Rewriting The Succession Playbook

In 2012, He Xiangjian, founder of Midea Group—then a Fortune Global 500 company with over $60 billion in revenue—handed the chairmanship to a non-family professional, Fang Hongbo. The move departed from the prevailing script in Chinese family business: the founder's son must inherit the throne.

Nor did he push his son, He Jianfeng, into Midea. Well before the succession question ever arose, He Jianfeng had already built his own orbit—Infore Group, founded on his own choice rather than by family default.

Fourteen years on, Midea's revenue has grown from ¥100 billion to ¥458.5 billion (FY2025 annual report).

Yet the He family built something rarer than a larger company: a family galaxy, held together by three lights—letting go (operations to professionals, ownership with the family), expanding the circle (family members building ventures in investment, materials, real estate, and philanthropy), and passing on goodness (a foundation giving the family a shared mission across generations).

We sat down with Yue (Vivian) Sui, an independent researcher on succession and family offices, formerly of the HKUST Roger King Center for Asian Family Business and Family Office and co-author of the HKUST–EY Greater China Family Office Landscape 2024. She has studied more than 100 family offices across the region and writes 家传漫谈 (Legacy Talks), a WeChat publication on family offices and succession. This interview builds on her case study of the Midea succession.

Why is relinquishing operational control so difficult for founders? Sui explains that letting go is hard for three reasons.

"First, for a founder, the company is not something you own—it is who you are," she says, pointing to what scholars call socio-emotional wealth.

Trust is another barrier: once ownership and management separate, will the professional act in the family's interest?  Thirdly, culture compounds the challenge: in many Chinese contexts, zi cheng fu ye—the son inherits the father's business—is the default script, and entrusting the company to a non-family professional can be a difficult conversation—although, as Sui notes, more and more families across Asia are actively exploring professional management today.

What made He Xiangjian's decision work was not daring, but design. Beginning with the business-division reform of 1997, he spent fifteen years building the system before handing anything over.

“After fifteen years of preparation, the handover rested on the system, not personality,” she says. Family control remained at the equity level, a board with institutional and veteran directors oversaw management, and a significant equity-based incentive mechanism reportedly tied key executives to long-term performance goals, aligning management interests with sustainable value creation.

The results are in the numbers: revenue grew from ¥100 billion to ¥458.5 billion (FY2025) in fourteen years. Governance made the handover safe—checks and balances for the bottom line, incentives for the top line.

Succession is hard. Is there another path—and what are the strategic benefits when the family backs the next generation in launching independent ventures?

"Succession is never easy—in fact, there's great pressure. Prof. Joseph Fan's study of 217 Chinese family firms found an average 60% market-value decline across the eight-year succession window. My reading is that the gap usually comes down to governance preparation lagging the ownership transition: families that built the governance first tend to fare better."

"Succession may also carry emotional costs, as heirs face an inherent asymmetry trying to replicate a founder's era-defining success."

Sui notes there is an alternative to this: transgenerational entrepreneurship—shifting the focus from a single business to a wider family enterprise system.

"Enduring families sustain their wealth by continually renewing entrepreneurial capacity rather than merely guarding legacy assets."

The He family is a case in point: family members have built their own ventures across investment, materials, real estate and philanthropy—each orbit chosen, not assigned.

This approach mitigates succession risk while providing four key advantages:

How was the HE Foundation structured to protect family values without interfering in Midea's operations?

Through a clean separation of financial returns from commercial control. Between 2017 and 2018, the family donated a total of roughly ¥6.4 billion—100 million Midea shares, valued at the time of donation, plus ¥2.4 billion in cash. The donated equity sits in a segregated pool within the foundation structure.

"The equity functions as a perpetual dividend engine—a stream that grows with Midea, without touching its shareholding structure or commercial decisions," Sui says. The cash funded healthcare, poverty alleviation, and cultural initiatives, benefiting more than one million people.

One governance philosophy runs from the company to the charity: the family steers strategic vision, while professional managers run operations ( the executive chairmanship has recently moved from a family member to a professional manager).

"And the foundation protects what money can't buy back: values, reputation, intergenerational identity. Because the charity was a two-generation project—the son proposed it in 2008, a pilot foundation followed in 2010, the family foundation was formally established in 2013, and the donations came in 2017–2018—it created shared memory, which no trust or family constitution can create on its own. The HE Foundation binds the family by mission."

The single most critical governance shift needed to move from a founder empire to a multi-generational legacy, Sui argues, is moving from passing the crown to designing the system.

As practitioners of organizational design often observe: plans describe intentions; systems make outcomes repeatable. The ultimate asset a founder can leave is a system that runs without them.

This demands a shift in identity too, as the founder transitions from sole commander to guardian of family values.

Yet this shift remains remarkably rare. The latest UBS Global Family Office Report (2026) found that only 35% of family offices worldwide have a defined succession plan in place.

“He Xiangjian prepared for over a decade; most families start planning only when a crisis strikes,” Sui says, adding that separating ownership from management is not a universal prescription; there are many succession models.

“Failure often stems from not building a system for whichever path a family chooses. A succession path without a supporting structure is simply a bridge to nowhere.”

"We tend to assume East and West are worlds apart," Sui notes. "A comparative study by my professors at the HKUST Roger King Center—Prof. Roger King and Prof. Winnie Peng—shows East–West differences stem from historical experience rather than abstract culture."

"Some long-standing mercantile communities, shaped by histories of geographic mobility and political volatility, historically prioritized wealth liquidity and portfolio diversification—treating the operating business as one asset among many, with timely exit viewed as a legitimate strategic choice. In other contexts, families have tended to retain the operating enterprise as a core identity anchor across generations."

She notes that what is often called "Western" succession practice is not Western culture itself—it is simply what governance looks like after several generations of accumulated experience.

"European family businesses that have endured across more than three generations have had time to develop mature governance structures. Many families in Asia are navigating their first or second intergenerational transition, where relationship-based trust still plays a central role—that is a stage of development."

Sui adds that governance is not a cultural trait but a developmental outcome. “Governance tends to evolve with generational depth: families that have accumulated practice often develop more institutionalized structures such as corporate governance, family governance, family office governance, regardless of region.”

"Yet no family has to wait for time to learn. For both East and West, I believe Prof. Alfredo De Massis has pointed a way forward: the shift from the single crown to the entrepreneurial family galaxy."

"Traditionally, families pass the core flagship business intact to a direct heir. But families like the He's are showing a different path—redefining, rather than abandoning, the traditional model: fusing traditional family values, modern professional management, and next-generation entrepreneurship into one system."

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_{Disclosure & Disclaimer}

_{The views expressed are based on publicly available information and academic research. The interviewee has no financial or advisory relationship with Midea Group or the He family.}