Intermediary organizations herein refer to the institutions or
organizations linking the government and enterprises, producers and
distributors, or individuals and organizations that Provide market
entities of any kinds with services of information consultation,
training, brokerage, Law, etc., for the purpose of coordination,
evaluation, assessment, inspection, arbitration and other
activities. In China, most intermediary organizations are privately
owned while a few of them have governmental background or
sponsorship. In either case, they must be legally certified as
being professionally qualified and must act in compliance with the
rules and principles of market economy; they have to take
corresponding legal liability and economic liability thereof, and
accept the governance and supervision from governmental
authorities.
In recent years, China's intermediary line has grown rapidly,
eventually becoming an important composition of the market-oriented
operation mechanism. Tremendous intermediary institutions of
various specialties emerged as the times require and the system was
being perfected day by day. This is not only an inevitable result
and the objective need of the fast development of market economy,
but also the foundation for the operation of market-oriented
entities and an effective way to reduce trading costs. As well, it
is an important embodiment of the deepening of the market economy.
Some people may believe that there are some problems of these
Chinese intermediary organizations as most of their functions were
either gradually transferred from or authorized by the government
due to the great influence of the government during their formation
period. As a matter of fact, most of these intermediary
organizations are not subordinated to the government. Even for the
few organizations with relations of administrative subordination
with the government, they are running under the market rules and
within the legal framework.
Ⅱ. Functions of Chinese Intermediary
Organizations
(I ) Classification of Current Chinese Intermediary
Organizations
There are many criteria for dividing intermediary organizations.
By the patterns of action and the characteristics of providing
service products, intermediary organizations can be divided into
the following types:
1. Self-Disciplined Industrial
Organizations
Include trade associations, trade guilds, chambers of commerce
and other self-disciplined organizations that are initiated by
enterprises from the grassroots for the purpose of regulating the
competition between the enterprise members and maintaining the
overall interests of the industry by formulating industrial
development rules. Their major functions are: to protect the normal
and legal rights and interests of industrial and commercial
enterprises, to provide enterprise members with economic
information and services for market prediction, technical guidance,
investment guidance, legal consultation, training, etc. ; to
smoothen the channels for international contact, and to coordinate
the foreign economic exchanges and trading activities ; to pass on
the ideas and proposals to the government on behalf of the members
; to coordinate the relations between vendors, mediate market
behaviors in business, trade and law, restrict the market behaviors
of all the members from the group level, and fight against unfair
competition.
2. Legal and Financial Services
Organizations
Mainly consist of certified public accountants' firms, law
firms, asset and credit evaluation organizations, notary
organizations and arbitration organizations. These intermediary
organizations provide specific field of services in accordance with
the laws of the state, regulations of the competent administrative
authorities and the technical requirements to maintain the
effective operation and stability of society of the market economy.
Their functions are : to evaluate and assess the behaviors of the
enterprises, supervise and urge them to compete under the principle
of fairness and impartiality, to regulate market behaviors, fight
against fraudulence and to mediate disputes in the market.
3. Information and Consulting Services
Organizations
Include information centers, research and consulting
organizations, evaluation organizations for investment projects,
quoting systems and other organizations that provide comprehensive
information and consulting services to the enterprises. These
intermediary organizations feature value added information and
services. In some degree, they are a factor for the economic
development that can improve the economic benefits mid efficiency
in allocating resources.
4. Intermediary Organizations for Market
Trading
Include brokerage organizations, pawn firms, auction firms,
employment agencies, and talent exchange centers. They are invited
to directly provide facilities and services for trading activities
in the market, and decrease the transaction cost.
5. Market Supervision and Authentication
Organizations
The organizations for supervising market activities, including
metrological verification agencies, commodity inspection agencies,
quality inspection agencies, and qualification verification
agencies. They function on behalf of the government to provide some
public products, such as fighting against cheating of the
consumers, maintaining impartial trading mid fair competition in
the market and stabilizing the economy.
(Ⅱ) Functions of Current Intermediary Organizations in
China
From a macro view, the functions of Chinese intermediary
organizations can he concluded as serving, communicating and
supervising. These years, with the economic development,
intermediary organizations have played more and more important
roles. And these three aspects of functions become more obvious,
evidenced by:
Increasingly expanded service coverage and gradually enhanced
level. As the labor distribution goes deeper, the functions and
services coverage of intermediary organizations are expanded also.
Their services have covered law, accounting, information,
consulting, settlement, training, brokerage, etc., instead of the
single service at the first beginning.
Second, the functions as bridge and links between all market
entities are given full play. The communication fields grow wider
and the channels are diversified. On account of the gradual
improvement of these intermediary organizations, the communications
between enterprises, government and enterprises, individuals and
organizations, domestic enterprises and foreign enterprises become
more convenient and smooth.
Third, the function of supervision is progressively
strengthened. As in the past years the functions of intermediary
organizations have been eventually recognized, their role as
"economic policemen" become more notable. Particularly, in
supervising enterprises' behaviors, mediating disputes and
stabilizing market order, they are playing an irreplaceable role.
Of all intermediary organizations, those with strong supervision
power include consumers" associations, commodity inspection
centers, quality inspection institutes, and metrological
verification agencies. Their functions were gradually transferred
from former governmental authorities with the development of the
market economy and the conversion of governmental functions. In
this point, these intermediary organizations are more tightly
related to the government.
Impartiality is what an intermediary organization must bear. All
these years, both the Chinese government and intermediary
organizations have enacted a series of rules to highlight the
impartiality of intermediary organizations. Particularly,
intermediary organizations have made great achievements in
self-discipline and self-adjustment, and sticking to the principle
of objectiveness, impartiality, fairness and openness.
(Ⅲ) Relations Between Intermediary Organizations and
Government
In China, intermediary organizations play various roles, but,
above all, as bridge and link. To play these roles, they will
inevitably have contact with government. Such relationship can be
expressed as "regularization by law, self-discipline by trades and
supervision from the government". What is regularization by law? -
The government and intermediary organizations shall conduct their
behaviors and run business within the framework of law, and either
party shall not require the other party to do anything in violation
of law. Self-discipline by trades means normal business activities
within the trades shall be determined and solved within the trades,
in disregard of the intervention of the government. Supervision
from the government means the government shall supervise whether or
not intermediary organizations have violated any law.
One of the key functions of the government is to formulate and
preserve favorable market rules and order so as to create a loose
social environment and practicing atmosphere for intermediary
organizations; while the major functions of intermediary
organizations are to provide public services to the society by
virtue of their professional knowledge, to serve the specific
groups interested on their behalf, to serve as bridge and link
between the government and the enterprises, and to seek
self-development from these services. These functions are realized
independently under the condition of autonomy of the mass
organizations, without influenced by the government. The government
shall not issue administrative orders directly to these
intermediary organizations. Being two different subjects of right,
the government and intermediary organizations have definite and
essential distinctions in power and functions.
Generally, under the economic conditions of China, the
government and intermediary organizations are independent but
related. That means the government and intermediary organizations
have definite boundary of power and coverage of functions, without
transplacement, excess of authority or vacancy between diem, but on
the other hand, the government constructs a legal framework and
institutes relevant rules to facilitate the effective operation of
intermediary organizations while intermediary organizations
smoothen up the relations between the government, enterprises and
the society and lay foundation for the government to transform its
functions.
(China.org.cn November 7, 2003)
