yonghao generally stays out of day-to-day management and focuses instead on other investments and larger strategic decisions for the overall group. The journey was far more complex than this account suggests, but the point stands: this transition was executed with foresight and discipline.

China is heading into a once-in-a-generation handover. Most A-share listed companies are private rather than state-owned, and a significant share are family-controlled, making family enterprises a core pillar of China’s private sector. Further, among China’s top five hundred private enterprises, just over half were founded during the Reform and Opening Up era, particularly during the 1980s and 1990s, and nearly 70 percent of their founders were born in the 1950s and 1960s. The result is a succession wave hitting China’s private sector all at once.

Other economies have navigated similar moments: Japan’s postwar conglomerates, Korea’s chaebol, and Europe’s family firms have undergone generational transitions. Those companies, many nearing or surpassing the century mark such as Toyota, Sony, Samsung, Hyundai, Bertelsmann, L’Oréal, IKEA, and ABB, endured not because every successive leader was exceptional, but because the businesses themselves were built to last across different leadership eras.

In China, succession challenges are as much structural as personal. The one-child policy, which ran from 1979 through 2015, narrows the pool of potential successors for some companies. Heirs often grow up in environments very different from those of their parents and may be reluctant to take over the business. Formal succession planning remains rare, and many aging founders have little desire to step aside. One founder in his sixties told us, “Today, all kinds of people come see me because I am the chairman. What would I do if I retire? I can’t play golf every day!” Many entrepreneurs also believe medical advances will extend their working lives, and longevity has been a frequent topic of conversation with Chinese founders. The latest trend? Going to Tokyo to get stem cell treatment.

Compounding these challenges are the unprecedented domestic and global pressures facing Chinese businesses. Succession is often deferred and deemed important but not urgent, even though delay only magnifies the risk. “It is a high-stakes decision,” says Acha Leke, a McKinsey senior partner leading the Firm’s global work with family-owned businesses. “After studying more than six hundred family-owned businesses, it’s clear that CEO transition is one of the most consequential decisions. It is also the one with the biggest upside, if done properly.”

The long-term solution lies in building governance, systems, and leadership pipelines that outlast founders. These practices are well established in global management science, and more mainland Chinese companies are considering them as they scale and mature. Whether they move fast enough remains uncertain.

As McKinsey approached its centenary in 2026, it marked the moment alongside a small peer group: other century-old enterprises. At the Firm’s global partners’ meeting in Chicago, messages streamed in from the CEOs of Delta Air Lines, United Parcel Service, Siemens, Tata Group, AIA, Bancolombia, and others—companies that, across the United States, Europe, India, Singapore, Colombia, and more, have endured multiple economic cycles and transitions.

What stood out wasn’t who participated, but who didn’t: no messages from mainland China. This isn’t for a lack of longevity. China has roughly seven hundred nationally recognized “time-honored” brands with histories spanning more than a century; the oldest, Beijing’s chicken-and-duck restaurant Bianyifang, dates back to the Ming dynasty.

What Chinese companies have largely found challenging was the ability to pair longevity with scale, modern corporate governance, and sustained performance—the combination that turned postwar Japanese and European companies into multinational icons. Almost all of China’s modern large-scale private companies and the majority of our mainland clients are just twenty to forty years old. Many of their founders are in their sixties or seventies, yet remain firmly in control. That share of business originators still at the helm poses a challenge: more than 80 percent of mainland Chinese entrepreneurs say they wish to keep business in the family, but two-thirds lack a formal succession plan—one of the widest gaps anywhere between intention and preparation.

Handovers didn’t happen earlier in part because founders were still young enough, and they found China’s growth wave exhilarating to ride. The need for leadership transition is now arriving at an inconvenient moment, when firms must contend with slowing growth, demographic hurdles, regulatory and geopolitical challenges, and the disruption of generative AI.

It’s not a good time to sell a business, but it’s not a good time to hand one over, either. “These founders stayed in the kitchen and continued to work,” says Bain Capital partner Michael Hui. “But as they ask their kids to step into the ‘current kitchen’ they’re finding it’s really hot now. The first-generation entrepreneurs know the kids might not make it.”

The scale of this challenge is immense. Chinese family businesses account for roughly half of GDP and generate an even greater share of jobs. What happens when this cohort of founders finally steps back? Can companies built for speed during the golden boom era evolve into enduring institutions?

A generational cliff looms for these businesses. Globally, CEO successions in family-owned businesses tend to destroy value: in a study of more than two hundred transitions, McKinsey found that five-year post-handover performance lagged the prior five years by roughly 6 percentage points in total shareholder value, 2 points in revenue growth, and 3 points in EBITDA growth. In China, these risks are intensified by relationship-driven business norms, a capability gap between generations, institutions built around larger-than-life founders, and other factors.

We’ll examine each in turn—and outline how transitions can be managed more effectively.

We’ve discussed before how sharply today’s young Chinese differ in outlook and circumstances from their parents and their grandparents. “Two generations ago, no one in China had money,” says Louis Cheung of Boyu Capital. “They grew up in completely different cultural contexts. The older generation also wants the younger kids to feel a bit hungry and unstable.”

We draw this contrast through a mid-sized automotive parts maker. The founder, whom we’ll call Wang, built the business in the 1990s with little capital, weak legal protection, and few rules. When policy windows opened—real estate, exports markets, infrastructure—he moved fast, borrowing heavily when needed. “If you hesitated, the chance was gone,” Wang recalls. Decisions were informal, and relationships were central to how the business operated.

His son, Xiaocun, would inherit a larger, more regulated, and more exposed enterprise. Like other second-generation heirs— a majority of whom studied overseas—he speaks the language of governance, compliance, and capital markets fluently. “My generation was taught to reduce risk,” Xiaocun says. “Our parents were taught to survive it.” What he struggles with is the all-or-nothing decisions that defined the founder’s rise.

This contrast can be jarring. Education in China back in the ’70s and ’80s was rudimentary and disparate. While some entrepreneurs in that earlier era may have had a university degree, many did not, and more than a handful were granted honorary doctoral degrees only after they achieved business success. They learned capitalism through improvisation, navigating the rapidly developing business ecosystems and institutions with intuition and personal networks. “Often, the first-generation entrepreneurs do not speak English, but they’re obviously incredibly resourceful and resilient,” observes Mingyu Guan, a McKinsey senior partner leading the Firm’s succession work in China. “Meanwhile, their children have overseas experience. The challenge is figuring out how to use those global capabilities without losing the entrepreneurial instincts that built the company.”

Founder Wang worries that his son lacks grit, political sensitivity, and the instinct to act decisively under pressure. Xiaocun, in turn, has questions: Are his father’s business instincts, informal way of decision-making, and penchant for risk-taking still effective in a slower-growth, higher-risk environment?

It’s not surprising that enthusiasm is mixed from both sides. Nearly half of Chinese entrepreneurs express concern about their children’s ability or willingness to take over. The heirs pause, too, with about 45 percent ambivalent or uninterested in stepping into those shoes.

“I’m a one-in-a-million success story,” says a successful tycoon who has given up the idea that one of his kids might take over. “In my generation, I was the winner out of millions of others like me and fought my way to the top. Why would my kids, just by virtue of their DNA, be worthy of being a one-in-a-million success? They’re very likely going to underperform me.”

Many of China’s private companies feel like extensions of the individuals who built them. It’s hard to imagine a JD.com without Richard Liu, a Xiaomi without Lei Jun, or a Huawei without Ren Zhengfei. They might be founders or CEOs, but they’re also much more: symbols of entrepreneurial success and even national pride. The same dynamic plays out across small- and mid-sized firms as well as provincial champions. The scale differs, but the pattern is the same. In this context, succession feels less like a true leadership transition, and in fact can erase the company’s identity.

For outsized founder personalities, the shift to the next generation is both a theoretical and emotional test. The business is their life’s work, with authority and legitimacy residing in the founder rather than in the institution. Stepping aside can feel existential, which is why many opt for half measures without fully letting go—for example, choosing to remain as a chairman or “senior adviser” while appointing co-CEOs, setting up a rotating leadership structure, or engaging in informal power sharing.

Even when a founder is ready to step back, customers, partners, and employees often take longer to adjust. At Suntar Environmental Technology, a fast-growing Chinese industrial technology company, Yihong Lan is preparing to succeed his father, Weiguang Lan, who built the business around membrane-based separation technologies now used from water treatment to lithium extraction.

But in the Chinese market, Weiguang’s influence isn’t easily transferred. “His skill set and his reputation are intertwined—you can’t separate the two,” says Yihong. “The way stakeholders deal with me is different precisely because he’s the founder. I don’t have the tools at my disposal that he has.”

The larger the company, the harder it becomes to resolve this issue. Of course, the next generation might also be less likely to possess “the animal spirit, that entrepreneurial instinct” that engendered success in the first generation, says Sheng Hong, a McKinsey senior partner co-leading the global energy and materials practice. “Will the second generation work as hard? I have my doubts. They’re less hungry than their fathers.”

Another dynamic complicates succession: the divide between work and home. Many founders are absolute authorities inside their companies—“God” at work—yet struggle with the one audience they can’t manage: their own children. When founders spend more time in offices and factories than at home, that distance only deepens the gap.

For some businesses, the one-child policy has removed optionality. (Nevertheless, many entrepreneurs do have more than one child.) In Europe and the United States, leadership can sometimes pass to a second or third child; even when disputes arise, global business dynasties—from Bernard Arnault’s five children at LVMH and Rupert Murdoch’s family at News Corp to the Agnellis at Fiat and the Swires in Hong Kong—benefited from deeper benches. In China, that bench is often non-existent. When the sole heir is uninterested or unprepared, the dilemma becomes acute.

Under these conditions, succession shifts from choice to obligation. Emotional engagement is weak; only 21 percent of Chinese successors report feeling “excited” about taking over, and just 37 percent feel “motivated,” both well below global averages. Heirs carry the full weight of expectation regardless of aptitude or interest. Many also are drawn to technology, global investing, or other non-business fields, rather than traditional sectors such as manufacturing or trading.

China’s business context is filled with a web of unspoken rules, and who will be next in the leadership role is one of the most sensitive. Indicating interest too directly can be seen as challenging authority—or tempting bad luck. Ambiguity also serves a strategic purpose: when the successor is undefined, senior executives continue to orbit the founder. Siblings and cousins may compete quietly, but few dare to test the patriarch or matriarch openly.

And succession planning isn’t sensitive only at the top. Oftentimes, we find that related discussions run directly against prevailing Chinese corporate culture, where executives are rewarded for emphasizing their uniqueness and irreplaceability. Most Chinese executives try to prove their unique contribution, rather than prepare the next generation to replace them. As one executive, while dismissing our succession project, tells us, “The day I leave, the company founders will see how valuable I am. That’s my legacy—how much I meant to the company. Making myself irrelevant so someone else can take over is simply not a Chinese management virtue.”

Over time, the result can be organizational fragility. Rumors replace clarity, loyalty is tested more than capability, and succession becomes a guessing game rather than a managed and structured process. When a health scare or external shock finally forces a transition, there is often no cohesive team ready to step in—only formal titles layered over unresolved tensions. Furthermore, the strengths Chinese founders most want to pass on are the most difficult to institutionalize: government ties, regulatory intuition, and deal-making skills built over decades.

Leadership transitions are among the most consequential—and potentially destructive—events in the life of a family-owned business. McKinsey research has found that a transition to a family CEO is least likely to create value; only 29 percent generate positive returns, compared with 39 percent of transitions to non-family CEOs. The upside? When family successions do create value, they outperform: successful transitions to family CEOs generate an average 23 percentage point total shareholder return (TSR) uplift, compared with 15 points for non-family transitions.

In practice, the key questions facing Chinese founders are familiar worldwide. Who should succeed the CEO? Should that person be family or non-family? When should preparation begin, and how should success be measured? How can competing family aspirations be reconciled? As Acha, who leads McKinsey’s global succession work, notes, these questions are universal—even if the context is not.

What often differs is how families approach the answer. Family business adviser Roger King argues that durable leadership depends less on bloodline than on what he calls “CCKP”—commitment, competence, knowledge, and passion from the next generation. When intrinsic motivation is absent, he warns, forcing transitions can destroy value, and sometimes the business itself. In such cases, preserving the “business family” may matter more than preserving the “family business.” “Why force the next generation to run the company? It may be far better for the family to sell the business and manage the wealth,” Roger explains. Some families respond by separating ownership from management or by creating family investment vehicles that allow the next generation to pursue entrepreneurial paths without being locked into predefined roles.

There’s no one-size-fits-all answer. Instead, successful transitions rely on a multidimensional framework that treats succession not as a single event but as a long-term organizational capability involving disciplined execution of a small set of critical practices. At their core: a shift away from personality-driven leadership toward institutionalization that embeds continuity; professionalization that upgrades leadership capability; and governance that clearly defines power.

Marvin Bower, the Harvard-trained lawyer who shaped McKinsey into a professional institution in the mid-twentieth century, believed that leadership wasn’t about personal power but rather building organizations that endure. A company is truly well led, Marvin often said, only if it continues to perform when the leader is no longer present.

For many Chinese founders, building systems, rules, operating logic, and processes that operate independently of the individual feels unfamiliar. Most grew their companies without exposure to large organizations with mature management infrastructure; hence what outsiders call “institutional discipline” can look like bureaucracy.

Yet institutionalization is precisely what allows companies to outlast their founders—and eventually to endure for decades. When a founder’s knowledge and values are embedded into systems, employees’ loyalty can then more easily shift from an individual to a mission, rules, and defined roles. Decision-making rights are made explicit. Regular management rhythms replace ad hoc directives. Critical relationships with regulators, customers, suppliers, and partners are transferred from personal networks to formal roles. The test is simple: If the founder disappears for six months, does the company still function?

Some Chinese leaders have embraced this concept. Lenovo founder Liu Chuanzhi made the principle explicit early on. “ No matter how excellent executives’ children are, they are uniformly not allowed into the company,” he said in a 2012 interview, describing an effort to preserve fairness and motivation, even at personal cost. Haier founder Zhang Ruimin put it more starkly: “ The greatest failure of a leader is to make himself irreplaceable.”

Such ideas often clash with leaders’ intuition. Over the years, our Chinese clients have always asked us about McKinsey’s values. When we explain one of the Firm’s core tenets—that leaders should leave the institution stronger than they found it and that senior roles rotate every few years—the reaction is usually disbelief. “Rotate—even if the leader is doing a great job?” one entrepreneur asks. “That doesn’t make sense.” That discomfort is the price of building something that lasts.

Professionalization, in turn, is about upgrading the quality and independence of the leadership team. It marks a shift from a world where “the boss knows everything” to one in which technocrats, functional specialists, and professional managers have real authority—a move from intuition to the science of management. In practice, that means clarifying performance expectations and incentives, strengthening boards and oversight, and empowering managers to make decisions that may diverge from the founder’s instincts.

In a firm’s early years, it’s natural to rely on a small group of veterans who were “there from the beginning.” Loyalty and shared hardship matter when firms are young. But as the complexity of the business grows and regulations tighten, leadership must be based on expertise, not tenure or personal relationships. In many cases, a transition needs to involve the entire leadership team—not just the top spot.

“It’s hard to accomplish a good succession because we’re often also talking about the first-generation founding team,” says Leon Meng of Ascendant Capital Partners. “If you look at the head of procurement, head of manufacturing, head of this and that—all those are the ‘battle brothers’ who endured hardship together. How do you uproot this?”

“Company culture should treat leadership as a responsibility rather than a birthright or privilege,” says Acha. “Then considering a broad pool of candidates becomes natural; whether a family member actually wants the responsibility should also be taken into account.”

The ultimate test as to whether transition works is confidence beyond the founder: investors, employees, and customers believing in the company’s prospects, with valuation and reputation no longer tethered to a single person.

None of that requires abandoning family ownership. Globally and in China, models range from full family control to hybrid structures in which families set strategy through boards while professionals run operations. New Hope and Lee Kum Kee sit at the family-led end; Lenovo, Alibaba, and Haier are professionally managed; Haidilao occupies the middle.

Choosing executives who can thrive within these structures can be tricky. Frank Tang, co-founder of FountainVest Partners, tells us, “We have tried to find professional managers to replace entrepreneurs, but it’s really hard. You can find the best résumés—the multinational-trained executives, the foreign-educated returnees—but they may not have the entrepreneurial spirit to grow the company. Further, the bench of successful professional executives in China is just not as deep as we would like to see.” It is all relative. Alwin Poon, a former managing director of Carlyle, thinks China’s professional talent pool is improving, with an “increasing rank of professional managers to choose from, many coming out of professional services and multinationals.”

Even when the right candidates exist, bringing them in is rarely straightforward. First, recruiting top talent is costly: building leadership depth requires market-level pay, which can challenge cost-conscious founders. Progress often begins with making moves in finance and accounting—for example, through the early hiring of professional CFOs—while other functions such as HR and organizational development lag.

Longtime executives might represent barriers to this process. One client’s CFO began as the accountant when the business was a ten-person restaurant in Guangdong. The company now exceeds $1 billion in revenue with more than fifty thousand employees, yet this now-CFO retains the founder’s full trust. “If this person stays in the position, how can we recruit top finance talent?” the next generation asks, having lobbied for her retirement for years without success.

Companies should focus on a few core questions as decisions are made about personnel in the run-up to succession: Are roles matched to capability rather than lineages? Are successor candidates evaluated through disciplined, competitive processes that include family, internal, and external talent? Is there a deep, complementary leadership bench to support the next CEO and reduce reliance on any single individual?

Governance is about who holds authority, how it’s exercised, and how conflicts are resolved. Without it, neither institutionalization nor professionalization is durable. While the founder is present, ambiguity is often tolerated. Once the question of “who leads next?” arises, unresolved issues surface fast: who decides, who can veto, and whose interests prevail. As one entrepreneur put it, “Two brothers founded the company. Each has children. Now there are four potential successors. Who does what—and how do you keep the company intact?”

Most founders we know understand the need for rules, boards, and checks. The difficulty lies in making those mechanisms neutral and enforceable. This is where boards matter. In theory, they are neutral arbiters—overseeing the organization, setting its direction, and ensuring accountability while leaving day-to-day management to executives. In practice, many boards in Chinese private companies remain symbolic, dominated by family members or longtime loyalists with limited independence or authority. When boards lack real power, succession devolves into informal bargaining, driven more by relationships than by capability or long-term fit.

Effective stewardship requires clarity before it’s needed. Decision rights must be explicit. Roles must be clearly demarcated. Mechanisms for resolving conflict—between siblings, branches of a family, or family and management—must exist in advance so leadership transitions are accepted as legitimate and final. Structure cannot guarantee harmony—but it can prevent chaos. As one adviser puts it: “If you don’t fix governance, it doesn’t matter how well you prepare for a transition; the whole thing can be overturned the next day should someone inherit power and decide to do things differently.”

Chinese family businesses face an added dilemma: formal boards and governance structures are often seen more as Western imports than culturally-rooted solutions. They’re also seen as overly rigid. The real challenge is finding that middle ground that will support succession and accountability without eroding cultural legitimacy or founder authority.

Elsewhere in the Chinese business world, this transition is further along. In Taiwan, family-controlled groups such as Fubon Financial, CTBC Bank (formerly Chinatrust Commercial Bank), and Cathay Financial Holdings have navigated multi-generational transitions. In Hong Kong, firms like CK Hutchison Holdings have long operated with professionalized management and formal governance. Formed earlier, these companies have had decades to institutionalize.

For Elmer Cheng, who left Merrill Lynch in New York to become CEO of his Hong Kong family business, Polygroup, the early challenge wasn’t competence but rather legitimacy in the eyes of his father’s longtime lieutenants. Polygroup traces its roots back to his grandfather’s 1960s Hong Kong workshop selling silk flowers by the stem; his father, Wai (Paul) Cheng, later transformed the business after watching his young sons beg for a “too expensive” artificial Christmas tree they’d seen at a Hudson’s Bay store in Canada—prompting him to vow to make one himself. With the “one-man-show” instincts of a founder, Paul built Polygroup into the world’s largest artificial Christmas tree manufacturer, driving explosive growth as he shifted production from Hong Kong to Thailand, Indonesia, Mexico, and mainland China, and also expanded into new product lines such as summer inflatables.

When Elmer became CEO at thirty-six, he felt like slinking out the very first time he stepped into the company boardroom. “Huge imposter syndrome,” Elmer says. “Not knowing if I could lead, not knowing if my peers, all these older ‘generals’ who’d followed my dad for twenty, thirty years, would respect me.” He also felt like he’d “lost a father and gained a boss—and family gatherings sometimes felt like I was having dinner with my shareholders.”

Yet Elmer slowly put in place the structures to help guarantee the company thrives in his generation and beyond. He’s already thinking about his fourth-generation son, hoping he’ll have the freedom to choose his own path, but also trying to raise him with humility: “I tell my son, ‘I had to wait until I was a teenager before I got real soccer cleats. I even slept with my first pair,’ ” Elmer says. His son now does the same.

Mainland firms are now beginning the same shift from founder-style leadership. In Shanghai, Kelvin Pan’s path to leadership at AAC Technologies—Apple’s largest supplier of acoustic components, haptics, and precision mechanical parts—began with a call from his father, Zhengmin (Benjamin) Pan, to join the family business. In his twenties, Kelvin returned to China from Boston, where he’d studied math and computer science at Boston University and had planned to launch a start-up in the venture capital ecosystem there.

At AAC, Kelvin began in IT in 2014, went on to oversee a hundred engineers in R&D, and gradually moved into business operations, where he observed AAC sales teams repeatedly falling short in the smartphone business— their goal of achieving 30 billion RMB (about $4 billion) in annual sales often yielding only about 60 percent of the targets they’d set. It was an experience he found “deeply frustrating,” he recalls. “That happened for a few years in a row. It wasn’t a market issue—it was about how we operated.” Kelvin pushed his father and internal advisers for changes in R&D, strategy, and organization. In parallel, he set AAC’s Android motor business on a path to a fifty-fold expansion, reaching roughly 1 billion RMB ($143 million) in revenues today.

It was a milestone. “Once you start managing the business and getting results, you gain credibility,” Kelvin says. By 2022, he was overseeing all business units and driving expansion into new products and markets. “There’s no straightforward answer to succession,” he admits. “It’s about how you grow, and integrate, and take on more responsibility as you go.”

Succession in China is often framed as a liability. The stories in this chapter suggest a different way of seeing it—as a rare opportunity for second-generation leaders to bring new capabilities into businesses that saw success in a very different era. That shift matters as Chinese companies increasingly expand abroad, says Mingyu, who leads McKinsey’s China succession work.

“The parents have proven themselves in China, but, given the business context now, it’s impossible for their kids to be even more successful within China,” he says. “The only way forward is to move the goalpost: ‘what you did in China, I can do worldwide.’ It’s a mandate to go global.” The prospect of globally-educated, next-generation CEOs transforming traditional Chinese corporates into the next multinationals from China is exciting.

That’s exactly what Yihong, the second-generation leader at Suntar, is doing. Fluent in Mandarin and English and experienced across Asia and the United States, he is leading the company’s push beyond China. “Culturally, it’s easier for me than for my father to adapt to how business is done with clients outside China,” he says. “I have fewer preconceptions in terms of how things should work; by contrast, in China, I’d never be as effective as my father.”

Managing a successful transition, however, takes time. In a structure we expect will be increasingly common, Yihong sits on the board while a trusted management team runs day-to-day operations as part of a phased handover. He won’t take the top role for another five to ten years.

For private equity firms and companies looking for consolidation opportunities, the coming succession wave presents an intriguing proposition. As founders age and families reassess their priorities, many businesses that were never intended for sale may come onto the market. “If the next generation has interest in other areas, which may have even higher potential, why do they have to stick with the old business?” says family-owned business adviser Roger King. “Why wouldn’t selling the business at the right time, at the right price, be a good choice?” Increasingly, families may conclude that liquidity and diversification matter more than preserving direct control.

But for buyers of these businesses, the purchase decision is only the beginning. Private equity firms still face a hard question: Who runs the company next? In some cases, PE owners retain the founding team for a transition period, pairing them with professional managers to institutionalize operations, governance, and incentives. In other situations, founders exit entirely, forcing investors to recruit outside leadership—a tall order in markets with a scarcity of seasoned operators who can step into founder-led businesses.

Monetization remains the final hurdle. IPOs, trade sales, and secondary buyouts are all possible, but none is guaranteed. Investors are underwriting longer holding periods and prioritizing businesses that can survive leadership transitions, not just deliver near-term gains. In China’s succession wave, private equity’s advantage will rest not on capital alone but on its ability to supply governance, talent, and a credible path from founder-led growth to institution-led durability.

At this juncture in China’s history, there are more questions than answers. Will this generation of family-owned businesses survive their founders? How many businesses will celebrate their one hundredth anniversary? In contrast, how many will follow the path of the Chinese proverb that asserts, “wealth doesn’t last more than three generations?”

We are only beginning to see how the next era will unfold.