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Title:
Land property, Clan and Shareholding Cooperative Company Governance: A case study in Shenzhen, China
Abstract:
This study explores the complex dynamics of clans and Shareholding Cooperative Companies (SCCs) within urban villages in the context of land property changes in Shenzhen, China. Through two large-scale land acquisitions and transformations, Shenzhen achieved comprehensive urbanization in 2004, converting former rural collective economic organizations into SCCs, with villagers becoming shareholders. SCCs utilize collective land for a range of commercial activities such as industrial factory construction, property management, leasing operations as well as the sale of land development quotas. The economic benefits generated from these businesses are subsequently distributed among the shareholders according to the principle of equity distribution, forming a capital appreciation and income-sharing model based on land resources. Driven by the siphoning effect associated with Shenzhen’s high population density and the sustained wealth growth from housing demolition compensation under urban renewal initiatives, SCCs and their underlying clans have accumulated substantial wealth. Data indicates that the collective assets of Shenzhen’s SCCs amount to 3 trillion yuan, with the eleven most influential clans, distributed across nearly 400 urban villages, collectively holding assets valued over 1 trillion yuan. However, this rapid wealth accumulation and identity transformation have imparted characteristics to SCCs that distinguish them from fully marketized private enterprises. Clan remains deeply entrenched, with significant overlap between clan elites and board members. This phenomenon has profound implications for corporate governance and performance, worthy of further exploration.
This study examines a specific case of SCC controlled by a clan in Shenzhen’s Bao’an District. Through a comprehensive methodology that includes ten months of participant observation, indepth interviews, focus group discussions, and subsequent two-year longitudinal data collection from 2022, the study analyzes how the clan influence the SCC’s governance and business performance.
The preliminary results show the dual impact of the clan on the governance of SCCs. On one hand, clan networks cultivate and enhance social capital, thereby enabling SCCs to assert their influence in negotiations with state authorities. Conversely, the pervasive presence of the clan in governance structure, human resource management, and market expansion results in a contraction of the radius of trust, the adoption of conservative market exploration strategies, and a preference for maintaining clan interests and stability. These factors collectively impact the development of the company, presenting challenges in adapting to the competitive dynamics of a market economy.
