Grain and oil family businesses must remember the advice of the Lunsden's Law

China has opened up the grain and oil market and implemented diversification of grain and oil business entities. While reforming, streamlining, and integrating state-owned grain and oil purchasing and marketing enterprises to more effectively play the role of the main channel, it vigorously supports the development of privately owned grain and oil enterprises, privately controlled grain and oil enterprises, and mixed-ownership grain and oil enterprises.

After many years of opening up the grain and oil market, privately run grain and oil enterprises have sprung up like mushrooms, and tens of thousands of privately run grain and oil enterprises are found throughout urban and rural areas.

As China's grain and oil market has gradually become more standardized, some private enterprises have grown stronger through hard struggle; however, even more private enterprises have silently sunk into oblivion in the vast ocean of the grain and oil market economy.

Analyzing privately run grain and oil enterprises that are established quickly and disappear even more quickly, we can easily find a very important reason: the drawbacks of family operation in private enterprises.

American management scholar Lunsden discovered a famous law: working with a friend is far more interesting than working under one's father.

What does this famous law tell us?

A social commentator hit the nail on the head: if one is respectable but not approachable, respect will ultimately be hard to maintain; if one has power but no prestige, power will often be lost.

A son inheriting his father's business has been a rule among the Chinese people for thousands of years. In the hereditary system of ancient imperial clans, regardless of the age, talent, or conduct of the imperial heir, he had to inherit the so-called "great enterprise."

Among the Chinese people, skilled craftsmen traditionally passed on their skills only within the family, not to outsiders, and only to direct kin. Even today, many people still follow this rule.

This habit of thousands of years seems deeply rooted in some privately run grain and oil enterprises in today's era.

It cannot be denied that private enterprises built through one's own strength embody hard labor and sweat, and every cent is hard-earned. When first-generation entrepreneurs need to withdraw from the enterprise due to age and other reasons, they almost without exception leave the enterprise they are reluctant to part with to their descendants. This practice of "keeping the rich water within one's own field" seems beyond reproach to most people.

Passing on the family business and establishing a livelihood have had utterly different outcomes in different eras and under different social changes.

In a society or era with an underdeveloped economy, wealthy people (business owners, entrepreneurs) are in an absolute economic advantage, face little external pressure in passing on the family business, and can do so as a matter of course.

In a society with a relatively developed market economy, wealthy people (business owners, entrepreneurs), although they also have a certain economic advantage, face an increasingly fiercely competitive environment, so passing on the family business requires thinking thrice before acting.

"If one is respectable but not approachable, respect will ultimately be hard to maintain." Between father and son (mother and son), between elders and juniors, between the old and the young, the blood relationship is always intimate. This unbreakable kinship is the foundation for maintaining the family and a harmonious society. Even if temporary disharmony sometimes appears, in the end it will mostly be readily resolved.

Juniors respecting elders is a fine tradition of the Chinese nation and also the foundation for maintaining the development of human society. However, in the development and inheritance of grain and oil enterprises, respect is ultimately just respect.

Without long-term painstaking effort and sweat accumulated drop by drop, it is impossible to build a decent private enterprise. The founders of private enterprises at the beginning were either people who had previously worked in the grain and oil industry, or people who had been laid off or transferred from other industries, or rural residents who started doing business while farming, and so on. Whatever kind of people they were, at the beginning of entrepreneurship they had no large capital. By starting out selling grain and oil and gradually growing bigger in a snowballing manner, they later registered and established grain and oil enterprises.

Without the spirit of long-term persistence, gathering sand to build a tower, and collecting fox fur to make a robe, it is impossible to make a grain and oil enterprise strong and big. Because they are closely related to people's lives, the state has always implemented a moderate price policy for grain and oil commodities; that is, the market price of grain and oil must remain at a level acceptable to the people for a long time. The profit from operating grain and oil cannot rise with the tide and be richly profitable like in some industries. Fortunately, as long as grain and oil enterprises comply with state policies, avoid decision-making mistakes, and devote themselves single-mindedly to the business, they can embark on the path of becoming big and strong.

Without a high sense of social responsibility and a spirit of willingness to contribute, it is impossible to maintain the sustainable development of a private enterprise. In a certain sense, running a grain and oil enterprise means being a conscientious merchant. The money earned is not much, but the capital invested is large; the profit margin is not high, but the labor expended is great; the status is not high, but the social responsibility is not small. If none of this is accompanied by a high sense of social responsibility, and one thinks only of obtaining excess profits, it is impossible to persist.

As the future inheritors of grain and oil enterprises, they feel admiration and respect for the enormous dedication and spirit of sacrifice of the older generation. However, with today's superior living standards and the endless emergence of new industries, they seem to increasingly marginalize traditional privately run grain and oil enterprises. Therefore, they may respect their elders, but respect will ultimately be hard to maintain.

It is precisely because successors "respect their elders, but respect is ultimately hard to maintain" that the situation arises in which "if one has power but no prestige, power will often be lost."

Different ideals and different business philosophies lead decision-making directions to be poles apart. The development of grain and oil enterprises, like all other enterprises in a market economy, also has its own laws of operation. If one does not act according to the operating laws of the grain and oil industry but instead starts a new stove and does whatever one pleases, ruining a grain and oil enterprise takes no effort at all. In recent years, many privately run grain and oil enterprises have disappeared not because of improper operation of grain and oil, but because successors failed by not acting according to the operating laws of the grain and oil industry.

Looking at the secret of the enduring prosperity of private enterprises in developed countries, we can easily find that only by making good use of ownership and management rights can private enterprises remain prosperous for a long time.

For China's family grain and oil enterprises, the person who controls enterprise ownership is often the head of the family. He is both the chairman of the board and the general manager, combining ownership and management rights in one person. A high degree of centralization in decision-making and firm and powerful execution can be described as highly efficient for enterprise operations. Such a decision-maker can still produce high efficiency for a small enterprise. However, once the enterprise grows to a certain scale, he finds himself unequal to the task.

One of the world's richest men today, Bill Gates, is rich enough to rival a country. However, Bill Gates's actions have won people's praise.

On June 27, 2008, Bill Gates officially retired, but still served as Microsoft chairman to ensure the company's operations, and donated 58 billion US dollars of personal assets to the Bill and Melinda Gates Foundation. In his will, he announced that 98% would be given to the "Bill and Melinda Gates Foundation," founded by him and named after him and his wife. This money is used to research vaccines for AIDS and malaria and to provide assistance to poor countries around the world.

On February 4, 2014, Bill Gates no longer served as Microsoft chairman. His new position was technology advisor, John Thompson succeeded him as chairman, and Microsoft simultaneously appointed internal executive Satya Nadella as the next CEO.

Bill Gates gives us a very good inspiration. He began by separating ownership from management rights, and later simply stepped down from all positions. Facts have proved that Bill Gates's decision was incomparably correct. Microsoft Corporation's development is still at its zenith, and computer software such as  the Windows operating system and the OFFICES office system still sits firmly in the top position in the world.

By learning from the practices of private enterprises in developed countries around the world, China's private grain and oil enterprises should, while promptly transforming family-style enterprises into joint-stock enterprises and absorbing social capital, separate enterprise ownership from management rights and absorb professional managers from society to devote themselves fully to enterprise development. In this way, the family business owners who are the founders will have both power and prestige, and the enterprises will embark on the broad road of prosperity and development.