US QE3 sparks concerns !

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Possible US QE3 sparks concerns

By Hu Yuanyuan and Chen Ji 

BEIJING - The Federal Reserve said on Wednesday it could ease monetary policy further if the United States failed to see solid growth, which analysts said may add to China's inflation and endanger its $3.2 trillion foreign exchange reserves.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might re-emerge, implying a need for additional policy support," Ben Bernanke, Fed chairman, told the House of Representatives Financial Services Committee. His remarks were generally interpreted as a signal of a possible QE3 (quantitative easing).

In late 2009, the Fed launched an unprecedented bond-buying drive to boost the economy and make credit more available, spending some $1.7 trillion on mortgage-backed securities and Treasuries before it ended in March 2010. It then initiated a second round of easing, that wrapped up in June, in which $600 billion of bonds were bought.

But the US economy remains weak, prompting the possible launch of a QE3. A Reuters/Ipsos poll released on Wednesday showed that the number of Americans who believe the country is on the wrong economic track rose to 63 percent this month, up from 60 percent in June. The country's jobless rate rose to 9.2 percent in June from 9.1 percent in May.



"If the Fed continues to print more money (as Bernanke hinted), it will drag China into a protracted war to limit liquidity and tame inflation," Lu Zhengwei, chief economist with Industrial Bank Co Ltd, said.

China's consumer inflation already surged to a three-year high of 6.4 percent in June, according to the National Bureau of Statistics. This was partly attributable to quantitative easing measures by the US, which drove global capital into the more lucrative developing markets, including China, analysts agreed.

Moreover, the potential injection of money in the US is likely to raise global commodity prices. Crude-oil futures finished higher on Wednesday boosted by Bernanke's comments. The rising prices may force emerging economies, such as China, Brazil and India, to pay more for imported commodities, further exacerbating their inflationary problems.

"It will be a very bad news for emerging countries," Lu said.

Those countries may have to continually tighten their monetary stance, such as by raising interest rates, further incurring capital inflows, Lu said.

Cao Fengqi, director of the Research Center for Finance and Securities at Peking University, told China Daily that a QE3 would lead to faster appreciation of the yuan against the dollar.

According to Cao, if the easing policy became a reality, the resulting flood of US dollars means a faster depreciation of the greenback, which threatens the security of China's foreign exchange stockpile as it will reduce the real value of the dollar-denominated reserves.

"The primary task for China is to control consumer prices and maintain steady and fast economic growth (to counter any external shocks)," Cao said.

The Foreign Ministry said on Thursday that it hoped the US government would take a responsible attitude to protect investor interests.

Bernanke's hint of a QE3 could also be a strategy to pressure lawmakers to agree on raising the US debt ceiling, analysts said.

US President Barack Obama and the Republicans are bogged down in negotiations to raise the borrowing limit before the Aug 2 deadline.

Bernanke may be "talking up the market" and goading Congress to reach a consensus on the ceiling, Chen Xingdong, chief economist with BNP Paribas Asia Ltd, said.

Moody's Investors Service on Wednesday put its AAA rating on US government bonds on watch for a possible downgrade, citing the "rising possibility that the statutory debt limit will not be raised on a timely basis", which would lead to a default on US Treasury debt obligations.

Meanwhile, Chinese rating agency Dagong Global Ratings Co Ltd on Thursday put US ratings on domestic and foreign currencies on a negative watch list because of the country's rising debt.

Dagong said the current political and economic situation had squeezed out room for tax increases, while it is difficult to curtail military and welfare spending.

In the worst-case scenario, the US public debt will continue to grow to 124 percent of the country's GDP in 2015, and the federal government will have to raise the debt limit by $5.5 trillion, Dagong said.

Dagong downgraded US ratings from AA to A+ on Nov 9, 2010 after the US government announced the second round of quantitative easing.

Wei Tian contributed to this story.

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Bersih rally awakening the young voters in Malaysian politics; Registration easy & simple

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Awakening the young voters

ANALYSIS By BARADAN KUPPUSAMY

Pakatan Rakyat is seeking to keep the rally’s momentum going, hoping that it can be sustained until an early general election is held. 

NOW that the Bersih 2.0 rally is over, what’s in store for the divided politics of the nation? It’s a question on the minds of many Malaysians.

The Bersih 2.0 rally was a success by some measure because Pakatan Rakyat supporters braved police restrictions, roadblocks and barbed wire to gather in the city centre calling on the Government to institute electoral reform.

Their eight-point demand included issues that the opposition had been campaigning on for many years, like a clean electoral roll, reforming postal voting and a minimum of 21 days for campaigning.

These are fundamentals of a basic election system in a democratic society and few citizens would find this objectionable.

Saturday’s rally, therefore, had an unprecedented impact on society at large and on the election system, comparable to the March 8 political tsunami.

While Saturday’s rally was smaller in size compared to Bersih’s first rally in November 2007, the effects were the same – the awakening of young people to political action to rally for a basic right in defiance of the police.

In 2007, Bersih had the run of the city with huge numbers converging on the Istana to deliver a memorandum to the King.

Anwar called the 2007 Bersih rally an unqualified success.

Three months later, a general election was called that saw a loose coalition, that later became Pakatan Rakyat, winning five state governments and denying Barisan Nasional a two-thirds majority.

This time, too, Anwar is expecting an early election, probably by the fourth quarter of this year to capitalise on the Bersih 2.0 momentum.

709 pictures of the BERSIH march. Malaysians unite!

https://picasaweb.google.com/104201905154669598873/Bersih2Rally090711?authkey=Gv1sRgCN2Bo8PKqdzNIQ#slideshow/5627287829029822

Voices from Malaysian: 

 Patrick Teoh

Teoh has come a very long way from his days as an announcer on the Rediffusion private radio station before establishing himself as one of the pioneers in mobile discos. In fact, till today people still associate Teoh with his voice though he is also into the arts and theatre.

Watch and listen his Video:


By PR’s reckoning, Bersih 2.0 was a major success and big enough to wipe out the series of by-election losses they suffered in recent months and the spate of defections from PKR to BN.

The internal turmoil caused by PKR’s direct elections that also saw many people disheartened with PKR has also been eclipsed.

PR sought to keep its Bersih 2.0 momentum going by organising a large rally in Penang, a PR state, on Monday that was well-attended.

It is hoping that the momentum would be sustained until an early general election is held.

It needs to step up its criticism of BN, organise more Bersih rallies in other states and perhaps take nationwide action to keep the momentum going.

For this reason alone, it is unlikely that Prime Minister Datuk Seri Najib Tun Razak would call an election this year.

He has to put some distance between the Government and the effects of the Bersih 2.0 rally.

Another reason for Najib to delay the general election is the urban voters whose preference is still with the opposition. He has to come up with imaginative programmes to win over the urban voters whose concerns are very different from the rural electorate.

Najib is also due to meet the Pope next week and hopes to establish a diplomatic relationship with the Vatican. He hopes to consolidate the Christian vote, which accounts for about 9% of the 14 million voters.

On another point, Bersih 2.0 leaders like Datuk Ambiga Sreenevasan tried hard to convince Malaysians that her organisation was an independent body and was acting independently.

It is, however, abundantly clear that Bersih 2.0 was an opposition affair from start to finish.

The police handling of the Bersih 2.0 rally is also under the spotlight. Although they were heavy-handed, there was a relative absence of violence except for one death of a PKR activist that was attributed to a heart condition.

The low level of violence as a whole also limited the electoral backlash against the Government.

Therefore, it is an opportune time to release all those arrested, including the six leaders of Parti Sosialis Malaysia who have been detained under the Emergency Ordinance for allegedly reviving communism.

The Bersih 2.0 rally did not come anywhere near those in Egypt, Tunisia, Yemen and Syria. But it will probably have an impact in the coming general election.

The rally proved its point that a large number of Malaysians can gather, despite police action, and march peacefully.

But Bersih 2.0 is unlikely to be a game changer in the way the first Bersih rally was.

Registration easy & simple

By SHAHANAAZ HABIB and RASHVINJEET S. BEDI sunday@thestar.com.my

PUTRAJAYA: Voter registration numbers have gone up significantly, thanks to efforts by political parties.
But some 40% of the new voters they have registered turned out to be ineligible.

“Some are dead, underage or already registered voters,” said Election Commission (EC) chairman Tan Sri Abdul Aziz Mohd Yusof.

“We verify with the National Registration Department (NRD) those who are genuine and get rid of the names of those who are not. This makes it tiring because we have to keep checking,” he told The Star.

Despite this, he said, political parties still registered the highest number, bringing in more half of the new eligible voters.

“Compared to universities and NGOs, the voters we get from political parties are a lot more,” he said.
For May alone, 52% of new eligible voters were registered by political parties.

Twenty per cent were registered through post offices and 13% by government departments.

The EC, meanwhile, roped in 10% of the new voters through its counters and outreach programme. Universities and NGOs helped to register 3% and 2% new voters respectively.

Abdul Aziz added that the EC had appointed political parties, NGOs and universities as assistant registrars to help register new voters, paying RM1 for every clean and confirmed new voter these organisations bring in.

“If they register 1,000 new voters and only 600 are genuine, we pay them RM600,” he said. Between 2008 and 2009, there were 10 million registered voters in the country and another 4.3 million eligible voters who were not registered.

This year, the total number of registered voters increased to 12 million and eligible unregistered voters dropped to 3.7 million.

“We have made registration easy and simple. You can go to the post office, youth bodies, universities, colleges, government departments, NGOs and political parties to register,” he added.

Abdul Aziz said the Malaysian EC was the only one in the world that appointed political parties to assist in registering new voters.

He pointed out that it made sense to rope in political parties. “We appoint an average of two assistant registrars for each state seat. And because they have an interest, they work very hard to register new voters.

“When we do the voter registration ourselves, the response is not very good. We go to events like TV3's Jom Heboh to register new voters but it is difficult for people to come forward.

“This has to do with attitude. People ask what benefit they get by registering as voters. Some people do not have the spirit. They ask what happens if they don't register and when they find out no action is taken, they leave it as it is. Only those who really love the country and would like to choose their own leaders would voluntarily go and register as voters.”

Abdul Aziz also advised the people to vote in their current place of residence as this was stipulated in the law. This would also resolve the issue of phantom voters, where voters allegedly stay in a different place from where they cast their vote.

He said people should not feel attachment to their hometown and balik kampung to cast their votes.
“If I stay in Shah Alam, I shouldn't go back to Penang or my hometown to vote,” he said.

He estimated that about 30% to 40% of Malaysians voted in a different place or state than where they lived.

“I have no power to force them to vote where they live. I can only explain and persuade them,” he added.

Changes & Reforms - a case of two opposing sides in Malaysia

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A case of two opposing sides

CERITALAH By KARIM RASLAN

We’ve reached a point where it doesn’t matter who brings the change – BN or PR, conservative or liberal, socialist or right-wing. Malaysians will get behind whoever is the most sincere in taking us out of this mess. 

Voices from Malaysian: 

 Patrick Teoh

Teoh has come a very long way from his days as an announcer on the Rediffusion private radio station before establishing himself as one of the pioneers in mobile discos. In fact, till today people still associate Teoh with his voice though he is also into the arts and theatre.

Watch and listen his Video:

LAST weekend’s thwarted march wasn’t an ordinary incident – it reveals two radically different world views.

While the march was nominally non-political, the chasm between the two forces – the Government and the demonstrators – clearly mirrors the increasingly acrimonious split between Barisan Nasional (BN) and Pakatan Rakyat (PR).

Of course, a deeply divided political terrain is always troubling, however, it is at least proof of a dynamic and thriving public discourse.

Ironically, the opposition, despite being excluded from the mainstream media, is clearly setting the terms of this debate.

It also shows that Malaysia remains a democracy – albeit a flawed one.

Indeed, I’d argue that the intensity of the discourse over the past few weeks highlights quite how much we Malaysians care about the state of our nation.

We can see and feel that the state is becoming more polarised – and in such a situation, we are being forced to choose sides.



Sitting on the fence is no longer a viable option – especially when the fence is been shaken so hard by the two opposing sides. However, there are some positives. Most notably the fact that the divide is not racial despite what some politicians are alleging.

In fact there are Malays, Indians, Chinese, Iban, Kadazan, Muslims, Christians, Buddhists and Hindu on both sides of the debate. Indeed, the struggle has gone way beyond racial and religious lines.

Instead we are tussling over political philosophies and principles.

While the differences are certainly stark, their mere existence indicates a certain maturing of our political system presenting us with the alluring prospect of a two-party system.

I must stress that the racial diversity on both sides represents a steadying force – anchoring us together as a nation.

And yes, you could say, it underlines the fact that we are debating a truly Malaysian set of issues.

So what are these substantive political differences? Well, for a start, they transcend mere personality.

On one hand, we have a strident Umno-led Government demanding the continuation of the status quo.

In this respect, Umno is very definitely a conservative (small “c”) force – defending and promoting the interests of the influence-bearing classes.

It’s arguable that Umno’s small businessmen/contractors have adopted the mindset and behaviour of the many minor aristocrats and noblemen that once surrounded Malaysia’s many istana (or palaces) jockeying for favours and/or contracts.

The current Umno vision is retrogressive – it looks back to the party’s heyday under Tun Abdul Razak and Tun Dr Mahathir Mohamad.

It is not a dynamic, expansive vision – witness the primordial and unavoidable cry for Malay unity interspersed with Malay rights.

As with those enamoured and indeed obsessed by the past there is a paranoia and fear of change. Understandably then, any concession or reform is seen of as an affront to Umno’s domination, dignity and integrity.

On the other, you have what is essentially a socialist front in Pakatan Rakyat.

They claim to represent the interest of the rakyat – the ordinary people, taking a moral high-ground on issues such as corruption, mismanagement and civil liberties.

They know the language of the people – focusing on day-to-day issues from rising food prices to the quality of education.

Obviously my formulation ignores the inconsistencies, but there’s no denying the socio-economic and “class” basis to this struggle.

At the same time the respective leaders play up these associations because politics – let’s face it – is also theatre and understatement doesn’t play to the gallery.

Returning to Pakatan, I must point out that the coalition’s very new-ness means they are much more flexible, less rigid and accepting.

Indeed, Hadi Awang’s courageous stance on Negara Kebajikan is an indication of the extent to which Pakatan is exploring new paradigms.

Of course, PAS carry a certain baggage themselves. For example, will the gentle and considerate PAS of today be replaced by a morally sanctimonious force once in power?

At a time when technology is changing so rapidly, (iPad succeeded by iPad2, just when you’ve begun to understand it), we’ve got to accept political systems have to change as well.

But will the face-off between the two opposing forces benefit us – the rakyat?

Well, I for one am confident that there will be change and that we as a nation desperately need that change.

Indeed, we’ve reached a point where it doesn’t actually matter who brings the change – BN or PR, conservative or liberal, socialist or right-wing.

Malaysians will rally behind whoever is the most sincere in taking us out of this mess, just as Ronnie Reagan and later Obama inspired their respective voters.

Ironically, after all this talk of substantive politics we’re back where we started with character and personality.

So, we have to batten down, wait, watch and judge because at the end of the day we, the people are sovereign and through the ballot box, we can kick out those who’ve let us down.

So carry on ladies and gentlemen of the political world, we’re watching and evaluating your performance.

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A new dawn in world economy?

Review by Thomas Lee tomlee48@gmail.com

A new dawn in world economy?
Title: Uprising
Will Emerging Markets Shape or Shake the World Economy?
Author: George Magnus
Publisher: John Wiley & Sons Ltd

At first glance, the title Uprising gives one the impression that the book is concerned about rebellion or revolt, or matters related to violent political conflicts involving armed resistance.

However, after reading its small-print sub-title Will Emerging Markets Shape or Shake the World Economy? and a quick browsing through its content, one realises that the book is actually an in-depth analysis of the contemporary global economy, in particular the influence and impact of the new emerging markets with the focus on the shift of economic power from the West to the Orient, especially China.

Its author George Magnus is a prominent investment banker and global economist, who has been acknowledged as the key analyst who had predicted the recent world financial crisis in early 2007. He is a senior economic adviser at the UBS Investment Bank in London, and had held similar posts at the Union Bank of Switzerland and SG Warnurg.

Magnus is also a popular and respected public commentator on world financial matters, contributing frequently to the Financial Times of London, the BBC, Bloomberg, the CNBC and several other prominent economic, business or financial publications. He is also author of the 2008 definitive international economic analytical book The Age of Aging: How Demographics are Changing the Global Economy and Our World. 

Hence, Uprising is not simply any ordinary run-of-the-mill book, but a major authoritative book which anyone concerned with the contemporary global economy and the direction it is moving should read and reflect deeply on. What Magnus said in his book should not be treated lightly as he is no false prophet when it comes to matters of international economic wheeling and dealing.



Magnus begins his book with an incisive narration and analysis of the world events building up from the first year of the new 21st century to the current global economic scenario. He gives a sharp observation, and penetrating and critical analysis of events in China, including the implications of a world sporting event like the August 2008 China Olympic Games, which took place sandwiched between the May 2008 Great Sichuan Earthquake which claimed nearly 70,000 lives, and the October 2008 world financial earthquake following the collapse of the US investment bank Lehman Brothers, which, as Magnus puts it, “brought the world economy to the brink of an economic Armageddon, unrivalled since the Great Depression of the 1930s”.

In his 358-page book, Magnus sets out to explain the impact and effect that the 2008 financial crisis has on the major emerging markets, and why the rich developed Western nations is going all out to challenge and curb their increasing threats, especially of China and India, in the global economic order.

A major theme of the book as Magnus puts it, is that “the West’s financial crisis sparked a major change in the structure of the world economy, and that China’s capacity to also embark on structural change voluntarily is weak, unless it is specially geared to the long-run interests of the Communist Party’s grip on power”.

This authoritative definitive book examines the two major economic powers and leading emerging markets in Asia – China and India – and several minor but significant markets in Eastern Europe, and also Turkey.
Currently, the emerging markets are headline news. And the question uppermost in the minds of political and business leaders in all these emerging markets of the world is what will happen following the 2008 world financial crisis and what does the future mean and hold for global finance, trade and commerce.

Magnus provides significant suggestions and pragmatic guidelines to resolve this global economic dilemma.

He presents a persuasive and cogent perspective on China and the other emerging markets from a post-financial crisis situation, urging those with economic potency to seriously reconsider their attitude and approach to the emerging new world economic order. A fundamental matter to critically and analytically examine is the question of what economic reforms are needed to meet the new global goals.

Magnus should most be appreciated for offering a convincing critical analysis of what the future global economy may look like – not merely for the emerging markets, but for policy-makers, businesses, financiers, investors, economists, and even ordinary citizens concerned with the economic well-being of their nation and the world.

Magnus deals with matters such as climate change, commodity prices, and world demographic trends, and gives valuable insights into the implications of these issues for the world economy.

One significant question Magnus deals with is whether the 21st century belongs to China. The Communist nation operating on enterprise capitalism for the last 30 years is now all set to regain what Magnus has pointed out in his book as its premier economic power it held from ancient times till the early part of the 19th century.

For all intent and purpose, China is set for an economic renaissance. It will soon regain its ancient mantle as a world economic power it lost when its reticent conservative bureaucracy forced it into international relation isolation while Europe moved economically forward with an industrial revolution in the 19th century.

The Uprising by the plucky economic seer Magnus is certainly essential reading for anyone who wants to understand and care about the future of the global economy.

Understanding the context, content and challenges of the world economic scenario during the first decade of this century is certainly vital for those responsible for making policies, plans and programmes to chart the direction, set the trend, and strive for vigorous economic success in their nations.

Thanks to Magnus, his book has provided the seeds for the planting, growing and harvesting of serious objective thinking, critical pragmatic evaluation, constructive practical ideas, and effective and efficient creative implementation of economic policies, plans and programmes.

Understanding The Rise Of China [VIDEO]

http://www.dump.com/2011/01/25/understanding-the-rise-of-china-video/

The challenges of succession

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The challenges of succession



Lost direction? Many companies controlled by Chinese families experience succession problems as the leaders age but their children are not yet ready to take over the business. The fact that most Chinese families have just one child means tough decisions will have to be made when entrepreneurs consider retirement and succession. Hong Ye / for China Daily.


Lenovo Group Ltd may not want to disclose its succession plans but at least it has one. There's a good reason for the secrecy: Revealing who is going to replace whom puts the group at a disadvantage because it will encourage competitors to recruit its best people.

If history is an indicator, power or ownership transition is always difficult and most of the time, it will hurt.

"Chairman Liu (Chuanzhi) and CEO Yang (Yuanqing) realized that Chinese companies struggle with succession planning. The cornerstone for us is creating the next generation of leaders. The board worries about it," Kenneth DiPietro, senior vice-president of human resources at Lenovo, told China Daily.

Lenovo's board of directors, Yang and DiPietro discuss key moves within the organization once every year.

"We even create scenarios of possibilities such as 'what if we move this person to another department, what will happen?' or 'if this person is put here, what sort of results can we expect to see?' This helps us to build up the skills and capacity of certain people," he said.

The process, which was adopted four years ago, speaks volumes, especially when Lenovo is up against other Chinese mainland companies in terms of corporate governance.

Most Chinese chief executive officers and founders are young, the majority of them being in their 40s or 50s. Starting succession planning now doesn't carry as much importance as pursuing bigger profits and expanding into new markets.

The limitation of companies is not access to talent, DiPietro said. "The question is also not always about funding for mergers and acquisitions. As we move into new markets and new technology space, we ask ourselves: 'How are we going to execute with depth?'."

Now, 32 years after China's economic reform, the country's private sector, especially companies that have become globally competitive, will soon face the question of how to hand over to the next generation.

Liu Chuanzhi, Lenovo's chairman, is 67, and so is Ren Zhengfei, founder and president of telecom solutions provider Huawei Group. Zhang Ruimin, founder, chairman and CEO of Haier Group, a consumer electronics producer, is 62. Zong Qinghou, founder, chairman and CEO of Hangzhou Wahaha Group, a beverage maker, is 66.

Referring to succession planning in corporate China, Liu Shengjun, a professor from China Europe International Business School, said: "Usually they don't have a plan or they don't think it's necessary to have a plan. If they have a plan, it's usually poorly hatched."

He said the challenges that corporate China will face or is already facing are that founders are getting old, companies are getting too big to manage and companies are going global.

"Professionals are needed. Leaders with global vision are needed. But Chinese CEOs prefer to work life-long like Li Ka-shing. What they need are assistants rather than successors," he said.

When the 82-year-old Li was suddenly hospitalized in 2006, shares in his listed companies immediately sank.

In a joint study conducted on 250 companies controlled by Chinese families in Hong Kong, Taiwan and Singapore, Joseph Fan, a professor at the Chinese University of Hong Kong found that successions tended to go along with major declines in the stock value of these listed companies.

"If you hold shares valued at 100 yuan ($15) five years before the succession, the value will drop to 40 yuan by the time the company announces a succession," he said.

"It's a very challenging task. Most Asian companies have not done well. Those that have done well took 15 years to plan a succession," Fan said.

More than planning, succession requires founders to look deep at their lives and families too. "How many times they return home to eat, how many mistresses and children out of wedlock they have all these matter," he said.

Even if succession is well planned, the ferocity of the business environment in China posed extra challenges to companies, he said.

A change in local government officials, unforeseen recession or macroeconomic changes, or starting the succession in a hostile business environment can find companies unable to turn against the tide.

When Party member Lou Zhongfu first built Dongyang-based Zhejiang Guangsha Co Ltd in the 1970s into the multi-industry group it is today, he had the foresight to show his two sons the ropes in the hope that they could take over from him when he retires.

However, the listed Zhejiang Guangsha Co Ltd performed poorly over the years, which were predominantly affected by uncontrollable events. When the Dongyang local government changed hands in 2001, 2005 and 2007, even the well-connected Lou had to rebuild 'guanxi' several times over while watching the company's debt rise due to various outstanding infrastructure projects.

Since 1993, Guangsha Group has invested 400 million yuan in the construction of infrastructure such as Dongyang Children's Park, Xishan Park, Guangsha Baiyun Culture City and Tiandu City Huanle All Season Park.

The listed company performed poorly in the stock market over the years and reported losses of 177 million yuan in 2005 and 272 million yuan in 2006. In the same year, the company found itself embroiled in credit scandals over defaults involving large loans.

In 2010, the listed Zhejiang Guangsa started to install a new set of board members and is expecting to turn the corner, backed by an experienced team.

Fan expects fights for control of Chinese mainland companies to be more severe than their other Asian counterparts due to a vacuum in values in current Chinese society.

"We used to say family businesses tend to survive up to the third generation. With poor family governance, businesses in China can only last one generation," he predicted.

He predicts that most of the Chinese entrepreneurs may sell their businesses before retirement and transfer their capital out of the country.

"It's very unfortunate if this were to happen. You can sell assets but not brains. Intellect could not be passed down to the next generation," he said.

In addition, the one child in most Chinese families mean that it will be tough going for entrepreneurs to pass on to family members.

It's understandable that most founders of businesses in Asia and Europe desire to keep them within their families and partly also because of fear of betrayal.

The boardroom battle for control of Gome Electronics is a perfect example of an outsider hired as a professional to run the business who tried to seize control from founder Huang Guangyu, Fan said.

It's not surprising that most founders of companies believe that blood runs thicker than water.

Huawei's President Ren Zhengfei had almost similar experiences too. He promoted Li Yinan, a bright young executive, to be his second in command and potential successor. However, Li left Huawei in 2000 to start a rival company, which was later bought by Huawei in 2006.

For the first time, Huawei began disclosing biographies of its board directors in the group's 2010 annual report in order to be more transparent and "adopt a market-oriented corporate governance structure as part of its growth strategy".

While companies can outlive their founders, founders cannot live for centuries.

Source:China Daily