Abstract
This chapter compares different practices of business associations in two localities in China—Wuxi and Wenzhou—and examines the internal linkage between associational practices and patterns of economic development. In Wuxi, business associations are organized and run by government in a top-down approach, and serve as state corporatist instruments; while in Wenzhou, there emerged many grass-roots business associations initiated and governed by entrepreneurs from bottom-up, working for societal purposes. The distinctive associational practices in the two localities are linked with their local economic development patterns: government-led development in Wuxi versus entrepreneur-initiated development in Wenzhou. The chapter concludes that the growth of private entrepreneurship and the spread of market relations, together with the willingness of government to leave space to societal actors, are the primary conditions for autonomous, vibrant business associations to occur.
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Notes
- 1.
The fifteen associations appointed by the State Economic and Trade Commission in early 2001 are transferred to the SASAC for management. These associations officially supervise the Party affairs, leadership appointments, creation of branches or sub-associations, and foreign-related activities. However, these associations still do not have subordinate relations. And in interviews, respondents deny “subordinate relationship”. One respondent said that their branches have their own “responsible business department” and should comply with the local government at the same level.
- 2.
An ambitious leader of a national-level business association said to me in the interview that in the end all government-managed business associations have to return to its original position which is to defend its members’ interests, provide public goods for the whole industry, and act as a bridge between government and business community. Business associations should autonomously compete for constituents and support by offering necessary and popular service for its members.
- 3.
According to surveys by Transparency International (www.transparency.org), China is one of the most corrupt countries in the world.
- 4.
Sunan, literally southern Jiangsu province, includes Suzhou, Wuxi, and Changzhou. These three prefectures have followed a similar pattern of development during the last several decades. Sunan was very famous for its TVE miracle in the 1980s and early 1990s (Zhou and Zhou 1996).
- 5.
Several categories in the official statistics are essentially private, including shareholder cooperatives, limited liability companies, shareholder companies, private business, and self-employed industrial and commercial households.
- 6.
The cadre evaluation system is a strong institution in this region. Each level of government is subject to certain development targets every year, issued from its upper-level government. Such institution affects the behavior of local cadres (Whiting 2001).
- 7.
According to Parris’s (1993) documentation, official associations in Wenzhou are not so different from other places. When conducting fieldwork I heard considerable criticism of SELA and PEA from entrepreneurs, and some entrepreneurs even publicly called for their abolition. However, it is clear that official associations do not have the significance of the private associations; this is why we pay more attention to the latter.
- 8.
In total, since 1995, Wenzhou business people have organized 102 Wenzhou Chambers of Commerce in other cities, such as Kunming and Chengdu, to protect their interests (Chen et al. 2004). It is well known that, even before reform began, Wenzhou people have migrated all over China seeking opportunities. Nowadays, Wenzhou business people are numerous and influential in many cities. These associations are apparently independent. I do not discuss them in this article, since the focus is the link between the pattern of local economic development and the practices of business associations.
- 9.
There is a hierarchy among associations based on the level of government organizations with which they are affiliated. In Wenzhou, there are city-level associations, county-level associations, and town-level associations. The number here only gives city-level associations.
- 10.
The Chamber of Commerce and the Federation of Industry and Commerce were actually one organization with two titles. The former name reflects its non-governmental character, while the latter reflects its official status as a united front organization. Recently, the two have started to separate. A well-known entrepreneur replaced the previous government official to become the head of the Chamber of Commerce.
- 11.
The semi-official associations began with compulsory membership. But it was difficult to achieve complete coverage of the industry since there were numerous enterprises and most of them were small. And governments did not have effective ways to punish those enterprises that did not participate. Under such circumstances, membership later became voluntary. Of course, low coverage of membership in industries causes difficulty for effective regulation and coordination since non-members do not obey the rules set by associations.
- 12.
In interviews, some officials frankly expressed the idea that associations are a good way to get to know entrepreneurs.
- 13.
The term used –“school for democracy”– comes from a conversation with Zhang Renshou, a Wenzhou expert. He used this term when discussing the functions of business associations in Wenzhou. Others have recognized the role of associations in promoting democracy (see Chen et al. 2004).
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Liu, J., Zhang, J. (2018). Regional Business Associations in China: Changes and Continuities. In: Zhang, X., Zhu, T. (eds) Business, Government and Economic Institutions in China. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-64486-8_4
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