Chinese billionaires are about to transfer nearly $1.1 trillion to their heirs

 Chinese billionaires are about to transfer nearly $1.1 trillion to their heirs

Entering retirement age, China's first class of businessmen is planning to soon pass on wealth to their descendants.

Zhang Shiping was one of 16 million young Chinese sent to the countryside during the Cultural Revolution. Decades later, he took full advantage of market reforms to build two world-class businesses, a garment company and an aluminum smelter.

In 2019, after Zhang passed away at the age of 73, his son Zhang Bo, 52, became the chairman of China Hongqiao Group Ltd. and Shandong Weiqiao Pioneering Group Co., a privately held company that owns Weiqiao Textile Co. The younger sister, Zhang Hongxia, 50, serves as the chairman of Weiqiao Textile and is the general manager of the private group. The total fortune they inherited is $14 billion. In 2021, the Zhang family's fortune skyrocketed as profits and corporate stock prices both increased.

The Zhang family also became the first mainland Chinese family to enter Bloomberg's ranking of Asia's wealthiest families.

China has the second largest number of billionaires in the world, after the US. The country is also home to giant technology, green technology and pharmaceutical companies. Still, the wealth is largely derived from the wealth accumulated by the first generation, suggesting that the country only liberalized its economy in the 1970s.

Bloomberg's clan rankings include wealthy families spanning at least two generations. In Hong Kong, India or Southeast Asia, property is usually transferred over three to four generations. Meanwhile in Europe, the wealthiest families have been transferring wealth over the centuries.

With China, the shift is happening. The tycoons of the country's leading corporations have nearly $ 1.1 trillion in accumulated assets and this wealth will soon be transferred to the heirs.

“We will see more and more typical transitions as the first generation of mainland Chinese entrepreneurs steps in,” said Hao Gao, director of Songhua University's Global Family Business Research Center. Retired Age".

China's 80 richest billionaires according to Bloomberg rankings have an average age of 54-57. This shows that the transfer of power and assets to the heirs will take place in the next decade.

The founders of auto parts trading company Wanxian Group, feed maker New Hope Liuhe, construction company Country Garden Holdings or Hopson Development Holdings have all passed on wealth and power to the next generation. . Yang Huiyan, Co-Chairman of Country Garden, became Asia's richest woman in 2005 after her father transferred shares in the group.

While China has embarked on a "Commonwealth" campaign to close the gap between rich and poor, the country does not have an inheritance tax despite repeated mentions by officials.

Inheritance tax has not yet been taken into account in China, said Angela Zhang, an associate professor of law at the University of Hong Kong. "This partly explains why the Chinese government is pressing billionaires to donate more to charities and community projects to redistribute wealth.

On the other hand, Hao Gao said, the government's recent crackdown on industries such as technology, real estate and education has hurt the billionaire's business. This makes it possible for them to accelerate the planning of the transfer to the next generation.

"Currently, the private sector in China is facing many big changes. This is both an opportunity and a challenge for the F2 generation to develop faster," Gao said, noting. Chinese rich are increasingly aware of the need to handover sooner.