| Abstract: |
This paper aims to fill one knowledge gap on understanding the issue of
capital formation in new co-operatives in developing countries. By doing so,
it presents the main findings of capital formation and investment in a small
sample of horticulture shareholding co-operatives in rural China, because
shareholding co-operatives, as one best example of new multi-stakeholder
co-operatives in China, have become a vehicle to mobilize additional
resources. To better understand shareholder co-operatives’ stakeholder
heterogeneity, two main groups of stakeholders are identified, namely, member
stakeholders (investor-members and patron-members) and non-member stakeholders
(non-member investors and non-member donors/grant-givers). Following a brief
theoretical overview concerning co-operative multi-stakeholdership and capital
acquisition and constraints, I then analyze both the rules-in-form and
rules-in-use with respect to the co-operative stakeholders’ capital
involvement in China. Cases observed indicate a hybridization feature of the
co-operative capital base, including member contributions, public subsidies,
income from the market sale, institutional capital and social capital. There
exist at least four ways to raise equity capital from co-operative members.
External capital comes mostly from direct government support in the form of
grants and project funding, and indirect financial support through
preferential treatment and policies. Different from the situation in the West,
debt capital does not appear to be a widely-used traditional financing source.
New co-operatives in China have difficulty even in borrowing short-term debt,
not to mention receiving long-term loans. Also specialized/non-traditional
external capital sources such as those provided by co-operative banks do not
suffice. Co-operative banks are not always ready to provide micro-credit to
co-operatives. Only when the government plays an active role, this lending
process is facilitated. Many innovative financial systems are also observed in
the field, which facilitate the mobilization of more external capital for
co-operatives. |