China's Rural Shareholding Cooperatives as a Form of Multi-Stakeholder Cooperation

Township and village enterprises (TVEs) are the fastest growing sector of China's economy. Their development has been shaped by their close ties with local governments and communities. However, as marketization processes dissolve these links, the increasing competitive pressures of the 1990s make the search for new forms of enterprise organization a priority. The Shareholding Cooperative System (SCS) has been proposed as a method of strengthening enterprise autonomy whilst preserving the predominance of public ownership, and of improving enterprise efficiency by tying performance to profitability whilst maintaining some principles of equity. In practice, the new opportunities opened up by reform are often monopolized by those already in positions of wealth and power: local governments and individual entrepreneurs. But workers and local farmers may also become more directly involved in enterprise ownership, gaining a greater say in decision-making. In these cases, the SCS resembles a multi-stakeholder cooperative in which workers, managers, local governments and local farmers negotiate around their stakes in the future of the enterprise.