Several intriguing points have arisen following the recent news concerning Mebon Clothing (002269.SZ). Notably, the junior executive has stepped down after seven years at the helm, during which the company recorded losses exceeding 3.2 billion. The founder and ‘senior’ has been re-nominated as a director.

Metersbonwe, a product line of Mebon, was once a popular brand among students, and for a period, dominated the market. Their tagline, “Take the Road Less Traveled,” famously uttered by celebrity endorser Jay Chou, was recognized widely. Their flagship store on Nanjing Road was highly successful. However, in recent years the brand has gradually faded from public view.

After seven years and one month in his role as chairman of Mebon, Hu Jiajia has submitted his resignation to the board. This shift in leadership and the return of the company’s founder are noteworthy and raise questions about the future trajectory of the company and its strategic plans for revival.

On the evening of January 5th, Mebon Fashion announced that the company’s chairman, Hu Jiajia, had tendered her resignation due to personal reasons. Her positions included chairman, director, nomination committee member, remuneration and assessment committee member, and chairman of the strategic committee. Following her resignation from these roles, Hu Jiajia will continue to serve as the company’s President. As of the disclosure date, Hu Jiajia owns 225 million shares of the company, accounting for 8.96% of the total share capital, valued at about 370 million Yuan at the latest market value. It’s also reported that Hu Jiajia annual salary stands at 720,000 Yuan.

Interestingly, another announcement released the same day indicated that during the eighth meeting of Mebon Fashion’s sixth board of directors, company founder Zhou Chengjian was nominated as a candidate for a non-independent director position. On the same day, Mebon Fashion also approved a proposal to convene the company’s second temporary shareholders meeting of 2024, agreeing to hold the temporary shareholder meeting on January 22nd, 2024.

Zhou Chengjian is the executive director and actual controller of Mebon Fashion’s controlling shareholder, Shanghai Huafu Investment Co., Ltd., and therefore the actual controller of Mebon Fashion, although he doesn’t directly own company shares. Hu Jiajia is Zhou Chengjian’s daughter.

Zhou Chengjian, a male of Chinese nationality from Lishui, Zhejiang, and a graduate of Zhejiang University EMBA, started his business as an individual in May 1984. In 1995, he opened the first Metersbonwe franchise store in Wenzhou, implementing brand franchising. He has served as General Manager of Wenzhou Kaileisha Clothing Factory, Chairman of Wenzhou Metersbonwe Clothing Co., Ltd., Chairman of Wenzhou Metersbonwe Co., Ltd., Chairman and President of Metersbonwe Group Co., Ltd., and Chairman of the first, second, and third boards of directors of Mebon Fashion.

The transition from the second generation leadership to the re-emergence of the founder prompts the question: what factors are behind this change in leadership at Mebon Fashion?

" The meaning of the announcement is clear," a Mebon insider said on the evening of January 5th. This change in personnel primarily means returning power to Zhou Chengjian, so he can take the helm of Mebon Fashion once again.

A reporter from “Daily Economic News” discovered that since the second half of 2023, Zhou Chengjian has been actively making public statements and is said to be spearheading the business transformation of Mebon Fashion towards e-commerce.

The Succession Dilemma in Family Businesses: Between Dynasties and Empires

This piece discusses the challenging issue of second-generation succession in family businesses, exposing the inherent frustrations associated with this process.

The root of the problem lies in the expectation that children will continue the businesses developed by their parents. Whether the legacy involves shoe-making or lipstick manufacturing, the next generation is assumed to carry the baton.

However, the primary issue here arises from the personality-centered nature of the businesses developed by the parents. To extract and replace the core of the business—the parental figure—while maintaining its structure, demands a sufficient degree of similarity and compatibility between parents and children. This often compels children to alter their personal ambitions or traits to fit into the mold created by their parents.

For a successful transition to occur, the underlying venture requires ideological support. It must serve a purpose beyond making money and must be driven by a spiritual pursuit, rather than simply being a profitable venture too valuable to ignore.

Classic examples of successful transitions can be found in cases such as Japan’s centuries-long tradition of the Ichikawa Ebizo acting dynasty, the Tibetan Lama system, and the custodianship of temples in Taiwan. These roles involve social responsibilities and public sentiment, attracting widespread societal respect and emotional investment.

But for such successful transitions to occur, individuals need to recognize the value of dedicating their lives to a cause greater than the accumulation of wealth and ease. Genuine success and a lasting legacy stem from utilitarian practices—benefiting the many rather than the few.

That’s why presumed heirs—if without compelling reasons—tend to alter their inherited operations to suit their persona. This brings us back to the idea that true succession should ideally be as dignified and respected as a throne ascension—carrying a responsibility towards society rather than just a family name.

If your business doesn’t possess such quality, it’s strongly advised that you consider public ownership and selling the commercial operations to the capital market. Thus, providing your children with wealth rather than a legacy to carry on. This approach avoids forcing your offspring to mutilate their identities in pursuit of your ambitions. And if done right, your pursuit of dominance can still be forgiven, marking your legacy as a gift returned to society.

Remember, this piece is not intended for mockery or sarcasm, but offers a sincere warning to avoid witnessing the demise of your life-long empire under your successors—hoping you’d evade such a heart-wrenching ordeal.