The intrinsic value of family office investment in Chinese enterprises and the inheritance of traditional Chinese business culture

As a professional family office lawyer, I always choose high-quality investment targets to learn about corporate culture, economic development trends, core values of society, global economic development trends and market trends. More and more institutions are paying attention to the investment value of Chinese enterprises, whose intrinsic value lies in the Chinese traditional business culture and philosophy.
 
The ancient Chinese commercial culture and wisdom contained in many classic books can still provide inspiration for modern entrepreneurs today. These works not only document the business philosophy of ancient merchants, but also reveal the underlying logic of market laws, customer management, and risk control, etc. This article explores the correlation between the two.
 
Analysis of market laws in Chinese classic works
 
The Records of the Grand Historian: Biographies of Commodity Colonizationis praised as the “Encyclopedia of Ancient Commerce” by later generations. The book proposes the simple value law and emphasises that operators need to grasp the fluctuation cycle of commodity prices. This precise insight into the market supply and demand relationship coincides with the emphasis on “location positioning” and “demand analysis” in modern franchise entrepreneurship. The famous case of Fan Li’s “three relocations all have a glorious reputation” recorded in the book further verifies the importance of flexible adjustment of business strategies.
 
The Book of Shang Jun implies the importance of a unified market standard. This has enlightening significance for the standardised operation of modern franchise systems – the standardised management of product and service processes is the key to maintaining the core competitiveness of chain brands.
 
The enlightenment of ancient business philosophy on modern commerce
 
The cultural classics of the Shang Bangformed during the Ming and Qing dynasties proposed the concept of “inviting customers from all over the world with courtesy”, which cemented commercial ethics into specific service norms. The customer management skills taught in the book, such as "observing words and expressions" and "tailoring oneself", resonate with the customer experience management emphasised by modern franchise stores across time and space.
 
Many places in China have some time-honoured brands, whose predecessors worked hard to start their own businesses, experienced the ups and downs of life, and ultimately realised the essence of the way of doing business, which is to benefit the people, adhere to quality, only strive for excellence, and not make any reductions.
 
There is a classification of different levels of commerce:

• Those who benefit themselves but do not benefit others are referred to as small merchants;
• Those who benefit both oneself and others are referred to as great merchants;
• Those who benefit others but do not benefit themselves are not merchants; and,
• Those who seek personal gain at the expense of others are unscrupulous merchants.

 
Replicable business methodology
 
The debate at the Salt and Iron Conferencerecorded in the "Salt and Iron Theory" demonstrates the deep thinking on resource allocation in ancient times. The concept of industrial linkage corresponds precisely to the resource integration thinking of modern franchise entrepreneurship. The book emphasises that entrepreneurs should establish a stable supply chain system, which is the core advantage of the franchise model in reducing procurement costs and ensuring stable quality.
 
Ancient business books placed special emphasis on recording and analysing business data. The financial system of “daily clearing and monthly settlement” in the "Business Classic" is similar to the business reporting system required by modern franchise headquarters. The classics of Huizhou merchants advocate transforming cultural literacy into commercial competitiveness, which has reference significance for shaping the cultural added value of franchise brands. The "Longmen Account" double entry bookkeeping method invented by Jin merchants still serves as the theoretical basis for financial management to this day.
 
To sum up, these ancient Chinese business philosophies and logic have been passed down from generation to generation, condensed in the endogenous driving force of Chinese enterprises, the tenacious entrepreneurial spirit, and the business philosophy of integrity and experience. Chinese people regard business as the main road of life. It is definitely not a simple business behaviour. It is the law and method of maintaining a neutral position. It is the highest level of human cultivation. It means self-management, following the laws of nature, and maintaining restraint and righteousness at all times. It means harmony and aintaining a harmonious self-mindset and a harmonious relationship with the environment. Investing in credible Chinese companies not only delves into their corporate culture and business traditions, but also integrates into the harmonious unity of people, society, nature, and the environment.
 
Jackie, Qianlin Wang
M: +86 13717566723
mail: jackiew@zhongyinlawyer.com
 
Dr Wang oversees the Family Office Centre in Zhongyin. She has rich experience in international capital market and alternative dispute resolution – including international mediation and arbitration enabling her to create innovative FO models and systems. She is the advisor of several Europe based investment groups. With unique achievements in the field of family office services, Dr Wang directed and wrote the FO comparative Guide for China.
 
Dr Wang is also engaged in international banking and financial business, inc. IPO, REITs, securitisation, cross-border M&A, direct and indirect international investment, international asset management, and tax planning, etc. As a member of the Enterprise Compliance Professional Committee, Dr Wang is also proficient in the compliance system and effectiveness evaluation system.