“Don’t let your fertile water flow onto an outsider’s field” is an old Chinese saying, which translates into English as “keep it in the family”. The message appears to have been taken on board by Cao Dewang, the founder of Chinese blue chip Fuyao Glass, the world’s largest automotive glass supplier.
Earlier this month, the 71 year-old announced that he had appointed his son-in-law Ye Shu as the company’s new general manager and that he hopes to persuade his eldest son Cao Hui to take over as chairman within the next year or so. Cao told Beijing News that the two changes represent the first and second steps of a three-part succession plan for the firm he founded in 1987. The third and final step will be marked by his own departure after an eight to 10-year period during which he envisages remaining on the board as a director and only “interfering when something significant crops up”.
The company’s Hong Kong-listed stock then fell 5.51% over the course of the next two business days, although it then rebounded.
Succession planning for China’s aging tycoons is a familiar tale (see WiC264) and an increasingly important one given their rapidly advancing years. But as Forbes most recent Chinese Family Business Survey has suggested, about 60% of second-generation sons and daughters do not want to follow in the first generation’s footsteps. This is also the case with Cao Hui who left his father’s firm in 2015 and told insiders that he didn’t want to come back.
Beijing News says this is no bad thing. “Oriental culture places far too much emphasis on family-run businesses, which isn’t conducive to innovation,” it concludes. “Fuyao Glass needs to cultivate professional managers.”
Many netizens agree. “I don’t want Cao Hui to become chairman,” said one. “He’s a little ghost (the Chinese term for a child) and doesn’t have his father’s eyes and wide heart.” The latter reference is to Cao senior’s acts of philanthropy. According to the Financial Times, he transferred more than $1 billion in 2012 to a charitable foundation set up in honour of his own father and which is now Fuyao Glass’ second largest shareholder.
Earlier this year Cao voiced concerns that China’s industrial base is losing its competitive edge (WiC350). But he remains one of the more popular businessmen with the public. As Fujian News says, “Cao Dewang is a god in the eyes of the general public. He set up a professional charity, has never attracted a whiff of scandal and became a media darling after calling for corporate tax cuts” (see WiC353).
Cao had employed a professional manager as general manager before he decided to appoint his son-in-law to the role. Now Zou Min, the incumbent, will stand down. Zou joined Fuyao Glass straight from university and rose up the ranks to become the youngest CFO of a listed company when Fuyao Glass floated on the Hong Kong Stock Exchange in 1993.
Cao tells Beijing News that Zou will instead run his charitable foundation. “It’s actually a better role than being GM because he won’t be pressurised by operational targets,” he concludes.
Cao is also adamant that his son-in-law will do a good job. Having been suspicious of Ye’s motives in marrying his daughter, Cao tells Beijing News he was won round when the couple moved to Australia and supported themselves. However, subsequent remarks about the role that women play within the family have not gone down well in all quarters. “In our culture, when a daughter marries, she leaves one household to join another where a man is head,” Cao said.
Cao also tied himself in knots trying to explain how he loves Zou dearly but not quite enough to let him run Fuyao Glass after he is gone. “I’ve always loved him like a son and he’ll never leave me,” he explained, before adding, “If Fuyao Glass isn’t run by a member of the Cao family it will lose its soul.”
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