In early February, a group of students at southern Taiwan’s National Pingtung Senior High School launched a campaign to save their consumers’ cooperative from being shut down. They lost in a campus-wide referendum, by a small margin, to those who agreed to accept a chain convenience store at the school, replacing the cooperative.
This is not an isolated case. Nationwide, the number of consumers’ cooperatives has declined sharply, from 4,021 in 2002 to 2,854 in 2010. That year, Taiwan had 4,923 co-ops of all types, including labor, agriculture, transportation, marketing and multipurpose organizations.
Membership in cooperatives in all sectors has also fallen off. At present, approximately 3.12 million people in Taiwan, about one in every eight, are members of cooperatives—in comparison to one in two in Singapore, one in three in Canada and Norway, and one in four in Germany and the U.S.
“Taiwan needs to reacknowledge the importance of cooperatives for the stability and prosperity of a society,” said Sophie L. C. Liang, chairwoman of the Chinese Co-operative Economics Association and economics professor at National Taipei University.
The International Co-operative Alliance defines a cooperative as “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.”
According to the ICA, the cooperative movement has 160 years of history. Since the establishment of the Rochdale Equitable Pioneer’s Society in Manchester, England, in 1844, cooperatives have been considered an effective tool for addressing poverty and inequality. Today, over 800 million people are members of cooperatives throughout the world. In 2008 the world’s 300 top co-ops generated aggregate turnover of US$1.1 trillion.
The importance of cooperatives has come to the forefront today, as the globalized world feels the impact of insatiable human greed and natural disasters, poverty and economic recession, according to Liang.
It was no surprise, she said, that in 2009, amid the crash of the banking system, the United Nations declared that the year 2012 would be the International Year of Cooperatives, to remind people it is possible to pursue both economic viability and social responsibility.
“With members also the owners of a business, cooperatives are the cornerstone of economic stability for a community,” Liang said. She noted, for instance, that credit unions and cooperative banking institutions have been relatively unruffled by the current global recession.
The reason is that cooperatives trade on a more-than-profit basis. “Rather than satisfying human greed, cooperatives care for people’s needs in the various aspects and stages of life.”
While world bodies such as the European Union and International Labor Organization are advising governments to boost cooperative enterprises, recognizing their potential to help rebuild economies, create jobs and respond to social changes, Taiwan seems to be untouched, Liang said.
“But the cooperative as a business model has existed in Taiwan for about a century,” she said. “It’s time for us to review this tradition.”
Cooperatives came to play an important supportive role in agricultural, business and even architectural activities during the Japanese colonial era (1895-1945). Locals established Taiwan’s first cooperative, a credit organization, in Taipei in 1909, followed by many more around the island.
When the ROC government took over Taiwan from the Japanese after World War II, however, cooperatives received minimal, if any, support. “Anti-communist slogans stopped the administration from advocating any institution that resembled socialism or smacked of equal sharing,” Liang said.
Thus, the agricultural and credit cooperatives that boomed before the early 1940s were submerged under government-dominated farmers associations shortly after the takeover.
Despite the lack of encouragement, credit cooperatives continued to play a role in creating wealth for local people. They helped small and medium enterprises thrive, and by the 1980s, Taiwan had more than 70 credit co-ops.
The space for their activities has shrunk, however. Since the 1990s, cooperatives have been transformed into banks or lost their competitive edge to big banks, subject as they are to restrictions on the services they are allowed to provide. Today only 25 credit co-ops survive.
As an example of misguided policy, Liang noted that in 2009 the government allowed commercial banks to handle microlending, aimed at helping people fight poverty, yet “credit unions and regional cooperatives are the legitimate institutions for this activity.”
Over the past 10 years, growth in co-op membership has been seen only in the fields of agricultural production and labor supply, said Chen Jia-zone, an official with the Cooperative Guidance Section under the Ministry of the Interior.
However, as cooperatives receive little media attention, and the general public knows little about them, Chen said, “they are often confused, at best, with conventional corporations, which prioritize profit, or at worst with multiple-level marketing, which capitalizes on one’s social connections.”
Liang noted that “Taiwan’s free market economy has been so driven by profit that care and mutuality have seldom been integral to running a business.”
Lee Kuei-chiu, associate professor in the Department of Cooperative Economics at Taichung-based Feng Chia University, agrees. “Policymakers have been much closer to big companies and consortia, and thus not interested in facilitating the development and education of cooperatives,” she said.
Restrictive tax and labor regulations, the absence of a cooperative start-up loan program, and stagnation in legislation and policymaking to address these issues all contribute to the unfriendly environment.
“There is no national agency to integrate cooperative businesses from different sectors to form a larger-scale, powerful economy,” Lee said.
Singapore, in contrast, uses government resources from the top down to help create successful cooperative enterprises, sharing surpluses among members, rather than having stockholders take a bonus, she noted.
In addition to insufficient policy support, a shortage of people with cooperative management know-how has also impeded the development of the co-op movement.
A more successful local example is the credit-union movement, beginning in the 1960s. The Credit Union League of the Republic of China, with 300-plus unions under it today, is a member of the World Council of Credit Unions.
According to Lee, these credit unions help 200,000 average citizens in Taiwan stand on their own in a society with a widening rich-poor divide.
Another notable case is the Homemakers Union Consumers Co-op. Amid the overall decline of consumer cooperatives, the HUCC had over 35,000 members in 2010—almost 20 times as many as when it was established in 2001—with combined purchases of almost NT$721 million (US$24.43 million).
The organization promotes environmental protection and health by supplying food from small farmers and producers who work in environmentally friendly ways. Its growth has been based on the organization’s efforts to educate consumers about cooperative identity, as well as its sound financial management and effective democratic participation.
More recent cooperative start-ups offer at-home care and household services. “Due to the high quality of its services, a New Taipei City co-op has received more business cases than it is able to take up,” Lee said.
“Cooperatives do make money as long as they really care,” she said, noting that over half of the world’s 300 top enterprises are cooperatives.
“Officials talk about creating the economy of ordinary people—cooperatives are exactly what the economy of ordinary people should be about,” Lee said.
According to Liang, European countries have introduced programs encouraging communities to apply cooperative business models in sectors as diverse as housing, labor and tourism. The U.K. government is promoting cooperatives to generate local employment and meet the challenges of an aging society.
“Taiwan should catch up with this trend, to help solve the many social and economic problems it faces,” Liang said.
“After all, support for cooperative enterprises is enshrined in the ROC Constitution, and there is no better soil for the growth of a cooperative economy than Taiwan’s working democracy.” (THN)
Write to June Tsai at june@mail.gio.gov.tw