The paradox of the “rich second generation”taking temporary post in state-owned enterprise

A few days before, 48 young entrepreneurs of Guangdong Foshan concluded their 6 month temporary work in state-owned enterprises. These posts in state-owned enterprises became available since November last year. The organization department of Foshan committee of PRC selected 48 entrepreneurs from 100 applicants, assigning them to posts provided by 36 state owned enterprises. Among these 48 young people, over half of them belong to the “rich second generation”. Government helps entrepreneurs in culturing their successors; this naturally became one of the hot topics.

Actually, there are various training courses provided in the market which are specially directing at “rich successor worries”. However, these courses are normally characterized by strong economic purposes with less practice. Other than the market, Jiangsu province also provided similar trainings. Several years ago, Jiangsu province launched an assembly training of 1,000 “rich second generation” through Party school, which also triggered hot discussion.

As we know, the economic output of private economy in Foshan has exceeded 400 billion yuan, accounting for more than 60% of the total GDP of the city. Meanwhile, “those children from rich family are lacking of succession awareness,” some government officers said:”lack of faith and mission awareness and strong immigration intendancy are prevailing among these young people.” For this reason, the concerning about the succession problem of private enterprise of the government is somehow reasonable.

Indeed, since state-owned enterprises generally have more formal operation procedures and standardized regulations and systems due to their planned economy and organization character of which the current state-owned enterprises originate. They actually have stronger points over the family managing private enterprises. And as for the young entrepreneurs of the training, they usually take the posts such as assistants of the general manager or of the department managers of medium level. The posts they take are generally nominal without involving in any actual decision making. During their term of office, they will be given more time to observe and learn which is believed to enhance their ability of policy and market analysis. From this point, temporary engaging a post in the state-owned enterprise really has its own way to help.

However, local government’s involvement in the successor cultivating of private enterprise has a paradox which is difficult to detect. No matter competitive with each other or complementary as in the same industrial chain, the private enterprises of which the rich second generation come from and the state owned enterprises they take posts, more or less, have some “zero-sum “benefits, which means beneficial only to the private enterprises in single direction. But now, the state-owned enterprises open their arms to help their competitors or partners cultivating successor. This, put it in a harsh way, is just a reflection of the non-enterprise nature of the state-owned enterprises. And then what can a successor from a private enterprise acquire in terms of being an entrepreneur from an institutes of strong non-company characteristics.

This paradox lays the key point of the problem.

As we all know that an entrepreneur who possesses some relationship from the government or state-owned enterprises will have more opportunities. Therefore, although we cannot deny the learning nature of the training, we also cannot ignore the other side of this temporary engaging, that is, to provide a channel for entrepreneurs to expand their personal relationship network. Maybe this just explain the phenomenon that on the one hand, the rich second generation are not passionate about succession, but on the other hand, the applicants are not few.

It’s not a secret that it is the craving for the resources possessed by government and state-owned enterprises affect the succession of the private enterprises. In mature modern enterprise system, no matter the second generation choose to success or not, the normal operation and development of the enterprise will not be affected. And this system is formed spontaneously under the expectation of a long term and stable system.

Therefore, the nature of the role of a government shall be that to form long term, fair and transparent system expectation. However, it is regretful that besides the benign start points, the training, to an extent, provides a seminary to set up opaque relationship network. Although entrepreneurs are currently craving for these resources, the resources will not help the entrepreneurs to form stable expectations of the macro-environment.

As the old Chinese saying goes, when you open a book, you can always acquire something. But is it really true that if you read, you can acquire something good. However, it is decided by the content of the book. From this perspective, It is really hard to give absolute answer that engaging temporary post in state-owned enterprises is good or bad.

Published on The Beijing News  | 2014-5-29