The report concludes with three written framework proposals and draft proposals on the formulation of provisions on business associations. It also provides four revisions to the existing Provisions on Registration Management of Social Associations
Summary Report of Legislative Research on China’s Business Membership Organizations
Summary
The principal purposes of this research are to proactively participate in the legislative activities of business membership organizations in China and to bring forward a non-official version of draft framework proposal concerning laws and regulations on China’s business membership organizations for their further reference. This draft framework proposal will be formulated based on an in-depth research about the development of China’s business organizations and associations, and as well as the guiding ideology, basic principles, path choice and relevant theories and practical issues involved in business membership organizations’ legislative activities.
Considering that several scholars in China often confuse the concept of business organization with that of business association, this report introduces the term of business membership organization (BMO). Business membership organization is any non-governmental, autonomous and reciprocal business organization formed by businessmen and enterprises in membership, and it includes business organization and business association. Compared with business organization, which is a generalized term, business association is a professional business membership organization specialized in a certain industry. The introduction of this definition has considerable importance for the scientific legislation of business organizations and associations in China. It also clarifies similarities, differences and relationship between business organizations and associations.
The report first conducts an in-depth and comprehensive analysis into the development of China’s business membership organizations by looking at National Federation of Industry & Commerce, business associations including the one on agricultural products, and various kinds of business organizations. It finds out that, since the reform and opening-up, China’s business membership organizations have maintained rapid growth and made significant achievements in both intensive self-reform and non-governmentalization. It is exerting increasing influence in social and economic development. However, China’s business membership organizations are also confronted by acute problems such as structural disorder, obscure legal status and fragmented governance structure. These problems are due to the characteristic alteration of business membership organizations from governmental entities to non-governmental ones and this process falls short of related legislation. Therefore, the above problems should be solved as soon as possible through legislation.
The report then systematically introduces other countries’ legislative structure of business membership organizations, mainly Continental, Anglo-American and a hybrid one between the former two. It also outlines China’s historical practices and experience in the legislation of business membership organizations. All the information is provided for the purpose of a scientific legislation on business membership organizations that fits for China’s national situation and is integrated with the international practice. In states and regions taking Continental model and hybrid model, there are specific public laws on generalized business organizations. These laws clarify the legal status of legal entity and special legal entity of the public laws and define these organizations’ public functions appointed by governments through laws. In terms of various business associations, they are regulated by private laws such as civil code, law of associations, and law of non-profit organizations. Citizens can formulate these private laws freely and business associations are not taking any public function. In states and regions of Anglo-American model, there is no specific public law for generalized business organizations or business associations. Generally speaking, business membership organizations in these countries are regulated by law of associations and law of non-profit organizations. So far, there is no evidence that any state or region enacts specific public law for business associations. China’s has a legacy of developing laws for business membership organizations. Hybrid legislative structure of business membership organizations was taken in late Qing Dynasty, Beiyang Government and Nanjing Government. The above three models have their advantages and disadvantages respectively. Based on their status quo of development, China’s business membership organizations should learn from both foreign and domestic experience in legislation for business membership organizations and establish legislative structure of business membership organizations that fits for China’s national situation.
Taking other countries’ experience and China’s national situation into consideration, this report offers recommendations on guiding ideology and basic principles of legislation related to business membership organizations. The report points out that the guiding ideology of legislation related to China’s business membership organizations is to, based on the spirit of reform, clarify their organic structure, identify their respective legal status and regulate their governance structure and practices through legislation. The above ideology conforms to China’s national situation and development law of business membership organizations, and the purpose is to promote healthy growth of business membership organizations, social economic development, and as well as the construction of a harmony society. The report also points out that the legislation should adhere to the principles of voluntary, autonomous and self-discipline.
According to the guiding ideology and basic principles of the legislation above, this report puts forward a legal framework for China’s business membership organizations. First, on the level of the Constitution, people enjoy the freedom to form business membership organizations freely. Second, on the level of the Fundamental Laws, friendly legal environment should be provided for the development of business membership organizations through refining general provisions of the civil law and formulating laws on business membership organizations and non-profit organizations. Thirdly, in terms of slip laws, specific laws on business organizations and special industries should be formulated to regulate both generalized business organizations and specialized business associations. In addition, relevant regulations and rules should also be formulated and refined, such as revising Provisions on Registration Management of Social Associations and formulating and enacting Provisions on Business Association.
In order to deal with the disorder of business membership organizations’ organic structure, this report suggests three methods to legally reorganize China’s business membership organizations through the enactment of the law on business and industry membership organizations. The first one is to organize a network for business membership organizations based on same industry and also to establish a network for national business associations by integrating resources. The second one is to establish a network for business membership organizations based on enterprises as member units and at the same time establish a network of national business associations. The third method is to establish a network for business membership organizations that covers all business associations and organizations. The collective characteristics of the three are the effective consolidation of the vertical business associations and horizontal generalized and regionalized business organizations and the formulation of a business membership organization with reciprocal functions. In terms of functional divisions of regional generalized business organizations and vertical business associations, this report indicates that the functions of generalized business organizations are to represent and coordinate the overall interests of local industries and enterprises, to help the government implement policies in economic development, to improve investment environment and promote industrial and commercial oriented economy, and also to provide generalized services to the local industries and enterprises. The functions of business associations are to represent and vindicate the collective interests of the industry and coordinate the industry’s interests with other industries’, provide industrial suggestions to the government on behalf of the industry and provide various kinds of specialized services to enterprises.
This report indicates that in the reorganization system of business membership organizations, generalized business organizations should be organized based on the existing network of National Federation of Industry & Commerce. National Federation of Industry & Commerce should be transformed in to a non-governmental organization. This report provides two ways for this transformation. The first one is to formulate a law on business and membership organizations and turn National Federation of Industry & Commerce into a non-governmental generalized organization according to the law. The second one is to separate the functions taken by National Federation of Industry & Commerce with that taken by those non-governmental organizations. While the former one performs the strategic planning, the later one works as the actual non-governmental business membership organizations.
The report concludes with three written framework proposals and draft proposals on the formulation of provisions on business associations. It also provides four revisions to the existing Provisions on Registration Management of Social Associations:
- Eliminate the dual management system of social associations;
- Eliminate the regulation in which states that, in the same region, there shouldn't be more than one association performing same function;
- Restore the registration of social organizations which are non-legal entity;
- Add the right of other countries’ citizens in forming associations in China.
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