From 'megaphones' to defenders of enterprises
China's industrial associations, once dubbed as "government megaphones", have polished their image and worked hard to protect domestic enterprises in the first year of China's membership of the World Trade Organization (WTO).
"They have become real spokesmen for enterprises and are speaking in a louder voice," said an official with the State Economic and Trade Commi-ssion's industrial association office.
In the past year, the associations have reacted rapidly when domestic manufacturers faced anti-dumping lawsuits and when foreign countries enacted new laws or regulations to affect Chinese producers.
China Audio Industry Association finished negotiations with 6C - a group of companies which hold the world's major DVD technology patents - and successfully slashed the royalty fee to be paid by domestic DVD player manufacturers to the 6C from the required US$20 to US$4 on each player.
The China Food, Native Product and Husbandry Product Import and Export Chamber also led domestic vegetable planters and aquatic raisers to break out of technical barriers imposed by Japan and the European Union.
More importantly, China Chemical Fibre Association even represented domestic chemical fibre producers to stage China's first anti-dumping suit against foreign producers and won the case.
"Many of the associations have re-positioned themselves to meet the requirements imposed by China's WTO membership," said a Beijing-based analyst.
Origin of associations
Statistics show that there are more than 360 industrial associations in commercial and industrial fields. The number is small compared with the 18,000 associations in the US.
Most such associations were born in China's reform of government organizations. For example, the China Textile Industry Association was established from the former Ministry of Textiles.
Before China joined the WTO, some such associations still retained heavy administrative colours with most staff coming from former government organizations and were accustomed to their role as administrators, instead of a server of the industry.
"We had to speed up our internal reform to suit the new situation after China joined the WTO," said Cao Xumin, director of the China Food, Native Product and Husbandry Products Import and Export Chamber.
Cao's chamber started reform in 2000 to meet the requirement imposed by China's WTO membership - to serve enterprises and protect interests of the enterprises.
Currently, Cao's chamber has 41 branches and 13 co-ordination groups. All the branches and groups have established a consultation mechanism with their foreign counterparts.
"Now, we have realized that we are no longer managers of the industry and that our money comes from member enterprises," he said.
"If we don't take enterprises interests into consideration, they won't join us."
Such a change in realization prompted the associations to actively do something for its members.
In January, when China's exports of honey products suffered from a big slump due to a high fertilizer level, the chamber sponsored training for bee raisers and related enterprises to tell them how to reduce the problem.
In May, informed that the US might follow the European Union by limiting the import of Chinese honey products, the chamber organized a lobby team to the US and successfully persuaded the American-side to give up the plan. Such efforts have paid off, boosting the chamber's popularity among enterprises in this industry.
Like the chamber, many other associations are also giving top priority to providing services for the enterprises.
"The basic function of industry associations should be in making judgments on development trends of the industries and to serve and co-ordinate enterprises based on such judgments," said Zheng Zhiyi with the China Chemical Fibre Association.
Another function is to represent enterprises to negotiate with the government when new government policies might affect their interests, said Zhang Jing, director of the State Administration for Industry and Commerce's market management department.
An example is when the government decided to lift preferential policies on import of PTA, a major polyester raw material for the chemical fibre industry. The China Chemical Fibre Association submitted a report to the State Council to suggest a cut in import tariffs on PTA because domestic manufacturers mainly relied on imports to meet their demands for PTA.
"Although the State Council has not yet responded to our request, it is possible for the government to slash the tariffs thanks to our efforts," Zheng said.
However, experts noted that China's WTO membership needs industry associations to do more.
With many associations responding actively on anti-dumping suits against domestic firms, experts say they should also pay sufficient attention to staging anti-dumping investigations against foreign products.
Meanwhile, the associations should be classified further. For example, even on apple production, associations for apple planting, apple processing and apple imports and exports should be established.
In addition, the central government should support the associations by empowering them more on management rights.
Shenzhen has taken the lead in this field.
A plan to reform the city's industry associations is expected to be released before the end of this year. Under the plan, some of the government administrative functions will be transformed to industry associations and intermediary organizations.