For the vast number of first-generation distributor bosses, how to cultivate a suitable successor is a topic that requires careful consideration.

I still clearly remember that 18 years ago, with the collective countdown of '5, 4, 3, 2, 1', we bid farewell to the 20th century and welcomed the 21st. Newborns that year were nicknamed 'century babies'. Eighteen years later, the first batch of century babies have reached adulthood.

At this point, looking back at the post-80s and post-90s generations, we realize that they have inadvertently become the mainstay of society. Whether in consumption or in the corporate world, they are not only the backbone of the workforce but also the benchmark leading the changes in purchasing trends of this era.

Distributors in the FMCG sector may feel the impact of this macro demographic shift even more keenly. Whether it's updating the products they represent or reforming internal management, the rapid growth of the post-80s and post-90s generations has been a driving force behind these changes.

Over the past decade, I have come into contact with more than 300 distributors in the grain, oil, and food sector. The earliest wave generally started their businesses in the 1990s and gradually developed to where they are today by following major brands. With 20 to 30 years of operational experience, they have accumulated extensive resources such as networks, customer relationships, and manufacturer connections. However, they now face the most practical question: who will take over the business?

The succession issue for private entrepreneurs in China has always been a hot topic. The focus lies in the fact that Chinese people place great importance on traditional ethics while lacking modern corporate governance principles. As a result, news often reports conflicts between child successors or between them and professional managers, leading to the continuous splitting of companies, with most enterprises shrinking in size with each generation.

As micro-enterprises, distributors find succession easier than those famous private enterprises known nationwide. However, precisely because distributor businesses are small, many distributor bosses I know do not place much emphasis on cultivating successors. Most have a casual attitude and do not have high expectations for their children.

In reality, for the vast number of first-generation distributor bosses, how to cultivate a suitable successor is a topic that requires careful consideration.

I believe there are three key actions that distributor bosses need to personally plan.

1. Understand the Second Generation's Intentions Early and Plan for Both Scenarios.

We all know that not everyone is suited for business. Many children of distributor bosses I know have no interest in business at all. As the saying goes, 'A forced melon is not sweet.' Forcing them to take over the business will naturally not yield good results.

From what I have observed, the characteristics of most 'second-generation successors' can be summarized as follows: they have a university degree or higher, have received a series of higher education (even overseas), possess some management and business skills (a natural result of modern education, not innate), are mostly aged between 22 and 30, think proactively, but lack a deep understanding of the actual difficulties of their parents' business (related to the tendency of parents to only share good news).

Based on these characteristics, generally speaking, as long as the child does not strongly resist taking over, most bosses will choose to hand over the business to their children, sooner or later.

Of course, some young people have little interest in this traditional profession. If forced into management, they may develop a rebellious attitude. Therefore, distributor bosses might try the 'operator' model, selecting excellent and loyal employees from within the company, appointing them as deputy general manager or marketing director, or directly giving them shares, to help the child handle company affairs.

More importantly, those bosses who still have time (i.e., their children are not yet adults) need to plan ahead. Confucius said, 'In all things, success lies in previous preparation, and there will be failure without previous preparation.' Before children complete their studies, bosses can consciously cultivate their intention to take over. For example, choose majors related to the distribution business (such as economics, finance, and marketing). Lao Wang, a distributor from Hebei, told me that he has been in the business for 30 years since representing his first brand. Now he represents several major brands, with business covering half of Hebei Province. His business has been doing well, and he now has over 50 employees, which is quite gratifying. However, time waits for no one; at nearly 60, he sometimes feels overwhelmed and hopes his son can take over soon. His son studied marketing management in Australia, which was his deliberate arrangement.

To summarize this key process, I believe distributor bosses must determine the child's true intentions before they formally start working, so as to decide what kind of successor to cultivate (first, as a new boss to fully take over the business and manage it directly; second, as a property owner, to find a professional manager to run it, achieving an effective separation of management and ownership).

2. Don't Avoid Conflicts to Achieve Integration and Progress Together.

For any distributor, there will be differences and conflicts with the successor child regarding management style, business philosophy, represented brands, and many other issues. For young people who grew up in the 21st century, they live in an era of rapid development and change in China and the world, an era of booming internet. The differences in life background from the previous generation are enormous, so conflicts are perfectly normal.

On the other hand, many distributor bosses hold a simple belief: they want their children to take over and run the business according to their own methods and routines. Otherwise, they think it deviates from the track and violates normal rules. In fact, children who have received new-style and higher education find it difficult to align their thoughts and business methods with their parents. Innovation and breaking tradition are common traits of this generation, which troubles many elders.

For the second generation, they easily clash with their parents over business philosophy and management style. Some even worry that after taking over, their parents will interfere too much, leading to reluctance to take over the company. A more common phenomenon is that they generally have plans to start their own businesses, just hoping their parents provide funding.

It is precisely because of the differences in thoughts and concepts between the two generations that various work disagreements arise. Therefore, many distributor bosses, in order to ensure the company's stability, often try to cover up or gloss over conflicts with their children. This is actually the least necessary. For the new generation, interactive communication is far more effective than silent endurance.

In fact, distributor bosses, compared to many local elders who rarely leave home, tend to be more fashionable and modern in thinking. So they are not unable to accept new ideas and concepts from their children; they are simply afraid that their children's 'innovations' might not benefit the business, or that their hard work might 'shrink' or even 'go down the drain'.

As long as distributor bosses can understand that the second generation cannot simply copy the old model, it becomes easier to coordinate conflicts and move forward together with a peaceful and tolerant heart. Of course, this does not mean completely letting go and 'indulging' the children's behavior, but at least they can rationally listen to the second generation's management and business opinions, and even proactively embrace new industry trends.

3. Extend Time and Space Distance, Use Buffers for Cultivation.

If the second generation is confirmed to take over and conflicts with the parents are basically resolved, the last remaining task is how to further train and improve the second generation's management and operational capabilities.

As the saying goes, 'Gold shines wherever it is.' Distributors cultivating their children should first be willing to extend the time and space distance from their children, even artificially create buffer zones, and not let children report everything directly to them. This is the core principle for forging their real skills. There are mainly two directions: downward and outward.

Downward means going to the grassroots level. The closer to the front line, the closer to the grassroots. Only by laying a solid foundation can they become proficient in business when taking over and smoothly complete the 'handover baton'.

Fotile Group, a domestic kitchen appliance giant, successfully completed the transition between two generations around 2010, serving as a very successful example. As early as seven or eight years before the succession, Fotile Group founder Mao Lixiang trained and educated his son Mao Zhongqun and had him work at the grassroots level. Mao Lixiang's succession theory was 'lead for three years, help for three years, watch for three years'. It was this nine-year grassroots training that enabled Mao Zhongqun to step into the management level and eventually become the head of Fotile Group. It was also due to Mao Lixiang's long-term grassroots training of his son that Mao Zhongqun became a capable leader in the company.

Moutai also completed a classic attempt at Chinese paternalistic succession on its path. In 2007, Ji Keliang, the nearly 70-year-old head of Moutai, felt his age and urgently sought a successor. At that time, there were two candidates: Qiao Hong and Yuan Rengui. Later, because Qiao Hong was 'double-designated' (placed under investigation) for alleged corruption, the succession burden fell on Yuan Rengui. Yuan Rengui lived up to expectations and became the new head of Moutai after Ji Keliang. Yuan Rengui was able to shoulder such a heavy responsibility because of his more than ten years of grassroots experience in the enterprise.

Yuan Rengui started as an ordinary clerk in the supply and marketing department, then successively served as deputy director of the factory office, party committee secretary, and workshop director, until he became the 'new commander' of Moutai Group. It can be said that Yuan Rengui worked his way up from the grassroots level. Over ten years of grassroots experience not only honed his skills but also gave him a thorough understanding of Moutai Group. After taking office, Yuan Rengui managed Moutai with great success.

Besides downward, another training direction is outward. I know many distributors who have also proactively stated that grassroots training for their children is necessary. Some distributors, to temper their children's will and cultivate their 'resilience', even send them to harsh environments for survival training.

Outward does not necessarily mean going to tough places; it can also mean going to good places to learn. Zhou Haoyi, chairman of Western Paradise Supermarket in Jiayuguan, Gansu, sent his son to Anhui Lecheng Supermarket as an apprentice two years ago, where he participated in basic work such as store opening, delivery, and sales alongside other supermarket employees in Hefei, fully understanding the latest technologies and methods of industry benchmark enterprises.

For distributors, this method is equally applicable. Many distributor bosses in the same industry know each other well and can send their children to another city or another trading company to participate in daily work. Compared to doing grassroots work in their own company, where the child might be deliberately spoiled by employees (after all, it's hard to hide such explosive news that the boss's child is in the company), going to another company to experience grassroots work makes it easier to truly integrate with other employees on an equal footing.

The last way to extend the buffer is to have the child, when formally entering the company, not hold any position with management authority, but only serve as the boss's assistant or a company consultant in a nominal role. The purpose is to create a smooth relationship period between the child and employees. At the same time, it is also to reconfirm the child's actual performance in the company. When the child can do well in the nominal role, then gradually delegate authority and take over the company.

Whether succession can happen and who will take over is an eternal question. Most of China's first-generation distributor bosses will soon face this issue on a large scale. I hope the above three key actions will make bosses think carefully.

Source: FMCG Elite Club -END-