- Open Access
How does the market operate under the condition of capital shortage? A study of social time mechanism of the textile industry of Pu Town
© The Author(s). 2016
- Received: 13 March 2016
- Accepted: 13 May 2016
- Published: 27 June 2016
Based on the case of the textile industry of Pu Town, this paper brings in social time mechanism to illustrate how financial activities and continuous operations of the small and medium enterprises (SMEs) under the condition of capital shortage are realized through massive graduated debts and cost allocation in the production chain. Starting with the relational contract, this paper adds the time dimension of contract, which is called social time mechanism, to the dimensions of market power and social relations. Through this social time mechanism, the author expands the meaning of credit and highlights the restriction of repayment capacity and the repayment period on the trading process. The author then uses this model to explain how the two trading parties adopt the capital settlement period developed under this mechanism to adapt to and promote operations and development of the market in the absence of third-party credit guarantees.
- Relational contract
- Capital chain
- Social time mechanism
Capital shortage has always been a disturbing problem for the development of small and medium enterprises (SMEs). One of the important factors contributing to the problem is that the current financial system can barely support the development of SMEs. The restriction of the financing environment is rooted in the highly centralized financial system left over from the planned economy during the economy’s transformation that was viewed as inappropriate for SMEs (Lin and Li 2001) and which discriminated against SMEs’ loans (Lin et al. 2003). In addition, it is rooted in a relatively backward financial system that was designed to support the previous financial system and is incapable of meeting the demands of the numerous labor-intensive SMEs. For example, Fan (2000) argues that it was essential to develop small- and medium-sized local private financial institutions in order to improve the financial system and expand the financing channel of the private enterprises. However, it was not until recently that this kind of financial system for private capital developed. In fact, Growth Enterprise Market (GEM) for direct financing was established after 2000. This financing platform targets high-tech enterprises rather than private enterprises; private capital was not allowed until the State Council issued 36 guidelines in 2005 titled “Several Opinions on Encouragement of Nonstate-owned Economy Development.” Thus, from the beginning SMEs developed under the shortage of financing sources, especially the private SMEs in rural industry.1
However, in reality, SMEs have made significant progress even in the absence of a regular financial system, which impelled researchers to turn their focus to financing channels outside the regular financial system, such as underground private banks, civil bidding, and even exorbitant usury. Taking nongovernmental finance in Wenzhou as an example, there are nongovernmental loans, industrial loans, and civil bidding (Wang et al. 2004; Zhang 2000; Guo and Liu 2002). Whether through financing channels within or outside the regular financial system, SMEs had to pay certain rates for loans since all these financial services are offered for profit. Thus, the SMEs were under the double restriction of a shortage of regular capital supply channels and the high cost of irregular capital supply (Zhou 2007). The cost of regular capital supply was also considerable. With overcapacity in China’s economic sector and the rise of the RMB exchange rate, the profit rate of export-oriented enterprises decreased more and more. Influenced by changes in international marketing conditions, SMEs entrepreneurs who depend heavily on such financing channels tended to experience cracks in the capital supply chain. A large number of entrepreneurs have gone into hiding due to the pressure to repay loans. These SMEs have collapsed on a large scale due to the guarantee chain for the credit warranty system established by banks and massive mutual interenterprise debt. Thus, the causes for the capital shortage were first, that financing approaches were seriously limited and second, SMEs entrepreneurs intended to restrict the scale of financing in order to avoid risks. This raises the question of whether there are any other approaches to tackling the capital shortage problem that emerged in the course of SME operations as market subjects.
Through analytical strategy, loans from the regular financial system and the private financial system can be classified into visible financing channels, that is, financing channels studied by economists that we can directly observe. Obviously, there is another invisible financing channel that can only be found in enterprises’ own capital supply chain,2 which implies that entrepreneurs realize financing through controlling the capital circulation period in industrial chains as well as the scale of cash flow, making use of minimum expenses to stimulate the operation of the whole production chain.3 In brief, it can be concluded that the scale of cash flow must be minimized and capital circulation speed be improved as much as possible. However, improving capital circulation speed is subject to fixed conditions such as labor intensity, technology, and logistics speed. It is difficult for SMEs to evolve under these situations unless they are making innovations in their technique. Comparably speaking, it is more manageable to minimize cash expenses. This is the invisible financing channel discussed earlier, which refers to the specific phenomenon of structured deferred repayment that occurs among enterprises on a large scale through production chains. In other words, it is cost allocation based on massive graduated debt that definitely motivates the lasting development of SMEs. Nevertheless, economics has not paid sufficient attention to this phenomenon and generally regards it simply as existing debt or deferred repayment.
This paper discusses this borrowing behavior that has received insufficient attention from economics. Although deferred payment or borrowing is a common phenomenon in social economic life, this paper’s focus lies neither on borrowing and lending money, which is essentially of mutual help in daily life, nor on borrowing and lending behaviors in rural areas influenced by borrowing and lending cultures (Geng 2014). Instead, in regard to SMEs’ lasting development, it concerns how borrowing and lending money is facilitated with a capital circulation period in the productive process in order to solve the problem of capital shortage. Given that contract theory is one of the most essential dimensions to comprehending the marketing relationship and debts exist among different market subjects, this paper will follow this approach.
Relational contracts and market power
In the economics literature, contract theory was gradually developed first by Oliver Williamson and later Oliver Hart and finally formed a more systematic theoretical system applied to analyze issues from market and organizational relations to property (Zhou 2003). In order to clarify market integration issues from the perspective of transaction cost, Williamson distinguishes three kinds of contract forms at the level of legal governance: classical, neoclassical, and relational contracts. On the premise of incomplete contracts, relational contracts transform legal governance structure into a concrete bilateral governance structure or governance structure within an organization, thus providing an analytical frame for organizational behaviors and internal governance (Williamson 2002; Zhou 2003; Macneil 1978). Simply speaking, by introducing relational contracts, Williamson brought problems such as asset specificity into interorganizational behavior studies, including threats and possible moral risks after signing a contract. However, Hart insisted that in the incomplete contract the remaining power of assets would be the very key to tackle all sorts of contractual problems (Hart 2006). In this way, he transformed the problem of organizational boundaries studied by Williamson into property assignment.
Softening of contract constraints: the concept of property rights and capital payment period
Generally speaking, enterprises need a great deal of liquidity. They will not being in debt unless they suffer radical changes in the macroenvironment, such as a depression. Even if enterprises encounter the challenge of deferred payment, they can resort to a credit guarantee from a third party such as the installment of a commercial bank and acceptance bill commonly used in transactions. In fact, transactions without a third party as a credit guarantee generally use cash in order to avoid risks. There is a great deal of mutual borrowing and lending behavior among enterprises. For enterprises in communities (Zhe and Chen 2004), this behavior is taken for granted as the reason that contract constraints between transaction subjects have been softened compared to transaction relationships in an unfamiliar environment.
Many studies on the transformation of township enterprises focus on the softening of contract constraints. For instance, Liu (1999) explicates how contract constraint relations have softened and how business agents have acquired residual control of property rights from the perspective of re-embedding between the business agent and his/her interpersonal network. For township enterprises, the situation is more complicated. Zhou (2005) analyzes the ambiguous and evolving phenomenon in township enterprises from the view of the relation of property rights, claiming that it is mainly attributed to township enterprises adapting to a complex environment in order to attain resources. Liu (2003) explains the complexity through three dimensions of possession. The softening of property rights constraints proves from another aspect that constraint relations could be softened by resorting to a certain mechanism of the community. This mechanism functioned because economic relations have been embedded into social relations (Polanyi 2013; Granovetter 2008). Therefore for transaction relationships between acquaintances, the trust mechanism is not generally established on the basis of strict contract relations.
As Durkheim (2000) points out in regard to contracts, contract relations can be maintained because of other more fundamental impersonal factors. These impersonal factors are essentially social conventions. Zhe and Chen (2005) hold that social contracts are based on reciprocal relationships implemented in communities. Therefore, the transactions of SMEs in communities are impacted by various social relations and thus influenced by social contracts. In a certain sense, as the foundation of credit, the trust mechanism is also a kind of social contract. In the case of the transactions of YQS discussed below, he usually reached agreement with the households verbally. Therefore, being in debt is generally dependent on social contracts. What is more, a premise is implied in these social contracts that goods or money can be borrowed, that is, under certain conditions and for a designated period of time, one party can transfer its property to another party free of charge, which has been the essential point for discussing the internal mechanism of realizing contract relations.
The notion of a limited assignment of property indicates that, distinguished from financing within a financial system as well as private financing, being in debt directly minimizes cash input with no need to pay interest. On the other hand, with the time restriction of a social contract, being in debt is indeed limited. Therefore, the reason why borrowing is sustained is that debts can be repaid within the time limit prescribed in social contracts. Timely repayment is equal not only to repayment ability but also to lasting borrowing. Therefore, enjoying good credit does not mean taking on debts easily. It is highly relative that the counterparty with good credit is able to repay with enough financial strength. In market transactions, especially after market practice, the debtor clearly knows that the purpose is to advance money to others with no expectation of gaining interest from the deferred payment. Thus, the only condition they could receive is that the counterparty volunteers to repay within the assigned time limit, usually prescribed by the social contract. Thus, credit refers to repayment ability, as a result of which being in debt is an after-set credit mechanism. This is so even in the case in which there is no third-party credit guarantee.
Social time mechanism: an explanatory dimension of sociology
Enterprises in communities are able to resort to personalized social capital, embedding trading relations into social relations, with no need of a third-party credit guarantee for deferred repayment. The implementation of market power further strengthens deferred repayment. For example, suppliers in the upstream of the production chain would experience the risk of poor sales if they demanded due payment from downstream firms. Nevertheless, the key to delay in payment is to use the capital spending cycle in social and economic activities. As a result, social time has been the critical link for exploring the subtle relationship between borrowing money and capital circulation period in the capital chain of the SMEs.5
Social time essentially refers to a time unit formed in a certain social or collective life rhythm. In this text, it mainly includes periodic holidays and time points at which significant family events occur. The former typically refers to the Spring Festival that determines the end of a year, and the latter principally includes events6 surrounding marriages, funerals, and children’s enrollment in school. In addition, it covers routine time arrangements on the basis of social conventions, such as capital settlement in a season and settlement in half a year according to the customs of rural communities.7 A large number of studies have focused on social time (Marx 2008; Durkheim 1999; Mead 2002; Giddens 1984). For example, Durkheim (1999, p. 12) argues that “the differences between date, week, month and year are corresponding to the periodicity of rituals, festivals and public ceremonies,” that is, “the calendar conveys the rhythm of collective activities and guarantees the functions of the regularity in these activities.” Additionally, Hubert (1999) explains how the duration of time is interrupted by the divinity at important time points. As Sorokin and Merton (1938) note, institutions concerning time arrangement are directly related to social cooperation. All of the above studies constitute the essence of social time as defined in this paper. It can be seen in the text that rhythm and important festivals are formed on the basis of social economic life, which is distinguished from astronomical time or physical time in nature. Social time is characterized by discontinuity (Mukerjee 1943) that is reversible and periodic.
The time system for industrial capitalism, which differs from social time, was essentially developed based on linage time and commercialized time evolved from calculating rationality (Hassard 2009; Marx 2008; Thomson 1967; Thrift 1981). According to Mukerjee (1943), social economic rhythm in an industrial society is dominated by the speed of the machine system rather than life rhythm. The rhythm of production, transactions, and other economic activities for different enterprises and markets, such as the speed of capital circulation and the logistic system, is more compact due to unified time arrangements after which the links are more accordant with economic rationality. It is suggested that time was made into a timing system, the fundamental system of economic production and development, such as the time arrangement of Taylor and hourly wages (Marx 2008). According to Polanyi (2013), this time system would necessarily be replaced by a more rationalized form when encountering the rhythms of social time. However, this is not so. Nyland (1986) argues that a series of arguments and political movements emerges when the rationalization in time arrangements according to economic benefits extends to production, circulation, and exchanges, that is, workers struggle to achieve time for social life (free time) within the economic time system. But indeed, the salary settlement period such as monthly salary and weekly salary is not a time system naturally made by the economic system but a system made by social time, which operates in the economic system.
As a result, we see that Algeria’s farmers are dependent on natural time rhythms as Bourdieu (1963) notes, which also indicates that social time still functions by creating a certain mechanism in another system. As Young (2002) argues, time is not only a dimension of social interaction but also an instrument of social interaction. Therefore, when social time occurs as a capital settlement period in a contract relation with no impact on the social economic life of either party, they are able to make remarkable progress. Thus, this capital settlement period according to social time is defined as social time mechanism. In the following text, the textile industry of Pu Town is taken as an example to clarify how SMEs that cooperate with the capital circulation period in production resort to the social time mechanism in solving the problem of capital shortage.
Located in the north of Zhejiang, the Hangjiahu plain, Pu Town has developed its textile industry since the late 1970s. After 30 years of development, Pu Town has developed into an important textile industry base in the Yangtze River Delta. For example, the lining output in Pu Town in 2009 occupied 2.5 % of the gross national production. In terms of development scale, the industrial scale of Pu Town has increased remarkably, from 100 to 200 looms in the early 1990s to over 35,000 looms in 2014, and from 100 households in three to four villages to more than 2200 households in 11 administrative villages (a total of 14 administrative villages) today. From January to December 2013, the total output of Pu Town’s textile industry reached 235 billion yuan. According to economic indicators designed in Pu Town, there were 84 enterprises whose revenue from sales exceeded 20 million yuan in 1 year (14 % of all other enterprises’ revenue in the county), while there were 196 enterprises whose revenue was less than 20 million.
Country fair trade and social relations: the social relation network of the acquisition type
Despite the development of the textile industry in Pu Town at the end of the 1970s, a small local textile market was not built up until the early 1990s. Before that, most individual households were restricted by capital produced and sold to external domestic markets, respectively. As Fei (1999) argues, there are two forms of rural industry: one is the cottage industry, which developed with the slack season in farming; the other is the workshop industry. The difference between these two kinds of industries is that the former resorts to surplus labor force while the latter makes use of surplus capital. Obviously, after the 1990s, the workshop industry developed in Pu Town.
Case 1: In 1986, after graduating from junior high school at 16 years old, WLC became a mechanic in a textile mill in town. After working for 2 to 3 years, WLC bought two shuttle looms to start weaving with his father and sisters. They sold their woven cloth on the road. In 1990, WLC became acquainted with mercers from Guangzhou and the northeast of China through his relative’s hotel because many foreign mercers stayed there. By age 23, WLC no longer sold cloth by the main road of the town and had instead started a workshop at home to collect cloth for mercers. He began to do business with mercers, selling his own clothes produced by his own shuttle looms and collecting cloth according to these mercers’ demands in order to make profits. This pattern lasted until the establishment of the textile market in Pu Town. During this period, WLC rented a store specifically to do business in material, fabrics as well as dyeing, and then went back into the fabric business. He rented machines from the mid-1990s until 2003.
The pattern of subcontracts: the formation of the structure of market power dominated by orders
Case 2: In 1992, YWL was employed by a locative printing and dyeing mill in an enterprise of Pu Town, taking charge of business services. After the transformation of this mill in 1998, due to his familiarity with the business, he began to conduct textile business in Guangdong. During this period, YWL sold the cloth produced by his father’s factory and cloth purchased from Pu Town. He also took orders in Guangdong and went back to Pu Town to find processing factories, which entailed locating households in Pu Town to do the subcontracted work. In 2000, YWL went back to Pu Town, specifically to contract with the households. He took foreign trade orders and became a large subcontractor locally until 2003, when he moved to a printing and dyeing mill.
Thus, at the stage of subcontracting, production driven by domestic orders and direct or indirect orders from the international market was greatly changed. For example, local agents responsible for purchasing gradually played the role of operators just as in the material process within the putting-out system (Fu 2014; Tian 2014). The previous social network of purchasing was developed into the social network of processing. In other words, the structure of the order-oriented production chain signified the combination of market power represented by orders and the personalized social network of purchasing. In the process of reorganizing the structure of production and management in Pu Town, those small traders at the previous stage of market sales were replaced, forming a similarly recessive factory system (Xie 1992). It has been suggested that if the households failed to cooperate with the subcontractors, it would have been difficult for them to join in the recessive factory system and survive in the market. The households who made a family living by weaving would be totally on their own in such a case, where they could neither satisfy the production need of orders nor afford a textile mill on their own.10 Subcontractors at the core position of the production chain would be forced to face the challenge of capital shortage. First, in order to acquire orders, subcontractors have to purchase fabric, exceeding their own capital ability. With market competition strengthening and productivity improving, the profit margin of fabric was decreasing year by year in the mid-1990s. For example, the profit of fabric went down from 2 to 3 yuan per meter at the end of the 1990s to about 3 cents per meter in 2014. The weakening of profit-making ability gave rise to capital shortage. Therefore, faced with the double restrictions, the entrepreneurs of the SMEs who held market power and personalized social networks for purchasing, i.e., subcontractors,11 began to adjust the capital settlement period within upstream contracts in order to tackle the problem of capital shortage.
From the perspective of relational contracts, debt is a phenomenon that emerged from the adjustment of the capital settlement period when the upstream and the downstream make use of social relations or market power. However, in fact, it is more complicated than that. For the enterprises in the community, if the time dimension within the contract is overlooked, it would be hard to illustrate clearly why the settlement period presents the character of social time only through social relations and market power As a result, by introducing the time dimension to explore the production capital chain in Pu Town, in reaching a settlement time on the basis of agreements, a more fundamental social economic life rhythm within the community is obeyed, even though both of the two parties resort to the relational contract to adjust the capital settlement period. It is also suggested that the result of consultation between individuals is a kind of nonindividual and social institution. Thus, occurrence of the social time mechanism indicates that the transaction relations motivate more fundamental social resources or institutions, bringing the contract relation into a deeper social mechanism. More significantly, the cases discussed in the text demonstrate that the social time mechanism further develops the discussion of contract theory.
When New Institution Economics introduces the important analytic concept of transactions, it also breaks the hypotheses of instant transactions within New Classical Economics. The relational contract from the dimension of time presents the process of constant adjustment driven by the incompleteness of contracts in order to deal with the constant emergence of new situations. However, time has not been emphatically analyzed within contract theory. In other words, even though time is introduced into the contract relation instead of being in the background in the enforcement of contracts, it is still regarded simply as a certain appointed term in contracts, such as the capital settlement period mentioned in the text. After introducing the time dimension of contracts as an analytic concept, it effectively strengthens the explanatory power of the relational contract. In fact, it has been proven in this text.
As emphasized above, the frame of contracts discussed in this text is different from that discussed by Williamson and Hart. In this text it is the social conditions involved in the agreement of contracts and the internal mechanism that are discussed. Some scholars such as Liu Shiding have focused on the relation between social conditions and contracts. Liu (1999) explores the content of the relational contract and discusses the issue of embeddedness. Many of this text’s discussions concerning the structure of market transactions in Pu Town are based on this issue. In order to introduce time into the analytic concept, it is necessary to raise it to the same position as “specialties of investments” and “residual ownership,” which is to say that the concept of time has analytic significance only when covering the core interest or power relations.
In fact, the concept of time has occupied this status when it involves the issue of capital settlement, for the reason that during market transactions especially under the condition of capital shortage the capital settlement period is directly related to the existence and development of enterprises. When taking the concept of time into consideration in individual cases, we further find that the different time periods have different significance and social time becomes the core of the whole relational contract. Therefore as the relational contract is embedded into social relations, its analytic concept of time naturally becomes social time. More interestingly, there is no similar issue such as the residual rights of control, but it directly develops into a mechanism that motivates the relational contract because social time becomes a kind of social nstitution. Obviously, the significance of social time in maintaining and controlling is no less than the time that is not discussed in this text. For example, subcontractors control the quality of production produced by the households and the upstream suppliers through deferred payment in order to maintain cooperative relations with the upstream.
What is more, the social time mechanism developing from the social time dimension of contracts effectively explains how SMEs are able to develop rapidly when facing capital shortages. From the perspective of social time, the previously deferred payment developed into the time difference caused by two kinds of capital settlement periods, demonstrating that the production chain based on social relations and market power can provide a financing channel with low costs for the SMEs. In fact, it is through graduated debts and cost allocation on the basis of the social time mechanism that SMEs are able to realize capital accumulation that cannot be reached in unfamiliar market transaction relations.
Finally, the social time mechanism also indicates that the trust relations between two parties have greatly changed. Social time reflects the lowest measure of the repayment period. In other words, when capital settlement relies more on the social mechanism, which is more binding and legitimate than individuals, the fundamental measure of deciding the debt transaction relations to be maintained by the lending party depends on timely repayment within an acceptable period delayed to a great extent and repayment capacity. Obviously a trusting relationship depending on the social institution reflects the difficulty of maintaining trusting relations between individuals in present economic interactions. When both the transaction parties begin to depend on the institutional trust mechanism of social time, comprehending the possible influences that changes in the trust mechanism bring and other effects of the social time mechanism needs to be further studied.
This paper mainly discussed private SMEs in rural industry. From the point of view of the financial system, credit cooperatives set up by the Agricultural Bank of China first provided financing channels. In 1996, since credit cooperatives rescinded the administrative subjection relationship with ABC, original financing services were supported by rural credit cooperatives.
The internal financing of enterprises, such as the stock system that involves equity and interests, is adopted by private entrepreneurs in a limited way. Its financing capacity is thus restricted.
This financing approach is distinguished from the financing approach that depends on the production chain even though both channels resort to relationships between upstream and downstream enterprises. As for the production chain, it emphasizes combining the upstream and the downstream enterprises into a whole by resorting to enterprises that have great credit in order to obtain financing from commercial banks. It is still a financial product. Financing through the capital chain discussed in this paper refers to a financing approach that is dependent on debts upstream and downstream, which makes it a loose financing form that does not need to pay interest. The logistics bank and financing warehouse are both similar to financing approaches that depend on the production chain, which are distinguished from financing channels studied in this paper.
When differentiating the concept of power discussed in Hart’s contract theory, Zhou (2003) specifically highlights the fact that the term “power” as used by Hart refers to ownership of the remaining capital rather than the concept of power discussed by game theory in the market force sense, which is also the concept of market power discussed here.
What is more, social time has been the legitimate basis for borrowing money and claiming money. Since the two trading parties are in the same interpersonal network, in trading, with the pressure of capital shortage, borrowing money is taken for granted. Meanwhile, as the debtor, even though many debts are settled according to social time, not all debts were settled in time. It is generally acknowledged that debtors take social time like the Spring Festival as a legitimate reason to claim money at the opposite house. If they do not succeed, they have to wait for the next social time period. There is no detailed discussion in this text since it is restricted by the topic.
In rural societies, there are many time points that require money, such as sowing and fertilization, because of the rhythm of agricultural production. However, with the development of rural industrialization and the decline of agricultural production, these time points are losing importance. As a result, there is little need to collect money for agricultural production. In this case, it is not considered.
From the perspective of managing production among economic subjects, these settlement periods occupy the same important position as social time in maintaining the order and policy of social life.
An important effect of subcontractors is to localize the production of the previous procedure in the production chain.
For convenience of discussion, printing and dyeing mills are regarded as subcontractors because most of them have subcontracted the work.
It is also one of the reasons why a large number of textile mills emerged in this period; subcontractors have enough stock and capital strength to establish textile mills.
Here, subcontractors are equal to textile mills. With the change of the market structure, there were many textile mills in Pu Town that were essentially subcontractors. It suggests that there are two kinds of subcontracting: one refers to subcontracting between the households and the subcontractor, while the other refers to subcontracting between textile mills and households. Because many textile mills are developed by subcontractors, all are regarded as chartered looms here. In Pu Town, there are two kinds of textile mills: one is textile mills that produce fabric on their own, although the number of such mills is small; the other mills only subcontract the weaving work to households, which indicates that all of the subcontractors subcontract the weaving work to households but purchase looms for knitting. However, it is hard to promote knitting subcontracting among households because knitting machines are very expensive. One set of knitting machines is worth 1 to 2 million yuan, so only a few of textile mills whose economic strength is strong can afford the technology. As a result, this paper focuses on the weaving textile industry between the households and subcontractors.
The use of the term “strong ties” here is the same as in Granovetter (1973). In contrast, the relation in the social network of processing is a “weak relation.”
With the passage of the new “Labor Contract Law of the People’s Republic of China” at the end of 2007, beginning in 2008, the government required enterprises to pay salaries in full every month, that is, no longer paying only living expenses to workers and deferring the remaining salary until the end of the year. Obviously, the law is not enforced here. Subcontractors and households still continue this practice, as discussed in this paper.
In fact, besides the allocation driven by the social time mechanism, for households purchasing looms on their own, it is also a kind of cost allocation of the fixed capital for the subcontractors. This article only studies the cost allocation driven by the cooperation within the production chain from the perspective of the capital chain.
As for foreign orders, they are paid on delivery with no existence of debts as in domestic orders. Therefore, it is neither the dotted line nor the allocated part. Lately, chartered looms or textile mills and printing and dyeing factories with capital shortages have attempted to develop foreign trade due to the character of foreign trade. The percentage of foreign trade is usually up to 50 %.
This paper was discussed in the seminar “Organization and Institution Study” of The Third Social Theory Workshop. Thanks to Professor Cao Zhenghan, Liu Shiding, Zhang Jing, Li Youmei, Zhe Xiaoye, Qu Jingdong, Yang Qingmei, and Li Rongshan for their criticism and advice. Thanks to the two anonymous reviewers for their valuable advice on revisions. The author is responsible for all content of this work.
Open AccessThis article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
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