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A new generation of young entrepreneurs are taking over China's private sector

ARI SHAPIRO, HOST:

China's economy is slowing. Competition with the U.S. is increasing. That's what faces a generation of young Chinese entrepreneurs now taking the helm of the country's private sector. What does their future look like in these uncertain times? NPR's Emily Feng went to find out.

HEATHER KUANG: (Non-English language spoken).

EMILY FENG, BYLINE: This is Heather Kuang at work. Like many millennial Chinese, the 27-year-old Kuang studied hard, went abroad to the U.S. to study finance, then got a prestigious job at an AI company. But nearly two years ago, she took a hard left turn.

KUANG: Turning point is pandemic.

FENG: She was stuck at home and wanted to prioritize family, so she decided to move to the city of Dandong, on the northern fringes of China, along the North Korean border, to help run this factory.

(SOUNDBITE OF MUSIC)

UNIDENTIFIED PERSON: (Non-English language spoken).

FENG: This is the Dawang Steel Casting Company, one of China's biggest metal casting firms, making components for clients like John Deere and General Electric. It's actually the family business of her husband. They'd never seriously entertained the idea of taking over before.

KUANG: Going back working at the factory is indeed, like, boring for your personal life. Living in a rural area, you have no friends.

FENG: But during the pandemic, they felt a responsibility to keep the firm her in-laws built over decades going.

KUANG: It has hundreds of workers. You need to be responsible to them.

FENG: And in taking over, Kuang and her husband became chang er dai, Chinese slang for second-generation factory owners, inheriting private factories that are China's economic engine. These firms propelled a good part of China's economic rise throughout the 1990s, employing millions of migrant workers and making China the factory of the world. Kuang's company does about 30 million U.S. dollars in business a year.

KUANG: We can see this as a good opportunity. We can build this into something sexier.

FENG: Sexier, as in more modern - getting the company on social media and going international, helped by Kuang's English fluency. With the founding generation retiring, the new generation wants to upgrade, but running a huge factory is not easy business. Their parents' generation grew up in an era of explosive economic growth when everything felt up for grabs. By contrast, the chang er dai are taking over in a slowing global economy.

LUCY LU: (Through interpreter) My father's generation of entrepreneurs worked hard. But also, the success they won will likely be bigger than what I will likely achieve, and it came easier to them.

FENG: This is 27-year-old Lucy Lu. She graduated from an American university and came home right after, in 2020, to help out the family's water pump business when it was in serious financial trouble. Business shrunk 80% because of greater competition and supply-chain issues, so her parents give her a lot of pressure.

LU: (Through interpreter) My father is the kind of person with his own way of thinking, and he hopes the business will return to its original scale.

FENG: Which is why another chang er dai, 26-year-old Rosie Guo, likes to talk to other young entrepreneurs like herself. It's like an informal support group of sorts that started out online, so chang er dai could connect and vent with people who understood exactly what they were going through.

ROSIE GUO: (Through interpreter) Of course there's pressure on me. You think, your parents did such a good job; why can't I?

FENG: Now, the support group has a few dozen members, most under the age of 35, running clothing firms, like hers, or machining and manufacturing businesses across China. These are not internet startups, but the real nuts and bolts of China's manufacturing core. And they trade tips about how to deal with the pressure and communicate with their parents on more lenient HR practices, for example. Guo started a system to reward top-performing employees, something her dad did not understand at first.

GUO: (Through interpreter) The times are changing, and young people like us have our own way of thinking and of working.

FENG: Guo is getting the hang of it, though. She started winning more international clients. She built up credibility for herself. And the hardest-won gain of all - she now has the approval of her parents.

Emily Feng, NPR News.

(SOUNDBITE OF ADRIAN YOUNGE SONG, "SITTIN' BY THE RADIO") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Emily Feng is NPR's Beijing correspondent.