Recently there have been renewed calls for an inheritance tax in answer to reducing the rich/poor divide. It sounds enticing for the government. Nearly half of family businesses in Mainland China will be passing the reigns to the next generation over the next five years as the average age of the founder creeps up to, for example, 49 years on the Hurun Report China Rich List. To date there have only been a handful of sizeable fortunes passed on to the next generation, of which 24-year old Li Zhaohui ' s US$300 million inheritance is the biggest representative. So far the government has adopted a laisser-faire attitude, allowing the family businesses to grow to a critical mass before imposing this new tax.

In stark contrast

The most significant common denominator of China ' s dynamic entrepreneurs is that well over 90% are first generation. This is in sharp contrast to our thought-provoking list of the ‘ World ' s Oldest Family Businesses ' , headed by the 1400-year old Japanese temple construction business based in Osaka . The UK, France, Italy, Germany, Japan and the US lead the way with the highest number of family businesses on the list, which was first published by US-based Family Business magazine. Even the number one hundred on the list has just 230 years of history. Alcohol manufacturing, followed by inn keeping and handicrafts are the industries that have survived the years best. Unsurprisingly perhaps, there are also a couple of funeral parlors on the list.

Succession is a complex and emotion-laden issue for family businesses. Of primary importance among family firm wealth holders is transferring not only their financial wealth but also their values surrounding their wealth to subsequent generations. Primary values taught include encouraging children to earn their own money and philanthropy.

Wealth does not survive three generations, according to a Chinese proverb, and this is pretty much proven by statistics from the West too. A study in the US showed that a third of family-owned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with three percent of all family businesses operating at the fourth-generation level and beyond, very much upholding the Chinese proverb. In this issue we bring you exclusive interviews with two of the families from the World ' s Oldest Family Businesses.

Brand builders

Whilst the US has been at the cutting edge of brand building for the past century, expect to see a few brands from China begin to blip onto the radar screen. This issue we bring you our list of the fifty most valuable privately-controlled brands in China . Hurun Report puts numbers on the value of the brands, lead by the milk-producer Mengniu with a value of US$750 million. Whilst brands are playing an ever-increasing role in the marketplace, our conclusion is that the greatest value still lies in distribution channels with many brand agencies overvaluing the impact of a brand for the benefit of the client. With exclusive interviews from many of the brand-builders themselves, Hurun Report goes behind the scenes to investigate the strategies of these brands.

Luxury travelers

On the subject of brands, there is another race to watch out for: the race for luxury travel brands. At a recent event in Jiangsu , Raymond Tong, Accor VP of Development for Greater China, was telling me that on the same day in May Sofitel opened two hotels in Nanjing setting a new milestone for the group. “ Never before has Accor opened two Sofitel hotels on the same day anywhere in the world. ” Whilst the luxury hotel market in China is still led by the Shangri-La, at the top end the competition is about to become stiffer from players including the Park Hyatt, Ritz-Carlton and Mandarin Oriental, all of whom have aggressive expansion plans.

As outbound tourism increases, so do the luxury travelers. Hurun Report estimates there to be 50,000 luxury leisure travelers from Mainland China today (defined as outbound travelers flying business class or more) and a further 150,000 luxury travelers for business purposes. Since luxury leisure travelers today represent only 10% of the individuals that can afford luxury travel, and the market is growing at breakneck speed, this may explain the rush for hotel brands to establish a strong footing in China today.

This issue our travel editor Mica Quinn investigates luxury travel destinations in the US , taking our readers to Hawaii , California , New York and Las Vegas . “ Despite its lack of ADS status, I was surprised at how much the US is welcoming independent Chinese luxury travelers, ” says Quinn.

Charity catching on

Two years ago when Hurun Report held its first charity auction at a gala dinner in Shanghai , it was one of the earliest of its kind. Now the tempo is picking up. In early June Hurun Report held a weekend event at Tianmu Lake together with Hentique, a local property developer, with fifteen Ferraris and Maseratis, yachts and helicopters to entertain the 300 guests. The evening ' s charity auction raised a further US$50,000, meaning that to date Hurun Report has raised US$350,000 for local charities in China .

Our mission at Hurun Report is to keep you posted on the changes in China ' s private sector, identifying the rising stars and their evolving lifestyles.