The Development and Reform of

Business Association

Jun.2018 Beijing

02/02/21
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The Introduction of Eight Contents and Four Problems

 The connection between Business Association and China’s

economic society

 The development and current situation of China’s Business

Association

 The problems and challenges Business Association faced

 The main measures about the reform and development of Business

Association
02/02/21
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I. The history of Business Associations is a history of
China’s economic and social changes. Business
associations are part of China’s economic and
social development. Learning about business
associations is to learn about China.
Why ？
The trade association is the collection of people in the same trade and the product of the
development of Commodity Exchange to a certain stage. The development of business
associations in China has a profound cultural foundation.

1.China has a long culture of Jianghu, and the business association is the representative of
Jianghu culture. It’s a delight to have friends coming from afar. All men are brothers.

2. China is a country with a long history and wide geographical coverage. The customs, cultures
and humanities of different regions differ greatly, which provides a good basis for the
development of business associations

3. China's trade association has a long history, industry association is part of our history and
culture.
The Profound History of China’s Business Association
1. China’s folk associations have a long history. “Every profession produces its own topmost
master in 360 kinds”. People from all trades come together to warm up. In the Northern Song
Dynasty (960-1127 AD), the citizen economy was developed. A famous painting “The
Qingming Shanghe Diagram” involved more than 500 characters and dozens of industries,
reflecting the development of industry associations at that time.

2. In the Spring and Autumn period (770-221 BC), In “The Analects of Confucius,” saying “A
hundred workers live up to their own business.”

3. During the period of Han and Tang dynasties (206 BC-907 AD), the business associations called
”Hanglie, Shilie, and Tuanlie". 。

4. During the mid-Ming Dynasty (around 1550 AD), when China's capitalism developed, the
commodity economy was highly active and began to use geography, blood, and friendship as a
link to form groups of mutual help businessmen, such as business associations, clubs, and
public offices.

5. In the Qing Dynasty, the first law of business association was introduced.
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II. The Development Status of Business Associations
in Current China
1. A large quantity of business associations that cover a wide range of levels. There are
registered business associations in the state, province, city and county, and the number reached
more than 70,000. Among them, there are more than 16,000 employees in the national business
associations

2. It covers a wide range of industries. According to the statistical classification of the industry by
the National Bureau of Statistics, various industries such as science, education, culture, and
health have industry associations, which can be said to involve food, clothing, housing, and
housing.

3. It is fully functional and has played a huge role in economic and social development. The
general functions of industry associations include: statistical surveys, industry exchanges,
industry training, industry self-discipline, reflecting appeals, consulting services, and so on. In
2008, Tsinghua University had conducted a survey on the functions of industry associations. The
top three rankings were industry training, reflecting appeals and industry exchanges (exhibitions,
etc.).
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III. The reason of the rapid growth in business associations
• According to statistics, since the beginning of Reform and Opening-
up, China's business associations have grown to more than 70,000 at
present from initially less than 1000, increased by more than 70
times.
• The reason of the rapid growth?
• 1. Internal reasons: strong internal motivation. Maslow's hierarchy of
needs: when people are liberated from the control of physiological
needs, there will be more advanced and socialized needs.
• 2. Marketing reasons: The more the market economy develops, the
more the business associations are needed.
• 3. Government: the state wants the business associations to
undertake more public functions.
Internal Reasons-Seeking cooperative development and
maintaining common interests
• The United States: The Encyclopedia of Economics points out that
business associations are groups of peers or businessmen who
voluntarily organize to achieve common goals.
• UK: business associations are non-profit organizations which are
made up of independent business units to protect and promote the
vested interests of all members.
• Characteristics: common goals, voluntary organizations, made up of
counterparts and peers, safeguarding members' interests and not-
for-profit.
Marketing reasons-The coincidence between the
development in Business Association and the
development of Chinese economy
• Business associations are organizations with strong economic
attributes and productive forces. The more the market economy
develops, the more the business associations are needed.
• 1. The number of business associations reflects the trend of Reform
and Opening-up.
• 2. It is highly related to China's entry into the WTO. From 2000 to
2006, business associations in China has increased from 36000 to
58000, with a growth rate of 60%.
• 3. The number of local registered business associations reflects the
pattern of regional economic development. For instance, in Beijing,
Guangdong and Shanghai, the number of local business associations is
basically correspond to that of the primary, secondary and tertiary
industries in the regional economy.
Governmental Reasons-Hoping Business Association Play
an Active Role

• 1. A number of associations have been developed.

• 2. Governments encourage the market to set up business

associations spontaneously. As a type of legal person,

business associations can be registered in various

government departments.
IV. How Is the Internal Governance of Business Association
(1)
 First, the highest authority: the member congress

is responsible for formulating articles of association, deciding on dues and voting directors.

 Second, the daily decision-making body: the council and the standing council

is responsible for the election and recall of the president, the vice president and so on; and
deciding big issues such as the establishment of the classified institutions of the
association.

 Third, the specific executive agency: the secretariat is in charge of the implementation of
the members' congress, the council's resolutions, and the supervision and management of
the branches and departments of the association.

Membership of trade associations: corporate members, research units and individuals.

The internal organization of business associations: branches, representative offices, advisory

bodies and other internal organizations.
IV. How Is the Internal Governance of Business Associations
(2)
• 1. Asset strength: the sources of income are increasing (income
includes membership fees, service income, etc.); the working
conditions have gradually improved, and many associations have
offices as their own property.
• 2. Team building: the number of full-time staff has increased. For
example, in the national business association, there are 16 full-time
staffs with an average age of 41, and 77% of them have a bachelor's
degree or above.
• 3. Complete internal governance: management system is sound, such
as financial management system and personnel employment system;
the council can be convened normally; important matters can be
decided by the member's congress, the council or the standing
council, which can reflect democratic management.
• 4. Information disclosure is required.
V. What Role Does Business Association Play (1)
• The role of business association is important. We compare them to
the "bridge link" between the government and the market, acting
between the "visible hand" and the "invisible hand".
• What does it do?
• First, it serves members. For example, it collects market information
and timely analyzes statistics; it holds exhibitions, for example: PMI
index and Guangzhou fair in China.
• Second, it makes business self-discipline. We will formulate rules and
regulations to safeguard fair competition. For example: China
Certification and Accreditation Association -- Measures for the
Administration of Security Deposit for Fair Competition among
Certification Authorities, the "trademark of genuine leather " of the
China Leather Association and the integrity initiatives of many
associations.
• Third, it promotes international exchanges. It helps carry out
international cooperation projects and fulfill international
obligations;
• Fourth, it provides consulting services. It participates in public
administration and solicits opinions and suggestions; it
undertakes consulting service projects entrusted by the
government; it provides consulting reports, participates in
development planning and formulation of business standards,
etc.
• Fifth, it undertakes social responsibility. We should encourage
member enterprises to abide by the law, conduct business in a
standard way and give back to the society. For example: it helps
compile the Social Responsibility Report, sets up scholarships and
participates in the popularization of knowledge.
VI. What Are the Government's Support Measures for the
Development of Business Associations?
• Clear positioning: serve the society, serve the business, serve
the people and so on.
• First, some administrative management and public service
functions are transferred to social organizations such as
associations.
• Second, the government has promoted to clarify the boundaries
of government, market and society.
• Third, the government will introduce policies to ensure the
development of business associations and encourage them to
purchase the services of business associations.
• Fourth, a large number of measures have been introduced to
help the association improve internal governance and healthy
development.
VII. Problems in the Development of Business Associations
(1)
• First, the layers vary in size, which are weak, small, and
scattered. It's hard to attract talents. The staffs tend to be older,
most of which are part-time rather than full-time.
• Second, it is lack of independence. The work efficiency is low
and the representativeness of business needs to be
strengthened.
• Third, the behaviour is not standard. Internal governance is not
sound, and sometimes violates management regulations.
• Fourth, core competitiveness is not strong. The business
association itself is not strong enough. The business self-
discipline and management ability is weak, and the
competitiveness needs to be improved.
VII. Problems in the Development of Business Association
（2）
Reasons that caused these problems
First, it is lack of experience in management and development.
Second, institutional systems are not mature enough.
Third, the markets have developed too fast.

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VIII. Reform Measures in the Development of Business Assoc
iation (1)
The government attaches great importance to the work of Business Associations and int
roduced series of policies to protect it and release its vitality, which can help to serve t
he economic and social development better.
I. In 2007, suggestions on the reform and development of Business associations has bee
n promoted to regulate the behaviors of business associations.
II. In 2017, Business Associations summarized supervisory methods, strengthened the s
upervision during and after events, release its vitality and strengthened society and th
e third party’s supervision.
Main Measures: through “addition and subtraction"
 Subtraction: Streamlining administration and delegating power, enhancing independ
ence
 Addition: Comprehensive supervision, etc.

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VIII. Reform Measures in the Development of
Business Association (2)

Subtraction
The first reform solution: to enhance Business Associations’
autonomous right and cancelled some institutions’ registries.
The second reform solution: to enhance Business Associations’
independence.
Main Measures: to enhance the construction of Business Associa
tion’s ability, give play to its advantages and values and
serve economic and social development.
 VIII. Reform Measures in the Development of
Business Association (3)

Addition
The first reform solution ： comprehensive supervision,
clarifying the relationship and taking its own responsibility.
First, regulating the corporate governance institutions; Second, r
egulating the supervision of capitals and finance; Third, regula
ting the supervision of service and businesses; Fourth, regulati
ng the supervision of rate paying and other payments; Fifth, in
formation disclosure.
 The Measures of Governmental Reforms towards
Associations
Addition:

The second reform measure ： Third-party evaluation

Main content ： Since 2007 ， Third-party institutions started ranking the associations,
based on the evaluations on the internal governance, financial management, work
performance, etc.

Evaluation Standards ： Whether the associations hold representative meetings and

board meetings as required, with meeting minutes; and whether important matters
are voted by the representatives; whether the board reelections are held regularly;
whether the associations are evaluated under the non-profit organization accounting
system; the practices and outcomes of the service of the association towards the
industry; and the feedback from the public and the people that are related with the
industry.
 谢 谢!
Thank you!