Microsoft Word - APE-V1N2-p113.doc Advances in Politics and Economic ISSN 2576-1382 (Print) ISSN 2576-1390 (Online) Vol. 1, No. 2, 2018 www.scholink.org/ojs/index.php/ape 113 Original Paper The Development of Rural Women’s Specialized Cooperatives in China: An Analysis from New Institutionalism Perspective Cui Huang1* 1 Department of Public Administration, Dalian University of Technology, Dalian, China * Cui Huang, Department of Public Administration, Dalian University of Technology, Dalian, China Received: August 20, 2018 Accepted: September 12, 2018 Online Published: September 17, 2018 doi:10.22158/ape.v1n2p113 URL: http://dx.doi.org/10.22158/ape.v1n2p113 This paper is supported by General Project of the National Social Science Fund in China “Research on the Organizational Development of Rural Women in Rural Governance” (17BZZ065) and the Liaoning Province Academy of Social Sciences planning fund project (key project) “Research on the promotion paths of Liaoning rural left-behind women’s organizing” (L15ASH002). My sincere appreciation is given to my student, Ping Yang working in Chaoyang Women’s Federation for the valuable data and research materials provided in this article. Abstract Since the rural declining and feminization of agriculture caused by rapid urbanization in China, the women’s specialized cooperatives are an important organizational force to promote the rural agricultural economy and empower women. Taking 200 organizations in Chaoyang city of Liaoning province as the sample data, this article presents the current situation and existing problems of the rural women’s specialized cooperatives in China, and takes the new institutionalism as the basic theoretical framework. It analyzes the reasons of the problems from the level of formal institutions and informal institutions. In the formal institutions, the policy incentive system lacks rigid implementation measures, and there is no effective resultant force among the relevant organizations. In the informal institutions, rural women have the insufficient understanding of the prospects of the cooperatives, poor awareness of “brand” management and low credibility of the cooperatives. Consequently, promoting the development of the cooperatives should also start with reforming these institutions. Keywords rural women’s specialized cooperatives, formal institutions, informal institutions www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 114 Published by SCHOLINK INC. 1. Introduction At present, China is in the process of rapid urbanization. The reality of “rural declining” and “feminization of agriculture” has made Chinese rural women’s living conditions very difficult. Heavy agricultural production, cumbersome housework and lonely spiritual life are the true portrayal of all of these women. It is a well-known fact that all kinds of female organizations can fight for women’s rights and promote their development. In this respect, women’s organizations in the Nordic countries have set a good example for the world. In fact, boosting the development of rural women’s organizations is one of the crucial ways to improve rural economy and empower women. As an important category in rural women’s social organizations in China, in recent years, rural women’s specialized cooperatives have emerged in rural areas and grown in both quantity and scale more remarkably compared with the other types of female social organizations. This article focuses on researching the rural women’s specialized cooperatives whose founders are all female and members are all or almost female. The purpose of the formation of such organizations is to motivate the entrepreneurial enthusiasm of rural women and enhance rural economic growth. Furthermore, the growth of rural women’s specialized cooperatives have positively promoted women’s awareness of association and public participation capacity. 2. Literature Review 2.1 Foreign Scholars’ Research Rural women’s specialized cooperatives belong to sub-categories of farmers’ specialized cooperatives. There are about 2.6 million cooperative organizations registered in 145 different countries on the planet (Grace, 2014), and there are a considerable number of researches on farmers’ specialized cooperatives. However, only a few of foreign scholars have directly discussed about rural women’s specialized cooperatives. Scholars analyze the functions, organizational nature and internal mechanism of the farmers’ cooperatives. From a functional point of view, Sexton Richard believes that the farmers’ participation in cooperatives is advantageous to realize scale production, enhance market competitiveness and improve the quality of agricultural products (Sexton, 1993). Farmers’ cooperatives can provide organizational links between small farmers and modern retail markets (Jos Bijman, 2011). Agricultural cooperatives are also tools for the government to uplift economic and social development because they can create jobs, increase income, eliminate poverty, and strengthen farmers (markets) in modern value systems (Tursinbek, 2018). The nature of cooperatives is generally considered to be an effective union between different subjects with the common interests, and a form of vertical integration (Emelianoff, 1942). In a broad sense, Yamei Hu shows that cooperatives are organizational forms of many independent growers (horizontal relationships) (Hu, 2007). The internal mechanism of forming cooperatives is the alliance of stakeholders. There must be a game between relevant stakeholders in this alliance structure (Sexton, 1986), and the way of distribution among members and the way of cost allocation have a great influence on the formation of cooperatives. www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 115 Published by SCHOLINK INC. 2.2 Domestic Scholars’ Research Since the application of law of farmers’ specialized cooperatives in 2007, the number of farmers’ specialized cooperatives in China has grown dramatically. By the end of June 2011, the number of registered organizations had tripled, reaching 446,000 (Liu, 2012). A large amount of studies on farmers’ specialized cooperatives are conducted by domestic researchers, for instance, the essence of cooperatives (Deng, 2016) and classification (Hu, 2017), innovation path (Li, 2016)(Wang, 2010), institutional alienation (Feng, 2014), transaction types and governance mechanisms (Cui, 2017), financial performance (Xu, 2013), credit issues (Zai, 2013), operational efficiency (Chen, 2015), evaluation and decision mechanism (Li, 2015) and the motivation of farmers’ joining cooperatives from the perspective of farmers (Liu, 2017)(Hu, 2013). The study of rural women’s specialized cooperatives begins with a discussion of women’s participation in cooperatives (Chen, 2008) and its influencing factors (Yuan, 2008). The articles on rural women’s specialized cooperatives are still rare, and the existing research is mostly based on case studies and summarizes their development status (Yuan, 2001) (Piao, 2010). With the strong development of feminization of agriculture, the research about this is also paying more attention to the survival situation of the special rural groups, that is, the left-behind women. Some scholars have discussed the issues of farmers’ cooperatives mainly with left-behind women and the paths of left-behind women (Zhang, 2013) taking part in agriculture and animal husbandry cooperatives in some specific areas (ethnic minorities in northwest China) (Xiong, 2014). In general, domestic and foreign studies on farmers’ specialized cooperatives are high in quantity; nevertheless, the studies particularly on rural women’ specialized cooperatives from the perspective of gender are rare. This does not adapt with the reality that the rural women’s specialized cooperatives are rising in the context of rural feminization. Therefore, this article attempts to explore the existing problems in the development of rural women’s specialized cooperatives. 3. Research Methods 3.1 Theoretical Analysis: New Institutionalism As an analytical paradigm widely recognized by the social sciences in recent years, the new institutionalism has received more and more attention. “Institutional theory provides the most promising and creative lens for us to observe organizations in contemporary society” (W. Richard Scott, 2010). North believes that institutions are constraints artificially designed and used for interpersonal interaction (Douglas, 1994). Institutions can be composed of informal institutions and formal institutions. Informal institutions generally refer to the value beliefs, ethical norms, moral values, customs, ideologies and other soft constraints in a society (Lu, 2003); formal institutions refer to a series of policies, regulations and other hard constraints that people consciously created, such as political rules, economic rules and contracts (Douglas, 1994). This article will take the new institutionalism as the theoretical framework to analyze the reasons for existing problems of the rural women’s specialized cooperatives in China. In www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 116 Published by SCHOLINK INC. other words, the development of the cooperatives is restricted by the formal institutions and the informal institutions, and in order to solve this problem, we should start with analyzing the two levels of institutions. 3.2 Data Analysis: The First-Hand Information The author’s student, Ping Yang is working in the Chaoyang Women’s Federation. Because the Federation manages most of women’s organizations of this city in which the women’s specialized cooperatives are included, this article can easily obtain rich and detailed data. In addition, the author has frequent contact with these organizations which provide first-hand data support for the research. To find cooperatives’ status and difficult issues, the article randomly sampled 359 rural women’s specialized cooperatives in Chaoyang City, and conducted a detailed sample analysis of 200 rural women’s specialized cooperatives randomly selected from them. 4. Development Overview and Existing Problems Chaoyang City in Liaoning Province is a prefecture-level city with relatively backward economy and many migrant workers. Therefore, the characteristics of feminization of agriculture are more obvious. The development of rural women’s specialized cooperatives has a certain scale and has the typicality for the research. According to the statistics of Chaoyang Administration for Industry and Commerce, by the end of June 2013, there were 1,256 farmers’ specialized cooperatives registered in Chaoyang City of which the number of rural women’s specialized cooperatives is 359, accounting for 28.6%. 4.1 An Overview of the Development of Rural Women’s Specialized Cooperatives in Chaoyang City This article has a statistical data analysis on age distribution, education level and type distribution of cooperative products of 200 rural women’s specialized cooperatives randomly selected. The general sample characteristics are as follows: 4.1.1 The Cooperative Members Are Mainly the Middle-Aged and the Elderly The Tables 1 shows that with the 200 rural women’s specialized cooperatives we surveyed, their total number of members is 5,444. There are 1,256 members aged 40 or under 40, accounting for 23% of the total member; 2,648 members aged 41-50, accounting for 49%; 1,310 members aged 51-60, accounting for 24%; and 230 members over the age of 60, accounting for 4%. It can be seen that the members of the cooperatives are mainly the middle-aged and the elderly aged 41-60. This age distribution characteristic is also an important factor leading to the lack of organizations’ vitality. 4.1.2 Cooperative Members Are Under-Educated The Table 1 also indicates that there is a decreasing trend in education level of the members of the cooperatives we surveyed. The number of members with high school level or below is 5,064, accounting for 93% of the total number. In fact, the members’ education level directly affects the breadth and depth of cooperatives’ growth. www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 117 Published by SCHOLINK INC. Table 1. Sample Information of Members of Chaoyang Women’s Specialized Cooperatives Sample distribution Number of samples % Age 40 years old and below 1256 23 41 to 50 years old 2648 49 51 to 60 years old 1310 24 60 years old and above 230 4 Education level Primary and junior high school education 3204 59 Technical secondary school and high school education 1860 34 College and university degree 378 7 Graduate degree and above 2 0.04 4.1.3 The Operation Mode of Cooperatives is Mainly Planting and Breeding According to Figure 1, the rural women’s specialized cooperatives in Chaoyang City are primarily divided into five types: planting cooperatives, breeding cooperatives, fruit industry cooperatives, agricultural machinery cooperatives and other cooperatives. Among them, planting cooperatives and breeding cooperatives account for 83% of the total number and become the main part of cooperatives. Figure 1. Distribution of Product Types of Rural Women’s Specialized Cooperatives in Chaoyang City 4.1.4 The Rural Women-Led Cooperatives Are the Majority of the Organizations As shown in Figure 2, there are four ways to set up rural women’s specialized cooperatives in Chaoyang City: rural women taking the lead, rural women’s congress taking the lead, female entrepreneurs taking the lead, investing enterprises taking the lead. The rural women-led cooperatives are the majority of organizations, making up 77.6% of the total number. This kind of cooperatives is generally led by rural female elites or large planting and raising www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 118 Published by SCHOLINK INC. households and other farmers are encouraged to participate, forming an operational mechanism of “elite people, large households + farmer specialized cooperatives + farmers”. The advantages of this type of cooperatives are that relatives and friends are the link, the transparency is higher, and the distribution of interests is more balanced. However, the shortcomings are obvious, that is, the cooperatives whose members are in acquaintanceship are generally small in number, and the speed and scale of their organizational development are also relatively limited. The cooperatives led by the women’s congress account for 12.4%, taking the second large proportion of the total. With this type of cooperatives, the rural cadres take the lead and attract the participation of farmers. They are local specialized production cooperatives in accordance with the development ideas “One Town One Product” and “One Village One Product”. Due to the initiative of the rural women’s congress, this kind of cooperatives has a strong appeal and high prestige among the masses with its tremendous development potential. The percentage of the other two types of cooperatives is inconsiderable. The cooperatives led by female entrepreneurs account for 8.2% while those led by the investing enterprises have a very small proportion 1.8%. The investing enterprise-led cooperatives are in the unstable development situation since their growth ratio will be restricted by the management benefit of the investing enterprise. Figure 2. Classification of Rural Women’s Specialized Cooperatives according to the Forming Way in Chaoyang City 4.2 The Predicament of Rural Women’s Specialized Cooperatives As being in the early stage of development, the rural women’s specialized cooperatives in Chaoyang City have been encountering the problems of scale expansion, funds and management. These difficulties, in reality, have seriously affected the cooperatives’ growth. www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 119 Published by SCHOLINK INC. 4.2.1 The Cooperatives’ Scale Are Small From the situation we can grasp, the development scale of rural women’s specialized cooperatives is generally small. According to the statistical data source provided by Chaoyang Women’s Federation, the average number of members registered at 359 rural women’s specialized cooperatives in Chaoyang is 23, which is much lower than 80, the average number registered at farmers’ specialized cooperatives in China. This reflects that the number of the cooperative members is quite restricted. In addition to the limitation of the membership, the cooperatives are currently limited to providing essential services which can bring direct, stable and considerable economic benefits to their members: technical information, production materials, seedlings, poultry, product recycling and others because of their poor infrastructure and the low level of cooperation between them. Furthermore, since most rural women’s specialized cooperatives are not closely connected with their members, it is difficult for them to form a business community that integrates “production, supply, sales and processing” with capital and interests as the link. As a result, their production scale and market competitiveness have been restricted and the function of driving the local labor force has not been extended. 4.2.2 The Funds Are Insufficient Most cooperatives in Chaoyang still has weak economic strength, insufficient and unstable sources of funds. Most of their available funds are from member contribution and the funds they loaned are also small by reason of the difficulty in evaluating the assets of the cooperatives. This shortage of loan and financing, as a result, can inhibit their development. Take the Rural Women-led Cooperatives as an example. These cooperatives are mainly initiated by ordinary women, and their participants are mainly ordinary farmers; hence, the source of funds is basically based on the farmers’ own collection and mutual aid. The majority of rural women-led cooperatives in Chaoyang has obstacles to circulating capital and finding public service funds. In fact, many of them do not even have their own office spaces, and only rely on renting houses or the village committee office to carry out their daily work. Due to such funding constraints, many of the cooperatives’ primary and deep processing projects for agricultural products cannot be implemented, and their storage and transportation capacity are also limited. Many of their practical technologies cannot be transformed into actual productivity. Moreover, due to the information asymmetry between cooperatives and related institutions, many cooperatives do not know the relevant supporting policies, which is considered one of the main reasons for the shortage of funds. Among the 53 rural women’s specialized cooperatives randomly selected, only 14 of them have obtained financial support from governments at all levels or relevant departments, accounting for 26.4% of the total while other cooperatives have not, resulting from their little knowledge about the relevant financial support policies. 4.2.3 Management Needs to Be Standardized The cooperatives’ management is still inadequate and needs standardizing. As far as the internal governance of cooperatives is concerned, most cooperatives have formulated statutes and rules; nonetheless, these statutes and rules are mostly formalistic and have not been strictly implemented. The www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 120 Published by SCHOLINK INC. cooperatives lack their financial management system, and their daily business decisions are often decided by a few members of them; as a result, the loose connection between cooperatives and cooperative members is increasing. At the same time, due to the limited understanding of management concepts, many cooperatives are not closely connected with production and sales. The phenomenon of “paying more attention to profit than to service, to distribution than to accumulation” is widespread, which negatively affects the sustainability of cooperatives. From the external governance of cooperatives, the responsibilities of the relevant administrative departments are not clear enough, resulting in a lack of substantive management. Instead of focusing on their management role, these departments are mainly concerned about the competitions for fund projects. 5. Analysis to Institutional Reasons The status quo of rural women’s specialized cooperatives in Chaoyang City is the typical example of many such cooperatives in other cities in China. On this basis, we can conduct an attribution analysis of the cooperatives’ above existing development problems. Taking the new institutionalism as the perspective, the paper discusses the reasons for the current problems of rural women’s specialized cooperatives from the formal institutions and informal institutions. 5.1 Formal Institutional Constraints 5.1.1 Lack of Rigid Enforcement Measures in the Policy Incentive Institutions In recent years, the Party Central Committee and the State Council in China have had a great contribution to the development of farmers’ specialized cooperatives, and have successively introduced a series of preferential incentive policies. However, due to the lack of rigid supervision and disciplinary regulations, these policies have not frequently carried out by the local departments. In terms of direct incentives, the Circular of the State Administration of Taxation of the Ministry of Finance on Relevant Tax Policies for Farmers’ Specialized Cooperatives stipulates, “The sale of agricultural products produced by the members of the farmers’ specialized cooperatives is regarded as the sale of self-produced agricultural products by agricultural producers with exemption from Value Added Tax (VAT). The agricultural film, seeds, seedlings, fertilizers, pesticides and agricultural machinery sold by the farmers’ specialized cooperatives to the members of cooperatives are exempt from VAT. The contracts for the purchase and sale of agricultural products and agricultural production materials signed by the farmers’ specialized cooperatives and members of cooperatives are exempt from stamp duty”. This tax incentive is an important incentive originally, but some local tax departments have not implemented this policy rigorously and have been still collecting various taxes from the cooperatives. With regard to indirect institutional incentives, the Ministry of Commerce and the Ministry of Agriculture have also formulated corresponding policies to promote the growth of farmers’ specialized cooperatives. Although the policies formulated by the Ministry of Commerce and the Ministry of Agriculture are more stringent in terms of provisions, some enterprises have had opportunistic practice or have not strictly implemented them. For example, Guidance of Ministry of Agriculture and Ministry of www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 121 Published by SCHOLINK INC. Commerce on Comprehensively Promoting the Work of Farming-Supermarket Docking stipulates, “Supermarkets are strictly forbidden to collect unreasonable fees such as entrance fees, sponsorship fees, booth fees, barcode fees, etc., and arbitrary default on payment is strictly prohibited”. The rules mentioned above have used more specific words such as “forbidden”; nevertheless, in practice some commercial chain enterprises have not really followed these rules, and the relevant regulatory authorities have not followed up the corresponding punishment for this violation. As the violation fines are excessively small, the business are mercenary to do whatever they want. Consequently, the difficulty of cooperative products entering supermarket chains has not been solved, which has seriously affected the enthusiasm of the cooperative members and the sustainable development of the cooperatives. 5.1.2 No Effective Resultant Force between the Organizations The growth of rural women’s specialized cooperatives is influenced by many major departments: party committees, agriculture, finance, industry and commerce, civil affairs, supply and marketing, forestry, taxation at all levels and other relevant departments. However, all of these departments have not reached the ideal working mechanism which is “government departments taking the lead, competent departments holding their business and relevant departments being in good cooperation”. There are always the conflicts of interest in the policies implementation among them. From the perspective of “rational people” in economics, some members of the departments have not spent more administrative costs on the rural women’s specialized cooperatives that cannot directly benefit them. Consequently, the cooperatives have not been frequently received information sharing, strong management forces, and support from other departments. 5.2 Informal Institutional Constraints 5.2.1 Rural Women Lack Awareness to the Prospects for Cooperatives The fact that a majority of rural women of the cooperatives have low level of education as the previous data shows is a barrier for their development. The rural women lack knowledge of management operation, have low skills in market development and weak legal consciousness. They also do not have sufficient understanding of the long-term development of cooperatives. In addition, as being in the initial growth period, most cooperatives could not employ experts, and their business is limited to providing start-up work for seedlings, technical consultation and information provision services. There are huge gaps in their development of agricultural products market, brand building and processing and value addition. All of the reasons above make rural women have no eager expectation for the development prospects of cooperatives. 5.2.2 The Cooperatives Have Poor Consciousness of “Brand” Management Modern agriculture is a knowledge-intensive industry related to good preparations for ploughing and sowing, management in production, postpartum processing on the basis of the support of modern technology. As an important part of modern agriculture, branding of agricultural products has become a necessary demand in the operation of cooperatives. Good branding can help the cooperatives highlight their products’ characteristics, increase their income, and promote their long-term growth. However, the www.scholink.org/ojs/index.php/ape Advances in Politics and Economic Vol. 1, No. 2, 2018 122 Published by SCHOLINK INC. rural women’s specialized cooperatives are currently accustomed to satisfying simple farming and marketing their primary agricultural products, and have poor consciousness of brand management. This issue is manifested by the fact that many of the cooperatives have not registered trademarks to protect their legitimate rights and interests. An example to prove this is that only 3 rural women’s specialized cooperatives registered their trademarks among 200 cooperatives we surveyed. 5.2.3 The Credibility of the Cooperatives Is Low All of the above problems can trigger the cooperatives’ virtuous cycle of the weak economic strength, insufficient investment, low economic benefits to the farmers, leading to the damage of their working enthusiasm. The result of this is that the scale of the cooperatives is generally too small, and thus they have not been highly recognized by the masses. This reality makes the development of the cooperatives limited and further affects negatively their credibility. 6. Conclusions and Discussions By the analysis of the cooperatives’ samples of Chaoyang, “a glimpse of the whole leopard”, this article shows that this kind of multi-functional organizations, rural women’s specialized cooperatives, is still in the early stage of development in China, and needs a lot of improvement in terms of scale, financing and credibility. The constraints of the institutions are the deep-seated reasons for its limited development. The route to develop such organizations should be constructed at the level of formal institution and informal institution. Specifically, the rigidity of formal institution formulation and implementation should be strengthened, and the rural women’s specialized cooperatives themselves should also improve their system construction gradually. In addition, the relevant departments such as industry and commerce, agriculture, taxation, and finance should also be self-disciplined and be in cooperation to promote the development of the cooperatives. At the level of informal institution, more experts could be recruited to train their members on cooperation consciousness and management methods, enhance the awareness of rural women’s practical value of cooperatives and approach more modern business concepts. As an important kind of rural economic organizations and social organizations in China, rural women’s specialized cooperatives can foster rural economic development and alleviate the double burden of rural agricultural production and domestic labor in the background of feminization of agriculture. Particularly, being a crucial form of rural social organizations, it can participate in the national governance system and the modernization of governance capacity which is considered as a vital part of rural governance. By this participation, the rural women of cooperatives will have more opportunities to be cultivated and trained their public spirit and political skills. 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