Take over or break free? the world's factory faces a succession dilemma

"Hello, everyone. My family runs a circuit board business, and our clients include Huawei, Xiaomi, and OPPO…"

It's a casual New Year's gathering, but when every attendee shares the same label – "factory second generation" – things become uniquely memorable.

In China's private manufacturing sector, "factory second generation" generally refers to the children of entrepreneurs who founded private manufacturing companies in the decades following the reform and opening-up policy.

As these heirs grow up, whether to return home and take over their family businesses has become an urgent and, at times, challenging question.

Factory floor feels more open than office cubicle

At last year's China International Import Expo, Wang Yi, who calls herself an "auto-parts second generation," spoke at a forum about how small and medium-sized factories are exploring digitalization to uncover new market opportunities.

Growing up on the shop floor gave Wang a natural affinity for traditional manufacturing, yet she felt no particular enthusiasm for everyday management.

"I don't like doing the same thing day in and day out. I'm also quite competent on my own, so I never really considered going back to work in my family's factory."

Through a chance encounter with friends who also had family businesses, Wang discovered that many of them shared the same confusion about their futures.

Together, they founded a community for people like them: "Factory Second Gen GOGOGO."

"In less than a year, I've met hundreds of 'factory second generation.' Although most have returned to their family factories, only a small portion have truly taken over. "Wang said

"To us, 'taking over' means having real decision-making power – guiding the company's growth – rather than merely serving as an accountant or salesperson," she added.

After forming this community, Wang noticed something interesting: many older-generation factory owners do not necessarily expect their children to take over.

"Parents mainly hope we'll mature, stay grounded, and appreciate their hardships. They don't want us always trying out big, impractical ideas. I've seen a quip online that goes something like, 'A second-generation heir lost in indulgence is no threat; an ambitious one is.' That sentiment really reflects how many parents feel."

Wang observes that those who stay away from home and start their own ventures tend to open relatively ordinary businesses – milk tea shops, gaming lounges, clothing boutiques, and so forth.

The few who want to accomplish more are usually the ones who do return to the factory.

"Many find that big-city cubicles aren't as satisfying as the spacious shop floors of their own factories. Some say they feel a stronger sense of achievement when they 'work like an ox' for the family business. Of course, there are still a handful who can't adjust and eventually run off."

For women, taking over can be particularly tough. Wang jokes that combining "factory second generation" with "only daughter" is like hitting the highest difficulty level.

"In the manufacturing world, men often dominate at the management level or in sales. Plenty of women worry they won't be taken seriously or might get duped. These concerns are not unfounded; they reflect reality." Wang said.

She shared that she was personally cheated out of nearly a million yuan during a relationship. "But I didn't let that breed resentment. I picked myself up, focused on building this community, and now I hope to help more women gain awareness, develop their skills, and build the confidence to take charge."

'I inherited a factory, not a fortune'

Every morning at nine o'clock, Wu Xi and his mother drive to work in Shanghai's Hongqiao business district, where his father established an R&D and sales hub back in 2012.

Wu is behind the wheel of a car his father gave him last August, the day he flew home from overseas.

That day, he had just landed when his dad took him to pick out a car, saying it was for him. Wu chuckles sheepishly. "I inherited a factory, not a fortune."

Wu accepts his label matter-of-factly: "Dad started a factory to support me, put me through school abroad, and provided jobs for so many people. I think that's pretty awesome."

For Wu, returning home felt perfectly natural:

"My grandfather's generation came from Xuzhou to Shanghai, bringing its pickled vegetables. My parents started with a small stall, became distributors for a Japanese salad dressing brand, and later created their own brand for Western-style sauces. I've witnessed it all. I've witnessed and been a part of all that."

He also feels a certain closeness to the family factory: "In middle school, I worked tightening lids on tomato sauce bottles during breaks. Dad paid me 100 yuan a day, and by the time I earned 4,000 yuan, I threw a party for my 14th birthday."

In the factory, Wu's father handles strategic directions while his mother manages internal operations. The couple has worked diligently, side by side, for years.

Even with an open-minded upbringing, Wu still clashes with his parents now that he is home: "A lot of my work is done through mobile apps and social media, but when they see me on my phone, they assume I'm just wasting time. They also still treat me like a kid."

Still, over the past half-year, his parents have given him considerable latitude.

"My dad encourages me to experiment. He always says, 'It's better to do something wrong than to miss an opportunity. Some market chances won't come again once they're gone.'"

Shortly after returning, Wu was keen on trying livestream sales. His parents were skeptical, believing it was better to proceed steadily in fields they knew. Yet, they still let him give it a shot.

"They gave me some product inventory at a low cost so I could try it out. In the end, it didn't go well, so I just stopped."

Wu's mother often says Shanghai rewards tenacity – so long as one persists, there will be returns. They have since relocated the factory to another city and kept R&D and sales in Shanghai, hoping Wu will focus on those areas.

Today, he is leading development for specialized nutritional products, testing new offerings like adding prebiotics to sauces:

"My parents fully support this direction. I focus on product development in the promising health sector, but I won't disrupt the factory or change successful systems."

A few gray hairs prompted the son to step in

During the Spring Festival holiday, Zheng Jite had dinner with his father. A yellow croaker simmered in the clay pot, steam rising and blurring his father's face.

His father, not yet 50, spoke of the new year's business plans with vigor and optimism. Zheng couldn't help recalling how, a year earlier, his father had shown him several gray hairs.

Back then, his father spoke earnestly: "I'm getting older and feeling tired. I need you to come back and help shoulder some of this."

It brought to mind Zheng's childhood memories of an old workshop with just one machine and a single worker. His father made molds while he squatted and watched. The smell of melting plastic was the defining aroma of his boyhood.

Unlike Wu Xi, Zheng had never intended to take over. He disliked the noise and the smell of machine oil and believed he had the talent to succeed either in his startup or in a major corporation.

Yet, seeing his father so worn down, he felt he had to step up.

He never expected that before setting foot in the family factory, his father would dispatch him to an undeveloped industrial park to sell screws: "I spent three months there and saw maybe four or five people total – a broadband technician, an electrician, and a few of my dad's friends."

Alone in a large warehouse stacked with fasteners, unable to distinguish carbon steel from stainless steel, he was somehow supposed to build a new market.

"I thought my dad was being ridiculous, throwing me into the wild like an unready bird. After three months of no sales and no earnings, we fought. Eventually, he realized expanding into that park was a mistake."Zheng said.

Looking back, though, Zheng still sees the value in it. He started reading up on standards, specifications, and materials, diving headlong into the world of screws.

Once he got into the actual factory operations, father-son conflicts only grew:

"He had no roadmap for me. I was basically a 'spare brick' – wherever someone was needed, I went. Working on the production line was frustrating: everything felt so rough and inefficient. But getting angry solves nothing, and the older generation often can't relate to our frustration."

Although Zheng had learned about lean production during a previous internship at a large company, he felt lost when confronted with the factory's old-school, labor-intensive practices.

He wanted to digitize operations, but his father vehemently opposed the cost, which could easily run into millions of yuan – no small expense for a modest factory.

Moreover, many long-time workers resisted the idea of using smartphones on the job.

In navigating these conflicts, Zheng also examined his own approach:

"We second generation usually have big ideas. We want to show our parents what we can do, but it's never simple when we try to implement new methods."

To encourage workers to adopt digital tools, Zheng devised a simple "scan-to-report" reward system: each time someone completed a job and scanned a code, they received a 20-yuan bonus; after a three-month trial, penalties were imposed for failing to report.

That direct system of rewards and punishments got the factory on board with "work orders," which track the production progress of each batch, calculate costs and profit margins, and streamline coordination with partner factories.

His father then gave him more responsibilities, including financial and future planning discussions.

"Some of my friends haven't yet figured out where they fit. But I believe that rather than waiting for our parents to slot us into a role, we should look for problems and solve them. That's how you grow your capabilities."

Zheng admits that playing the reformer earned him his share of criticism: "We're taking it slow. I can see people getting used to the changes. This year, one of our veteran workers video-called me from his hometown to show me the snow."