Local Economies Example: Pingshang Bamboo Group

Bamboo forests in the central and north China contribute significantly to the supply of bamboo products for both of the residents and export. Bamboo forests and product are the most important source of revenue in many regions. Pingshang, Guizhou province, China is one of the bamboo growing and producing regions.

 

In 2004, 354 people from 72 families were living in Pingshang village, and all of them are from the Miao ethnic group. The village has an average annual household income approximately $50 (400 CNY), and derived almost exclusively from the sale of forest products. (West, R. & Aldridge, C. 2007)

 

Pingshang village had a traditional producing system for decades. The main products that Pingshang Village made are rough, unfinished chopsticks and whole bamboo culms. The chopsticks were in basic quality and need further processing, and they were packaged in bulk. The unfinished chopsticks were sold with a very low price, US$0.25 for 10 pairs. (West, R. & Aldridge, C. 2007) The sales channel and transportation are also big problems to the village: the products were collected irregularly, and were taken down the mountains by walk to buyers. Because of information asymmetries, the buyers often took advantage from the villagers. As the rough bamboo product has such a cheap price, the way that villagers make a living is increasing the amount of harvest. This action led to damage of both ecological balance and natural resource.

 

In July 2004, Pingshang Bamboo Group (PBG) was established. It is a community producers’ group that owned by the residents of the village. The process of establishing PBG emphasized “local knowledge and enabled local inhabitants to analyze production possibilities and make more informed decisions about the direction of the community enterprise”. (West, R. & Aldridge, C. 2007) In most areas in China, commercial interests are still controlled by village governments, however, Pingshang village committee along with PBG figured out a way to form a separate management committee to act as director for PBG.

 

In the village, 50 of 72 families have two or three family members working on the basis for the group. (West, R. & Aldridge, C. 2007) PBG actually changed the economic relationships between residents and consociated them with the same goal. According to the small-mart revolution, it perhaps the most important benefit of spreading LOIS business.

 

After the formation of PBG, Pingshang village replaced the old production chain with a new system, which allowed the village to produce packaged chopsticks for immediate use. PBG is involved in all aspects of the whole production chain, including “forest management, harvesting, production, packaging, marketing, and delivery”. PBG helped arise the price to US$0.56 (3.5 CNY to 4.5 CNY) per 10 pairs. (West, R. & Aldridge, C. 2007) In this process, with a more sophisticate technic, they improved their product so that enhanced their self-reliance. It is unnecessary to rely on the third party to finish the product, which brought more profit to the village.

 

PBG has led a significant improvement in the village, which helps the village take the first step: be self-reliant and exporter. However, the village still lack of diversity product to support them to compete globally.

 

The traditional forest sector is restricted by several policies, including the “log-harvesting quota, the logging ban (a component of the Natural Forest Protection Program – NFPP), high rates of taxation, tenure and rights insecurities, and transportation restrictions”. (West, R. & Aldridge, C. 2007) Since the sustainability of existing bamboo number and species are the primary forest management objective, the rules are even stricter. PBG attracted people’s attention to the sustainable development of natural sources. On one hand, the introduction of new system made the production process more efficient so that reduce the overexploitation of natural resource. On the other hand, PBG rationally planned the use of bamboo, and tried to develop other products so that take use of every part of the bamboo as well.

 

In this case, rich natural resource laid a solid foundation for the development of Pingshang village. However, the resource of bamboo is the only advantage of Pingshang village. The village is geographically isolated from the county capital, and the mountainous terrain is not suitable for developing agriculture.

 

Although many villages like Pingshang exist in China currently, they are still struggling with finding an efficient way to maximize the use of limited natural resource, and promote their products as well. However, community groups are still rare in China. Besides the two requirements mentioned in the article, the awareness of residents is also important for the formation of community groups. Many residents don’t trust new technic, and the only resource in their common is too valuable for them to take a risk.

 

 

 

 

References:

West, R. & Aldridge, C. (2007), PingShang Bamboo Group: A case study of a community enterprise in China’s bamboo, Rights and Resources Initiative website.

West, R. & Aldridge, C. (2007), PingShang Bamboo Group (PBG): A Community Enterprise in China’s Bamboo Sector, Rights and Resources Initiative website.

 Shuman, M. (2005). The Small-Mart Revolution. San Francisco: Berret-Koehler Press.

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3 thoughts on “Local Economies Example: Pingshang Bamboo Group

  1. lidanli October 31, 2012 at 2:46 AM Reply

    This case provides a good example of a community-based enterprise. PBG contributes to the economic development of this poor village. One thing I am curious is that where the fund come from? From the government or non-government organizations? Actually there are numerous poor villages with extremely affluent natural resources (such forest, mineral, water, etc.) in China. Due to the lack of education, funding and managing skills, these villages are still poverty. Their original income can’t afford to start a business. In addition, the government cannot fund every village to set up enterprise. So the funding becomes a big problem.
    Their life quality and economic situations are far behind the developed areas. People here are almost isolated with the outer world, they need some experienced entrepreneurs to help them. Things they need to know are how to manage their natural resources, how to expand new markets, how to negotiate better prices, and how to lift their communities out of poverty. Lack of knowledge about the whole market is another problem.
    China, the communist country, is governed by one party. The party of Gongchan dang sets up all the policies and rules. The common regimes, mentioned in “Whose Common Future” that they have their own traditions and rules that are not influenced by the government, which is hard to exist in China. The communities in China are not strictly the same as defined in this article. They may have their own culture and traditions, but still governed by the party of Gongchan. Thus, the community enterprise also restricted by the government rule which may become the third problem.

  2. Jia Tu November 1, 2012 at 5:37 PM Reply

    This case provides a good example that how PBG tried to run the chopsticks business to help create sustainable growth for local the communities. However, the bamboo chopsticks business itself is not sustainable. From the price of the bamboo chopsticks, I assume that the product of PBG might be disposable chopsticks. Though the consumption of the disposable chopsticks is huge, it generates a little profit. PBG has successfully risen the price to 124% compared to the original prices, but they still market value still very low. The chopsticks business might not produce enough profit to help the community to keep a sustainable growth. They do not maximize the value of their Bamboo and they are not the world level import substitution.

    As Lidan discussed earlier, the source of funding might turn PGB from LOIS to TINA. If the funding is from the micro-loan, the pressure of repayment might make PGB to produce more chopsticks, which might lead to severe damage of the local environment. In order to produce more advanced chopsticks or even high-end chopsticks, PGB need to improve the crafting process as long as the packaging, and marketing.

    Another problem PGB is facing might be the loss of labor. As the reading mentioned above, the average annual household income was approximately $50 (400 CNY). However, if they work as labor in cities, the annual income could be approximately $5,000 (30,000 CNY). In many other villages, many young people go to the cities for labor work and leave the senior and children at home. This might make the local communities even more difficult to maintain self-reliant.

  3. tuc36439 November 1, 2012 at 9:40 PM Reply

    Thanks for this example. It clearly shows a community-based enterprise and how it has benefited the village economically. I was wondering about the structure hierarchy established in the village since it wasn’t explicitly stated in your review. In reviewing your references I see that although most Chinese village governments control commercial interests, the PingShang village committee permitted the formation of a separate committee. As stated by the post above, I wonder if this will become a problem. Also how does the informal membership structure affect the company in the long term? Since members can work ad hoc and can use the bamboo for other needs, are their borders drawn that within the village as to the appropriate use of bamboo outside of business use. Improper use or lack of commitment in membership could lead to the supply of chopsticks being below what customers need. I feel in order for continued success, PBG needs to mature and establish a formal membership structure.

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