Nov 13, 2022
“Gong Xiao She” （供销社）or “Supply and Marketing Cooperatives” (see graph above) is
trendy recently among China watchers. How the CHINA CO-OP is different from สหกรณ์ as we know in Thailand, or the “cooperative” as in the international movement represented by ICA (The International Cooperative Alliance)?
How its revival will impact economy and business opportunities in China?
The CHINA CO-OP had its heydays from 1949 to 1957 in the early times of PRC.
After the ups and downs in the following decades, its revival in the era of economic reform was
ushered in 1995 by the reestablishment of ACFSMC (All China Federation of Supply and
Marketing Cooperatives), and the “Decision to Deepen the Reform of Supply and
Marketing Cooperatives” by Central Committee of CPC and State Council in 2015
(Document No. 11).
By 2021, there were nearly 40,000 grass root CHINA CO-OPs with annual sales of ¥6.26 trillion, 14.2% of China’s total retail sales .
The nature of CHINA CO-OP needs to be clearly defined in the forth coming “Ordinance
on Supply and Marketing Cooperatives”《供销合作社条例》.
It should also reconcile with the definition of “cooperative” of ICA, which is widely adopted in the world including
Thailand. The challenges of the reform of CHINA CO-OP include:
Firstly, to set up a ownership structure which reflects the interests of the shareholders;
Secondly, to demarcate its business scope with a balance between social responsibility and services
for members;
Thirdly, to clarify its position as a normal player in the market economy without too much privileges, let along monopoly power;
and Fourthly, to shift the decision making power from government officials towards management or vote of the cooperative members.
As a direct channel connecting urban consumers and rural producers, CHINA CO-OP
makes sense with a business model focused on values. With a better supply of
agricultural inputs and services, it also plays a crucial role in the government plan of
“Rural Vitalization” (乡村振兴), one step forward after the successful campaign of “Rural
Poverty Alleviation”.
With the four challenges mentioned above properly addressed, the
revival of CHINA CO-OP may turn out to be a clever move towards an advanced and
people oriented market instead of a regression to the old and jinxed planned e conomy.