Chinese employer associations,institutional complementarity and countervailing power

Abstract

Prior to 2011 the China Enterprise Confederation (CEC) was the only employer association recognized by China’s government. Drawing on interviews with staff from employer associations, employers and state officials, this study clarifies the role of Chinese employer associations, with the focus being on the CEC. The study finds that the Confederation is a quasi-state agency that undertakes many of the activities conducted by employer associations in developed economies. It also finds that the demise of the CEC’s monopolization of employer representation can be attributed to its inability to act as an agent of countervailing power and its inability to sustain a complementary relationship with the social partners that are suited to the newly emergent employment relationship being constructed in China.

Keywords

China communist party countervailing power employer associations employers industrial relations institutional complementarity political economy state corporatism

Introduction

Employer associations (EAs) are ‘organizations consisting predominantly of employers and whose activities include participating in determining employee’s conditions of employment on behalf of members’ (Plowman, 1978: 237). There is a dearth of empirical research on EAs in China where employer mobilization is a politically sensitive area. This study investigates the role of EAs in China, with the focus being on the China Enterprise Confederation (CEC). The study responds to Barry and Wilkinson’s (2011: 149) call for researchers to theorize employer coordination in light of ongoing changes to employment relations systems and to examine EAs in countries that have traditionally had decentralized industrial relations (IR) systems.

Drawing on data collected through in-depth interviews and analysis of archival materials, this study finds that while the CEC is a quasi-state agency, it is a genuine EA to the extent that it undertakes many activities performed by counterpart organizations in countries that are members of the Organisation for Economic Co-operation and Development (OECD). The study finds that for many years the CEC complimented the needs of other IR actors but this situation has been strained by its limited capacity to exert countervailing power in ways that further employer interest in the evolving IR context in China. The study suggests that clarifying the role of Chinese employer coordination can be furthered by a theoretical framework that melds the notions of countervailing power and institutional complementarity.

The article begins by introducing the literature that addresses employer mobilization. Next, it sketches the context of employer mobilization in China. Part three outlines the method utilized to garner and analyse the empirical data, and part four presents the findings. The article concludes with discussion detailing the implications that stem from the findings.

Employer associations: countervailing power and institutional complementarity

The IR literature on employer coordination concentrates on liberal capitalist nations and is much informed by the concept of countervailing power. Traditionally, EAs are understood to be independent organizations formed by employers to offset trade union power and state intervention (Gladstone, 1984; Jackson and Sisson, 1976; Plowman, 1989; Schmitter and Streeck, 1999). To further the interests of their members, these agencies undertake activities that can be categorized as either interest representation or service provision (Traxler, 2008). Specifically, EAs lobby governments; conduct collective negotiations with trade unions; participate in tripartite institutions; help members resolve disputes; provide forums for discussion and debate; limit competition between employers for labour; and provide members with specialist services and advice (Gladstone, 1984; Traxler, 2008).

In recent years, EAs have reduced their involvement in collective bargaining due to decentralization of employment relations and declining trade union power, and now accord greater attention to political lobbying and the provision of specialist services (Silvia and Schroeder, 2007; Traxler, 2008). When examining this development, Barry and Wilkinson (2011) draw on Galbraith’s (1952) original understanding of countervailing power, which holds that it is capitalists who initially concentrate market control. By so doing, these authors challenge orthodox pluralist IR theory which assumes that it is workers who first distil their market influence, and that capitalists react to this distillation by choosing to mobilize. Having posited their challenge to the orthodoxy, Barry and Wilkinson theorize how employers are likely to behave in markets that become less oligopolistic and more competitive, as has occurred in recent decades. They observe that in competitive markets it is difficult for employers to pass increased costs on to consumers and this inability is likely to become problematic for employers if workers are able to gain, or retain, significant organizational power. In such circumstances, employers will be motivated to mobilize in ways that enable them to countervail employee power by taking direct action and/or by inducing the state to weaken labour’s capacity to bargain.

Extending Barry and Wilkinson’s reconceptualization of EAs and responding to their call for research on employer mobilization to be undertaken in multiple domains, generates opportunities for theory building. This is because the diversity of societal conditions across domains underscores differences in the purpose and value of employer mobilization (Schmitter and Streeck, 1999). Exemplifying this opportunity, political theorists have investigated EAs in the countries of Eastern Europe that are characterized by weak trade unions and governments that are decidedly pro-business (Duvanova, 2007; Komarovskii, 2007; Markus, 2007). They find that the governments of a number of these new capitalist states have provoked and assisted firms to mobilize in order to enhance employers’ capacity to complement government efforts to contain predation by state functionaries. What these studies have also revealed is the need to understand the complementarity between institutions or aspects of a system and the value of melding countervailing power and institutional complementarity perspectives when seeking to clarify employer coordination in societies which traditionally have powerful and dominating states.

Institutional complementarity is a notion that has gained a presence in the literature which theorizes the links between institutions and how these relationships might be impacted by economic and social change (Crouch et al., 2005). It is a concept that is interpreted in multiple ways but the underlying idea is that two or more aspects of a system need to be combined to generate a particular outcome. In the social world this association is normally understood to imply that two or more agents need to interact in specific ways if a desired outcome is to be realized and the role and value of parts of a configuration are context dependent (Hall and Gingerich, 2004). Gagliardi (2014: 1) rightly observes that the concept of institutional complementarity is increasingly being utilized to illustrate why agents tend to be resistant to change and why it is that if pressures for change penetrate one subsystem it is possible that a whole set of changes may follow. This latter possibility is evidenced by Sheldon et al. (2016), who describe how the institutional complementarity that informed the interaction of state officials, employers and workers through the post-war years in Australia and Italy was disrupted by the onset of decentralized collective bargaining and how this process reconfigured EAs’ activities. In this article it is posited that melding the notions of institutional complementarity and countervailing power, as reconceptualized by Barry and Wilkinson (2011), can help explain the changing role of EAs in China, where the Leninist market-socialist state dominates the polity (Gilley, 2011) and the employment relations system is undergoing a historic transformation.

Employer coordination in China: context

Scholars who study the mobilization of Chinese firms divide into two camps. Advocates of the ‘civil society’ perspective argue that mobilized firms enjoy a substantial degree of autonomy and on occasion have the capacity to challenge the authority of the state (Deng and Kennedy, 2010; Zhang, 2007). By contrast, ‘statists’ insist that the party-state keeps tight control over business associations and the latter are able to further the interests of their members only if their actions complement policies favoured by the party-state (Brødsgaard, 2012; Shi, 2010; Unger and Chan, 2008). The statist view has dominated debate on business mobilization. It accepts that while China is transitioning to a market economy, the Communist Party is determined that a Leninist state with socialist legacies will be retained (Gilley, 2011; Napoleoni, 2012). The consequent ‘market-Leninist’ system permits sectoral organizations to mobilize but this process is closely managed by the state in order to minimize the risk of capitalist restoration (Unger and Chan, 2015; Zhang, 2008).

While there are few studies that focus specifically on Chinese EAs, it is possible to discern both civil society and statist perspectives within this small body of literature. Advocates of the former perspective suggest that prior to the global financial crisis China had no ‘genuine’ EAs, by which they mean EAs that enjoy a significant degree of autonomy from the state and that seek to exercise countervailing power against other IR actors (Lee et al., 2011, 2016). They also posit that this situation has begun to change, with the government bowing to employer demands for increased representation by permitting a number of regional employer representative bodies to participate in collective bargaining, and by permitting the All-China Federation of Industry and Commerce (ACFIC) to become a national EA along with the CEC (Lee et al., 2011). Statists, however, tend to be sceptical of such claims, viewing the CEC as a corporatist organization with a marginal capacity to act independently of the state and being little more than a transmission belt from the government to the enterprise (Lee, 2006; Taylor et al., 2003).

A divergence in perspectives is also manifest in the explanations that have been advanced to explain why the state has permitted the creation of new EAs. As observed by a number of IR scholars, over the last decade China has experienced a rise of industrial disputes and wildcat strikes, most of which tend to be interest rather than rights disputes as was previously the norm (Chang and Brown, 2013). In response to this development, the All-China Federation of Trade Unions (ACFTU) has pushed for pro-labour legislation and experimented with new forms of collective bargaining in order to enhance its legitimacy with workers (Lee et al., 2016). Complementing these efforts, the party-state began embracing tripartism and collective bargaining ‘as key instruments to “harmonise” labour relations and therefore pre-empt social conflicts’ (Lee et al., 2011: 307). Observing these changes to the employment relations system, advocates of the civil society perspective attribute the emergence of new EAs to the growing militancy of workers and contend that as China’s transition progresses EAs will come to closely resemble their counterparts in the OECD countries (Lee et al., 2011). In advancing this perspective, these scholars voice a variant of the orthodox IR theory of employer mobilization. Specifically, they support the traditional conceptualization of countervailing power. This holds that the worker is the initial agent that mobilizes labour market power and that employers countervail worker’s collective power through mobilization, this being the understanding that is challenged by Barry and Wilkinson (2011).

Statists, by contrast, see the demise of the CEC’s monopoly as merely a modification of government strategy and insist that it is the power of the party-state rather than workers’ power that is the primary determinant shaping China’s IR system. This view is exemplified by Napoleoni (2012). She argues that on choosing to open China’s economy to global competition, the party-state prioritized enterprise efficiency over all other goals for some three decades. However, once it determined substantial progress had been made in the pursuit of competitiveness the government began selectively regulating the employment relationship in ways that would temper the drive for increased efficiency with an effort to enhance workers’ well-being. In brief, this suggests the key ingredient that disturbed existing institutional complementarities, and thus triggered the demise of the CEC’s monopolization of employer representation, was the state. Napoleoni’s (2012) observation is complemented by Unger and Chan (2015), who in the 1990s predicted that unions and business associations would gain increased independence over time but now concede their forecast has proven incorrect.

Research method

A qualitative research design is used in this study. Data were collected through semi-structured interviews and documentation. Purposive sampling was employed. Access to research participants was gained through cold calling, third party references, personal networking and participants’ recommendations. In total, 71 interviewees from 30 organizations participated in the research. Table 1 offers a breakdown of organizational participants and interviewees by groups.

Table 1.

Research participants by groups and by region.

	Total per group	Beijing	Shanghai	Guangzhou
CEC officials	8	3	2	3
ACFIC officials	3	2	1	0
Government officials	3	1	1	1
Enterprise managers	56	15	26	15
Academic	1	1	0	0
Privately owned firms	7	2	2	3
State-owned firms	16	6	6	4

CEC, China Enterprise Confederation; ACFIC, All-China Federation of Industry and Commerce.

CEC national, CEC Shanghai and CEC Guangdong offices were sampled in order to capture the CEC’s activities at both national and regional levels. As the CEC and IR system in Shanghai and Guangzhou are well developed, this study selected the CEC in these two regions. Interviews with an academic, who works closely with the CEC and ACFIC, and the staff of ACFIC, government departments responsible for labour issues, and seven to eight firms from each region were also undertaken to obtain data which can be used to support triangulation.

The underlying logic for selecting firms was accessibility (whether an actor agreed to participate) and replication (at least two firms were chosen for each subgroup categorized by different ownership type and size) (Yin, 2009). The interviewees were selected ‘on the basis of their potential contributions to answer the research questions’ (Barzelay et al., 2003: 35). For example, CEC interviewees included directors and staff from two departments responsible for employer issues: Employer Work Department and Membership Department. State labour authority interviewees included directors from the Labour Relations Department and the Law and Regulation Department. Firm interviewees included general managers, assistant general managers and human resource (HR) managers and professionals who were able to provide information on firms’ associational activities and perspectives. Wherever possible, multiple interviews within each organization were conducted.

Semi-structured interviews were conducted based on a list of questions that were tailored to each participant’s profile. For example, questions for participants from EAs covered the history and origin of these organizations, their functions, major activities and structure, influence on IR issues and membership. Interviews with government officials focused on the role and influence of the CEC in China’s IR system, and employers were probed for information on why their firms had chosen to join or not join the CEC, as well as their understanding of the EAs’ functions. The length of the interviews ranged from 45 minutes to 2 hours. The initial interviews were conducted in 2009 and follow-up interviews were conducted in 2012 and 2014 to capture changes that may have occurred.

The interviews were recorded digitally and transcribed by the first-named author, who is a former employee of the Shanghai Municipal Labour and Social Security Bureau and is licensed by the National Accreditation Authority of Translators and Interpreters in Australia. In addition to interview data, documentary data, including relevant organizational publications and documents generated by the participating organizations and media reports, were collected from research participants. Documentary data were used to supplement and validate data obtained from interviews. The data were analysed thematically, and a cross-case synthesis was undertaken to construct a general explanation that suited all of the individual organizations (Merriam, 2009). Comparisons of the results were made by identifying similarities and differences and verifying themes revealed by the data. The very high level of similarity in the interviewees’ opinions of the value, functions, and activities of EAs indicates that this study achieved data saturation.

The research design of this study, of course, has limitations. The major limitation concerns generalizability of research findings. The case study method and small sample used in this study inevitably mean that the scope for generalizations across EAs in different regions of China is limited. Nevertheless, the data obtained have significant strengths. Uppermost among these is that the data are drawn from multiple perspectives. The richness and robustness of data obtained enables this study to shed considerable light on the role of EAs in China.

The roles of the CEC

The CEC is not an autonomous association formed voluntarily by employers to countervail state or trade union power. It was created in 1978 as a consequence of the party-state’s decision to embrace a market-oriented form of socialism that permits capitalists to own and manage firms but will not allow them to become a ruling class. To further this objective the state initially instructed the CEC to assist state-owned firms in improving the quality of their management, providing representation for China’s employers at International Labour Organization (ILO) conferences, and acting as a communication bridge between government and enterprise managers (CEC, 2008). This agenda was expanded subsequently with the CEC being instructed to represent employers in domestic tripartite institutions. In seeking to fulfil the mandate specified by the state, the CEC undertook a range of activities that, as with OECD counterparts, can conveniently be grouped as interest representation and service provision.

Interest representation

That the CEC was created by the state to fill an institutional gap that emerged from China’s transition to a market economy was freely acknowledged by CEC officials:

The CEC takes on the role of employer association in China’s tripartite system and in the International Labour Organization. However, this role has not evolved from the needs of enterprises or employers but rather from the need of the state to participate in ILO conferences and to establish a national tripartite IR coordination system. Our tripartite system needs an EA, and we fill that gap. It is not a voluntary association that formed because of employers’ needs, and whose survival depends upon its ability to speak for its members. We are not that kind of organization. (CEC1)

Tight control is imposed on the CEC by the party-state, which has severely constrained the CEC’s ability to independently represent its members’ interests. CEC4 stated firmly that ‘the government will not allow us to truly represent employers. The CEC is not the same as EAs in western countries or Eastern Europe’.

A primary means by which the party-state limits the CEC’s autonomy is by monopolizing the appointment of its senior managers. A CEC interviewee reported that the wages of 25 per cent of the Confederation’s national office staff were paid by the state and that the party-state decides who manages the organization:

The post of President has always been taken by a national leader. Our General Director, Li De Cheng, is concurrently chairman of the Shenzhen Committee of the Chinese People’s Political Consultative Conference (CPPCC). In other words, leaders whose positions are at the rank of deputy-ministry or above are appointed by the Organization Department of the Communist Party. (CEC2)

The control that the party-state has maintained over the CEC has ensured that its leaders prioritize the interests of the state. CEC interviewees avowed that they strove conscientiously to serve members’ interests but if employer needs conflicted with the wishes of the state they invariably supported the latter. Indeed, CEC managers advised that doing otherwise would imperil the Confederation’s very existence:

Under the current institutional framework in China, our major task is to accomplish the mission assigned to us by the Party. Our position is to assist the government in carrying out labour and employment policies. … Only when these conditions are met, will the firms’ needs be considered. (CEC1)

In China, if associations do not act as an assistant to the government, they will be kicked out of mainstream associations. (CEC2)

The extent to which the CEC was incorporated into the party-state administrative system rendered nominal the Confederation’s capacity to countervail the power of trade unions. However, this has never been a major concern of the CEC. Indeed, interviewees held that such activity was inconceivable because ‘the relationship between the All-China Federation of Trade Unions [ACFTU] and the CEC is a non-confrontational relationship between two government agencies’ (CEC3). This perspective was endorsed by another CEC interviewee who observed:

In China, the state, trade unions and employer associations do not oppose each other, as this would not be in accordance with our country’s political system or with our country’s constitution. Our three parties unite together. (CEC2)

To confront organized labour, moreover, would have had little practical value for CEC members in the years before the enactment of the new labour laws. The unions, like the CEC, performed their IR functions in accordance with procedural rules set by the state and acted in concert with state agencies. Moreover, this complementarity between the unions, the CEC and the state was underpinned by an ideology that insists workers are the leading class in China. Therefore, it is impossible that the state would permit the CEC to enjoy standing and power commensurate with that of the ACFTU:

In our country, regulation by the state involves control rather than mediation. In this context, the state plays a very strong role in IR. Trade unions and EAs coordinate IR issues according to the tone set by the state. … The political status of trade unions in China is very high for historical reasons. They are very powerful in China. Among the three IR parties, the party of the employers is the weakest. This is essentially an issue of political status. Individual entrepreneurs may enjoy high political and social status; however, this is an honour rather than a political right. As a group or class, employers do not have high political and social status. In our political system, workers are the ruling class, so employers have little political voice. Consequently, this affects the CEC, although our president is a high-ranking official similar to the President of the ACFTU. (CEC3)

While conceding that they have consistently prioritized state interests and have not sought to countervail the power of organized labour, CEC interviewees insisted that they did strive to further members’ interests. One way by which the CEC undertakes this role is by conducting research. For example, when the first set of interviews for this study was conducted, the Confederation was collecting information on how the global financial crisis was impacting IR practices of member firms. According to a CEC national director, the CEC planned to report its findings to the State Council, both in order to help the government understand the situation confronting employers and to enhance the CEC’s standing with the state:

This research is our own initiative. We do this because we strive to do things that other associations do not care to or cannot do. Otherwise, you cannot make yourself stand out. In other words, when there is something that only you can do, you do it to convince the government that you can further their interests and thus increase your influence. (CEC3)

The second way that the CEC has sought to represent members’ interests is by engaging in tripartite interactions. CEC interviewees reported that these gatherings have enabled the Confederation to voice members’ concerns regarding the formulation and implementation of IR regulations and provide advice on IR disputes that have aroused the concern of the government and unions. Nevertheless, the interviewees reported the CEC’s influence in tripartite bodies was decidedly limited:

The role we play in the tripartite system is no more than to assist the other two parties in promoting forthcoming policies, hosting conferences, and jointly issuing documents with the other two parties. (CEC1)

We [the CEC Guangzhou] participate in setting minimum wages and (promoting) collective agreements. In accordance with the government’s need, we visit member firms and mobilize them to positively respond to these works. (CEC6)

In tripartite consultation, we mainly discuss wages and labour standards. Every year, the CEC says the same thing: wages should not be increased; nothing new is said. The tripartite consultation is just a camouflage, signalling that IR policies are not the result of the unilateral will of the government but rather the result of democratic consultation. In actuality, the power to make decisions is still in our hands. (GOVERNMENT2)

CEC officials reported that they found the Confederation’s limited influence frustrating. CEC4 shared her frustration with the promulgation of the Regulations on Collective Labour Contracts in Shanghai Municipality. She observed that the Shanghai President of the ACFTU wanted the Municipal People’s Congress Committee to issue a regulation on collective contracts. The tripartite committee initially objected to the idea but the Congress insisted and the tripartite committee was simply instructed to draft a document, which the party-state then proceeded to amend as it saw fit. Likewise, CEC1 lamented that when China’s government formulated the new Labour Contract Law (2007), it did not invite the CEC to collaborate with the Ministry of Labour and Social Security and the ACFTU in preparing the initial draft. He conceded that the Confederation was invited to express its views when the government called for public comment on the draft. However, he advised that few CEC proposals were included in the final version. Nevertheless, the national CEC acted in its role as a party-state assistant, facilitating public acceptance of the drafted law even though it was designed to enhance the rights and bargaining power of labour and was inducing anxiety among employers (Cooney, 2007). This drew criticism from CEC members:

At a seminar convened in Shanghai, when discussing whether the new Labour Contract Law should be issued, he [a senior official from the CEC national office] stressed the principle of harmonizing labour relations, and called on the attendees to support the new law. His words might not have been his own words but rather words instructed to him by the CEC leaders. Nevertheless, some attendees who opposed the new law accused him of being too weak and not taking the employers’ side. (CEC4)

Employer criticisms of what they perceived to be the CEC’s ineffectual response to the state’s initiative were accentuated by the fact that American and European business associations critiqued almost every provision of the draft (China Labour Bulletin, 2006; Global Labor Strategies, 2006). Indeed, these bodies threatened that if the government proceeded with the legislation their members would withdraw from China. This response allegedly induced a weakening of pro-worker provisions in the legislation and publically underscored the incapacity of the CEC to represent employer interests (Cooney, 2007; So, 2010). Such was the level of discontent among employers, our interviewees reported that ACFIC, a business association representing private business interests, applied for permission to add IR to its programme of work. This request was approved by the state on the condition that ACFIC only seek to represent the IR interests of private businesses and only after the party-state had strengthened its direct control over the organization (Unger and Chan, 2015). This latter development terminated the CEC’s status as the only formally recognized national EA in China.

The CEC’s limited capacity to represent employers’ interests begs the question of why many employers joined the Confederation even before the enactment of the new Labour Contract Law? Initially, this was because the government ordered state-owned firms and a number of associations to take up CEC membership. However, in the late 1990s the government reduced funding to the CEC, withdrew active support for membership recruitment, and instructed the CEC to register as a civil society body. These steps were taken to meet ILO requirements that an EA must be an independent association of employers. To enhance the capacity of the CEC to position itself as an employer advocate, the CEC opened membership to firms of all types and this step had a significant impact on the composition of CEC membership. For example, CEC5 reported that the Shanghai CEC branch consisted of 17 per cent state-owned firms, 70 per cent domestically owned private firms and 13 per cent joint ventures, foreign-owned firms and other types of entities such as universities.

The employers who joined the CEC were certainly not motivated by the hope that the CEC would help them combat trade union militancy or countervail state interventions that they deemed unfavourable to their interests. Rather, interviewees reported that firms joined the CEC primarily because the Confederation provided services that they deemed valuable.

Service provision

The CEC’s service provision activities include facilitating communication between members and the state, providing specialized knowledge to members, and building a ‘platform’ that enables members to network. These services are similar to those offered by their counterparts in OECD countries. Explaining the nature of the CEC’s service activities, interviewees advised that the Confederation has long acted as a medium between the state and employers. It informed the state of members’ concerns and helped employers interpret government policies and regulations. This latter service was deemed to be of particular value because labour laws and rules are commonly written in an ambiguous manner in recognition of the fact that labour management is a politically sensitive issue and often needs to be discussed sotto voce:

Many policies the government finds unsuitable to publicize are disseminated through our association. Such activity normally includes explaining how policies should be applied and the flexibility allowed in implementing policies. These things are best tacitly understood than explicitly expressed, and are normally passed through our association to enterprises via the seminars we hold. (CEC5)

The CEC was also able to recruit members because it has provided firms with services that relate to human resource management (HRM)-IR management, including consultancy and training. As is the norm across OECD countries, services tailored to individual members’ needs are fee-based while free advice is provided on general issues relating to labour law and state policies. Again, as in the OECD countries, small and medium-sized firms are the primary consumers of these services:

We joined with the Municipal Medium and Small Enterprise Office to operate a consultancy hotline ‘114’ to answer enquiries about IR issues. We advise anyone who calls us. Nevertheless, it is often small firms which call us. This is because big firms are much better informed and have a specialized department to handle personnel and IR issues. (CEC4)

Training programmes are normally delivered by full-time CEC mentors, government officials and academics. The following observations constitute a representative perspective of how larger firms reported they view these services and the CEC more broadly:

Their IR training programmes are not useful. It is simply an occasion for some so-called academics or experts to engage in meaningless talk. I know more about IR policies and practices than they do. Even when I have problems in interpreting policies, the CEC would not be able to give me an accurate answer. In those cases, I directly contact the labour administrative authority. That is more efficient. (FIRM25)

The CEC is of no use to large enterprises, as its coordination capability is very weak, it does not have any function or authority, and it is not a government department. Big firms can directly dialogue with the government; thus, the CEC is not needed. (FIRM34)

The CEC’s training programmes were also commonly dismissed by interviewees from large firms because they were deemed of less use than training programmes of dubious legality offered by private business consultants. As one senior CEC official observed:

Our training programmes aim to enhance firms’ understanding of government policies and promote harmonious labour relations. We do not give companies tips on how to utilize the loopholes in the laws and government policies or how to evade IR responsibilities. Advice of this nature is often sought by firms and consultant companies provide such training programmes. (CEC1)

None of the interviewees from large firms reported utilizing CEC officials in the management of industrial disputes. When labour disagreements occurred, these firms opted to settle the situation themselves, contract a law firm or take the dispute to the government labour arbitration service or to the courts. The extent to which large firms dismissed the CEC’s IR services was indicated by FIRM2 who observed: ‘Although I have been in charge of IR issues for 22 years, I do not recall ever having any dealings with the CEC in this regard’.

What firm interviewees did recognize as a valuable service is the Confederation’s ‘platform functions’. This term captures activities that Gladstone (1984) described as being designed to assist employers to meet and discuss issues of common concern. It entails the provision of venues where managers can build connections that may prove lucrative. To construct a platform for members to interact, the CEC has long organized a range of activities, including forums, study tours and social functions such as tea-tasting, spring festival galas and antique appraisals. Both CEC and enterprise interviewees indicated that most of the employers who had joined the CEC did so primarily in order to build their networks, especially in relation to government and Party officials:

The CEC is a route to the municipal government. Being a member and participating in their activities are ways to maintain relationships with the government. (FIRM40)

I think that firms mainly come to our functions for business networking. Here, they may find some business opportunities with our members. Small firms are sometimes more active in such functions. (CEC5)

We attend CEC functions for two purposes. One is to get to know people. The other reason is to exchange information with other CEC members. We often discuss business issues, share experiences and views and see whether there are business opportunities. We do not discuss labour issues at CEC functions. (FIRM23)

When explaining why IR issues were not discussed at CEC platform gatherings, interviewees commonly responded that labour relations had traditionally been regulated by the government so there had been no need for members to discuss such issues at these meetings. This suggests that many members deemed IR an issue of insufficient importance to warrant collective debate and/or accepted that there are more effective ways to resolve IR concerns:

We do not discuss our labour issues at CEC functions because we have many channels to express our concerns. Government departments quite often pay a lot of attention to our firms’ response to policies and our concerns. Relevant departments often come to our firm and collect our opinions and concerns. (FIRM50)

While IR issues may not be discussed at CEC platform functions, these gatherings can help managers establish connections with government officials that they deem to be valuable. That members used CEC functions to build connections with government officials was conceded by both CEC and firm interviewees. It was also observed that these connections were often of more value than the direct services provided by the CEC:

The senior officials of the CEC are normally old and have retired from leading positions in government departments. They had high posts and rank. We want to take advantage of their connections to handle some issues. (FIRM2)

The reason for going to functions organized by the CEC [Guangdong branch] is that this is a semi-government organization. If you do not attend activities organized by them, you miss the opportunity to meet senior officials who may attend, which is important because they have channels and control resources that are scarce. (FIRM48)

An example of how the connections forged as a consequence of the platform function can help employers was reported by CEC3:

Once we visited an enterprise. The firm owner complained that his firm was heading towards bankruptcy because of a new tariff. I introduced him to the Deputy Minister of Commerce. After they spoke, the minister realized that the problems confronting the firm constituted a blind spot in the policy; thus, a supplementary policy was issued.

The CEC interviewee explained that the success of this intervention was due to the fact that CEC officials have a greater capacity to approach high-ranking functionaries than have the managers of small or medium-sized firms:

His problem may have been solved because I knew him and also knew the deputy minister, who is my friend. Furthermore, our field visit to his firm provided the chance for him to tell us the problem. It is highly possible that many firms below the level of his firm went out of business because of that unchanged part of the policy. (CEC3)

In hosting gatherings that help CEC members build and sustain networks, the CEC has been assisted by the fact that the government allotted the Confederation the task of ‘modernizing enterprise management’ and cultivating ‘excellent entrepreneurs’. To fulfil this mandate, CEC staff appraised and promoted the diffusion of innovations across firms and conducted competitions in which businesses sought to become a ‘Top 500 Enterprise’, an ‘Enterprise of Excellence’, or an ‘Entrepreneur of Excellence’. Firms sought to win these prizes in order to enhance their influence with government officials, potential customers and other stakeholders. In illustrating how these activities assisted CEC members, CEC2 observed:

Next month, we are going to celebrate ‘Entrepreneur Day’, an annual nationwide event. At these events, some member firms may get opportunities to deliver a speech in front of other members and social media. This is free advertising for the firm, which is much better than investing millions of yuan in commercial advertising.

Discussion and conclusion: institutional complementarity, countervailing power and the CEC

This study has investigated the role of EAs in China, with the primary focus being centred on the former monopoly EA in China, the China Enterprise Confederation. It finds the CEC acts as an assistant to the party-state and is not an independent representative of employers that has taken on the mission of countervailing the power of organized labour and government. Nevertheless, it is a ‘genuine’ EA. It provides both a voice for employers in China’s tripartite IR system and many services that assist members achieve goals important to them as employers in a Chinese context. These activities include the dissemination and clarification of government policies, provision of specialized management knowledge and the construction of networking platforms that enable members to liaise with both state officials and potential business partners. In OECD countries such activities have taken on an increased significance for EAs with the decline of trade union power and the decentralization of the governance of employment relations (Traxler, 2008).

The empirical findings regarding the CEC’s role can be understood by using an analytical framework that incorporates the concepts of institutional complementarity (Crouch et al., 2005; Hall and Gingerich, 2004) and countervailing power (Barry and Wilkinson, 2011; Galbraith, 1952). The starting point, however, is to accept that China’s employer mobilization occurs in a socialist market economy that is dominated by a Leninist party-state and that the party-state has structured the collective representation of IR interests in a corporatist fashion (for analysis of Chinese state corporatism in relation to trade unions, see Chan, 2008 and Unger and Chan, 2015). Leninist state corporatism shapes the complementarity between the CEC, the state, trade unions and employers and thus defines the role and value of the CEC. The CEC’s relationship with the Leninist state has ensured that the CEC prioritizes the party-state’s interests and acts as its assistant, even while striving to provide support to members within permitted limits. Moreover, the party-state’s claim that it continues to adhere to the development of socialism and that it remains committed to maintaining the ‘working class as the leading class’ has made it impossible for the CEC to posit itself as a counterweight to the trade unions. For as long as the state severely constrained union power and bolstered management prerogatives, the fact that the CEC prioritized state interests was not a problem of sufficient substance to motivate employers to mobilize. Consequently, the Confederation was able to focus on serving members’ interests by complementing their need for policy clarification, access to party-state officials and HRM-IR service provision.

However, the established institutional complementarity and balance of power that bound the CEC, employers, trade unions and party-state through the last three decades was disrupted when the government introduced regulations that enhanced the bargaining power of labour and when labour shortages began to emerge. In this context, employers, particularly employers in the private sector, determined that they needed a level of interest representation that the CEC was not able to provide and thus they began seeking an alternative (Lee et al., 2011). This effort proved fruitful because in the new context the party-state needed a body that could more effectively voice the interests of employers than could the CEC and could increase the effectiveness of tripartism in resolving IR issues, particularly labour disputes. Therefore, the party-state accepted the ACFIC, a quasi-government agent that has strong credibility in representing private business, as the representative of private employers. By so doing, the party-state stands to gain because co-option of such an agent in the existing IR system can not only increase the effectiveness of tripartist mechanisms but also effectively pre-empt autonomous EAs. It also stands to gain because, having decided to increase the legal rights of trade unions and workers, the party-state can benefit by strengthening agencies that it may need to countervail the power of trade unions and workers should they use their new rights in ways that would concern the state. If this balancing act is managed effectively a new complementarity relationship may be constructed that will enable the party-state to continue expanding the role of the market while ensuring that capitalist employers will not become a force capable of undermining party rule by, for example, supporting a transition to a capitalist society, as has occurred in Eastern Europe.

Based on the empirical evidence and analysis presented above, this study urges caution on those who hold that the emergence of new EAs in China constitutes a sign that the country’s IR system is evolving in ways that will allow the institutionalization of a more liberal IR regime (Lee et al., 2011, 2016). What is important to remember is that the Leninist state is still enforcing a form of state corporatism that is designed to ensure it remains able to control organized interests, be they workers or employers. Given this is the case, this study suggests that what is likely to occur going forward is that both the CEC and the newly appointed private sector EA (ACFIC) will adapt to the new system of institutional complementarity and become more effective in representing the interests of employers. However, even if this expectation is realized, this will not enable China’s EAs to gain sufficient power to countervail the state. In brief, EAs with a substantial degree of autonomy will not be permitted to flourish in China.

This study has made a number of theoretical and empirical contributions. First, it has provided much needed empirical evidence on the roles and functions of Chinese EAs by interviewing the staff of these organizations, as well as employers and relevant government departments. This is an approach never before undertaken in China and rarely undertaken in the OECD states. It is a contribution in itself for it reveals that it is possible to examine employer mobilization in China by engaging in direct dialogue with employers and with Chinese EA officials, rather than studying their activities from afar. Second, the study is a contribution for it advances the theorization of employer coordination in two ways. It extends Barry and Wilkinson’s (2011) effort to reconceptualize EAs by explaining an anomalous type of EA, this being an agency that is dependent on both the state and its members for institutional legitimacy and survival and serves the needs of both actors while always prioritizing the former. In so doing, the article highlights the need for scholars to avoid a post-colonial mentality that judges what constitutes a genuine EA by the norms that exist across the advanced capitalist countries. Moreover, the study has advanced a theoretical framework that incorporates the concepts of institutional complementarity (Crouch et al., 2005; Hall and Gingerich, 2004) and countervailing power (Barry and Wilkinson, 2011; Galbraith, 1952). By so doing, it extends institutional complementarity research to a new area; that is, to the study of employer coordination in a socialist-market society. It has showcased how melding insights from research fields such as social sciences with classic IR theories can provide a more comprehensive explanation for the changing role of EAs in China, a task that has proven difficult for pluralist IR theorists to accomplish (Barry and Wilkinson, 2011; Schmitter and Streeck, 1999). Third, this study contributes to the civil society versus state debate on polity in China (Unger and Chan, 2008; Zhang, 2007). It provides evidence to support the dominating state perspective, especially in the area of employer mobilization.

Footnotes

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

Judith Shuqin Zhu is a lecturer at Newcastle Business School, the University of Newcastle, Australia. Her research focuses on industrial relations in China and employment relations in Chinese multinational corporations. In particular, she studies unionism and employer coordination in China. Another line of Judith’s research deals with Chinese multinational corporations’ responses to trade unions and employer associations in host countries and human resource management strategy in Chinese multinational corporations. Before she commenced her academic career, she worked for the Shanghai Municipal Human Resource and Social Security Bureau. Recent publications include contributions to Human Resource Management, Journal of Industrial Relations and International Journal of Human Resource Management.

Chris Nyland has a long-term interest in the history and evolution of business and economic ideas. Key areas that he has researched in this regard include the evolution of management thought and practice in the United States in the first half of the 20th century and how classical political economists have explained the respective status of the sexes. A second research area is globalization and education. Here he has studied the evolution and regulation of international education markets and the efforts of China’s government to develop a workforce that is suited to a knowledge intensive economy.

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