Millennials shrug as private equity buys family businesses

A Chinese student waves her hand at the graduation ceremony in Columbia University, New York. China tops other countries in sending international students to the US, accounting for about 31 percent of the total.[Photo/Xinhua]

Business owners are getting more willing to acknowledge that they need help from private equity in weathering the slowdown and developing new skills in areas such as marketing, branding and research and development, Sulger said.

Many small business owners have never had to deal with the need to cut costs or implement sweeping changes, said Weiwen Han, co-head of Bain & Co's regional private equity practice. "It's about cost reduction, operational efficiency, changing the business model and transforming themselves. They've never done it."

Conversely, many buyout firms haven't developed the skills required to take over and overhaul Chinese companies, compared with the more passive role they're used to playing.

"They also need to invest in their own capability, to really understand how a mid-sized private founder-led business operates," Han said.

In Hangzhou, Yao said his decision to sell control of Yaotaitai, for an undisclosed sum, allowed him to focus on areas he is good at－such as where to buy the nuts, preserved fruits and additives that go in to the products. Among the changes Lunar Capital brought is an e-commerce platform, which Sulger said could generate as much as 20 percent of sales in the future.