大午集团：“企二代”竞选董事长

The Dawu Agriculture and Livestock Group (hereafter “Dawu Group”) was founded more than 30 years ago (1984) by Dawu Sun and his wife. In the first two decades, Dawu Group witnessed and experienced China’s economic reform of opening up to the outside world, and the dramatic changes that took place in China’s rural areas. The group seized opportunities and implemented many creative ideas, such as land contracts and villager-funding, which enabled it to grow into one of the giants of China’s agriculture and livestock industry. Even though the business has grown steadily over the past 12 years (2004-2016), it has not stopped innovating. It adopted a distinctive corporate governance system – a “company constitution”, designed by Dawu in 2004. The core principles of the system are privacy, democracy, and sharing. Here, privacy refers to the nature and succession of the group’s ownership; democracy consists of democratic elections and public governance; and sharing means sharing the fruits of development with everyone in the company. Under the company constitution, all candidates, including Dawu’s two sons, have to earn the position of Board Chairperson through company elections. Members of Dawu’s family and eligible managers all have the chance to run for a position as Chairperson. Ensuring the entirety of the group’s ownership, which is to be inherited wholly, this system enables Dawu Group to follow a predefined profit distribution mechanism. Under this mechanism, only a relatively small share of the profit is distributed to the family—most of it is reinvested into the Company, or used to build the local community and to improve employee benefits. The teacher and students can use this case to gain deep insights into the nature, advantages, disadvantages, and sustainability of Dawu Group’s governance system. Discussions may further touch upon more detailed topics, such as the relationship between the family and its business, the setup of corporate ownership, and support from existing laws and regulations for the governance system. In addition, reviews may be carried out from the angle of principal-agent relationships, to understand the risks linked to the intensity of the family’s control over the company.