D.卡尔顿 罗西
D. Carlton Rossi

Constitutional System


I. Preamble

During their university studies  several students took part in the school's "student research project". Our group project title is "Big Afternoon Agriculture and Animal Husbandry Group Corporate Governance Model". The final results of the paper concerned "the private constitutional monarchy". After more than 10 years of development, the group's "Private Enterprise Constitutional System" emerged to lay a solid foundation which incorporated several changes.

At the activity, the Chairman of the Board of Supervisors explained the origin, content, essence and practice of the private enterprise's constitutional system. He also, elaborated upon the stipulation of the family member's subsidy, staff's benefit, the staff's reward and the retiring of the directors  in the private enterprise's constitutional system. The supervisor was close to the company's operating practice. The explanation aroused  the empathy of the participants who burst into applause.

It can be said that the corporate governance model of Dusong Farming and Livestock Group is the practice of a parliamentary system in an enterprise management system. Here, we will introduce the establishment, operation and performance of the DFLG.

Second, the origin of the "private enterprise constitutional system"

In 2003, because of the "illegal fund-raising case", Sun Dawu and Dafu Group management of more than 10 people were under police control. For a time, noon group was rudderless. Sun Meng who is the son of Sun Dawu was studying at university and preparing to study in Australia. He was temporarily appointed as the Chairman of the Board of Directors in accordance with relevant regulations. As a result, Sun Meng who was the Chairman of the incumbent position had no experience. The operating group of the afternoon suddenly fell into a predicament.

With support of  academia and  the strong appeal of the business community the "Sun Dawu "illegal fund-raising" case came  to nothing. On a sunny day, the punishable imprisonment was limited. The real Sun Afternoon contemplated through meditation  the successor problem.

Through  thinking and exploration of  the British constitutional monarchy evolved the enterprise management decision-making power, the right to operate, the right to monitor, the separation of the three powers and  the overall corporate ownership. It was decided not to interfere with the business decision-making, management, and implementation of workers' democratic participation. In 2004, the private, corporate, governance, constitution model of the afternoon farming and animal husbandry group was established.  Officially began Sun Dawu's "constitutional monarchy" and "labor republican" practice.

Third, the Group's "private constitutional  system"

The Group's top management is the board of directors ,the council  and the board of supervisors. How will the three members produce? What are their responsibilities and powers? What about the running rules? To everyone a brief introduction.

(1) The Board of Directors

1, The Board of Directors is the highest decision-making body. The board of directors shall be composed of one chairman and one or two vice-chairmen, and a number of directors. The board of directors shall be elected by the employee representative conference and the chairman shall be elected by the directors. Each director has a term of 2 years, the chairman has a term of 4 years and can be re-elected. The chairman of the board of directors may nominate the vice chairman of the board of directors, and the nominated vice chairman shall be approved by the joint meeting of the three parties.

2) The Board of Directors shall exercise the following functions and powers: to determine the Group's development strategy and major development policy; to decide the annual production, operation, investment plans and work plans of the Group; to formulate the annual incentive plan for employees, and the annual profit distribution plan; operation, and cooperation; to review the Group's articles of association and the system of changes; to appoint, remove or transfer one or two of the subsidiary.

3. The board meeting shall be convened at least once a month. The meeting of the board of directors shall be convened and presided over by the chairman of the board of directors. If the chairman is unable to perform his duties due to special reasons then a chairman shall be appointed or the the chairman of the board of supervisors will preside so that resolutions and decisions will be sent to the Board of Supervisors. More than two thirds of the directors shall be present at a meeting of the Board of Directors. Each director shall have one vote and shall not abstain. The resolution of the board of directors must be adopted by more than two-thirds of all the directors. The director shall sign the resolution of the board of directors and take the responsibility for the resolution of the board of directors.

(B) the Council

1, The Council is the executive body of the Group and is responsible for the implementation of the resolution of the Board of Directors; the composition of the Council consists of top leaders of the office and subsidiaries. The General Manager is responsible for convening the Board meeting once or twice a month.

2. The general manager shall be elected by the board of directors from among the directors. The term of office shall be four years and re-election is possible. The general manager may nominate the deputy general manager among the members of the board of directors or the members of the board of directors. The nominated deputy general manager shall be approved by the joint meeting of the three associations.

3, The general manager of the board of directors is responsible for the exercise of the following powers: presides over the company's production and operation management, organization and implementation of the board of directors resolutions; organizes the implementation of the annual business plan and investment plans, is responsible for the accounts and tasks assessment; acts on behalf of the Group's external important business; oversees The Articles of Association of the Company and other functions and powers granted by the three associations.

(3) The board of supervisors

1, The board of supervisors consists of the owners of property rights family members, trade union chairman, director of the Ministry of Supervision, Chief Financial Officer and other staff. The Supervisory Board has the greatest supervisory power. The board of supervisors and its chairman shall be responsible for and carry out the system of inheritance.

2, The board of supervisors exercises the following powers: the development of the enterprise's basic operating mechanism - "private enterprise constitutional system"; Organizational director election; check the group's financial and business conditions; access to financial books and other accounting information; if necessary, may require the group chairman to supervise and review the financial information, business reports and profit distribution plans of the group companies submitted by the board of directors and the council; and the supervisory committee of the board of directors and the board of supervisors. The chairman of the board of supervisors or the representatives of the board of supervisors may attend the meetings of the board of directors and the board of supervisors.

3, The board of supervisors organizes every two years a general election (every year in December as the election month), the election of the new board of directors. Temporary offices (electoral offices or committees) may be established during the election period which will operate under the authority of the board of supervisors.

Fourth, the "private enterprise constitutional system" of parliamentary nature

(A) The board of directors of the property

From the previous introduction, we can see that the board of directors is equivalent to "Parliament" as it  is the core power of the Group. But as an individual, the chairman of the board has only the power of "Speaker". The chairman can only convene and presided over the board of directors and can not make any independent decisions. All decisions must made on the basis of one vote per person. More than two thirds of the directors shall be present at a meeting of the Board of Directors. Each director shall have one vote and shall not abstain. The resolution of the board of directors must be adopted by more than two-thirds of all the directors.

The directors enjoy the following rights: Review the Group's business, financial reports, monthly work summary, and keep abreast of the company's business operations and management; they are concerned about the unit and the Group's production, operation and development which affects the general development. In addition, they provide advice and guidance on the production, operation and management of the Group or the Group's member units with the authorization of the Board of Directors or the informed consent of the Board of Directors. The Company may use the vehicles of the Company free of charge including private cars; enjoy the system of retirement and have the right to study and study abroad for qualifications.

In addition, the election of the directors of the Group is a democratic election of all the workers and staff members who had the right to vote. From the beginning of the election of the board of directors to the present, the demand for the right of suffrage is more and more stringent. In the earliest, as long as there are more than 3 years of service, workers have the right to vote, and in the later those with more than 5 years of service have the right to vote. For members of  the cadre team it is required there be 10 years or more of service for the right to vote. The number of workers with the right to vote is now about 500-600 people which in some sense reflects the ancient Roman Senate.

On the other hand, it is interesting to note that the requirements of the DBS Group are very lenient regarding eligibility as a candidate as long as there is more than one year's seniority.  - as long as there is more than one year's seniority to be eligible for election as a candidate.

(B) The attributes of the Cabinet Council

The board of directors is equivalent to the "cabinet" of the group, and the general manager who is equivalent to the prime minister has a relatively large personal authority. It is mainly the board members who implement the resolutions of the board of directors; but, it is the general manager who represents the group regarding external affairs.

(C) The chairman of the board of directors of virtual properties

The chairman of the Group's property rights owners is equivalent to the heads of state-owned units of the parliamentary system and as such does not participate in the group's decision-making and management. As the founder of this system, Sun Dawu has never intervened in the board of directors regarding decision-making and management of the Council. Even after his proposal was rejected by the board of directors more than once his proposals are rarely mentioned. It is only the leadership of the supervisory body, led by the members of the board of supervisors and board of directors and other institutions and their members which monitor the conduct.

Now, the Group has successfully organized the sixth session of the general election of the board. Not only is the orderly participatory enthusiasm very high of the majority of workers, but votes, elections and speeches have been used in board elections. In some sense it resembles democratic, national parliamentary elections. In addition, the convening, procedural and voting rules of the Board of Directors are similar to those of parliamentary countries. Therefore, the author of the afternoon group's "private enterprise constitutional system" regards it as a "parliamentary system."

Fifth, The implementation effect of the "parliamentary system"

In the managment system of the Dawu Group then the only evaluation of a manager or management system is based on performance. Does this mean that implementation effect of the afternoon group  resembles a "parliamentary system"?

The performance of enterprise management is the most basic and most important of two indicators of the company's development speed. The second is the treatment of workers. Here we use data regarding implementation of the "parliamentary system" to illustrate the two aspects.

(A) The rate of enterprise development

The output value of enterprises since the implementation of the constitutional system of private companies increases at an annual rate of 30%. Since 2004 the output value of seven subsidiaries is 100 million yuan with less than 1000 employees. Now, the output value has increased tremendously with 4500 employees.  

The Group has at least 80 million square meters of construction area of ​​fixed assets. Current assets are all net assets without bank loans. Each bank has deposits and the subsidiaries are profitable. Dadong Group has the largest stadium in Baoding which can accommodate 6000 people. It is building the top three hospitals with 3000 beds. It can be said that it will be among the best hospitals in Hebei Province. The new hotel is built to accommodate 2,000 people. The benefits of each subsidiary are very good.

In addition, the company stands at the forefront of the world's agricultural products. The Jinfeng breeder can sell for 5 dollars. The number of chicks hatching daily is 300,000. If there are 300,000 chicks hatched per day then total output is over a billion chicks per year. Most of them are transported by plane to  other countries such as the United States and the Netherlands.

(B) The treatment of workers

Workers wages calculated in December increased not less than 15% and now run at between 10 to 15% increments. The staff turnover rate runs in the 2% to 3% range. Each cadre training course has 300 to 400 people.

The main award to management personnel is based on profits. If profits exceed 20% then the excess is used to reward cadres. If there is no development and profits are lower than in the previous year then the cadres and workers enjoy a universal 8% reward. The reward to cadres cannot exceed five times the wages of workers an at the highest level cannot exceed 10 times.

The majority of workers also enjoy paid travel of between 1 to 7 days.  At a higher level staff can go abroad. This year 80 to 90 people went to Japan. In the future staff may go further. , the future may also go farther. Now, some workers are in Qingdao, Shandong Province and other places. Some companies charter a plane for small treasury expenditures. Housing, medical care, school and , retirement benefits are relatively perfect.

Dawu Group employees also enjoy the benefits of reimbursement of medical expenses. According to the length of service, they enjoy a different reimbursement amount. More than 3 years they are reimbursed up to 3 million, 5 years up to 5 million, 10 years up to 10 million and 20 years up to 20 million on an annual report. Of course, the workers will generally take the health insurance reimbursement and are not reimbursed by the Group.

From the implementation of the constitutional system of private enterprises on a continuous or cumulative basis the chairman of the board can be elected no more than two times, the general manager no more than three times, the directors no more than eight times before they are entitled to retire or retire in principle. The children of directors (cadres) are encouraged to study abroad or go into business. There is available a venture capital fund of between 30 to 100 million yuan.

Generally speaking, it is very difficult for a farming and animal husbandry enterprises to develop rapidly unless through merger and acquisition. However, the potential of the "old peasants" of Xushui County, Hebei Province has been fully actualized through democratic management and bears rich fruit.

Sixth, the reasons for the success of the "New Deal" of Dawu Group

Democratic decision-making maximizes the avoidance of mistakes. The Afternoon Group's implementation of the concept of democracy under the "Group of Parliamentary System" releases the vitality of all employees. The root causes of the development can be succicntly summarized as follows:

(A) Democratic elections to ensure the power of workers to mobilize the enthusiasm and cohesion of workers. To be a member of the board there must be enough votes from the staff. The most powerful weapon for workers to participate in enterprise management is their vote. A decision-making company has the power to choose candidates, but also to ensure the improvement of staff enthusiasm, sense of responsibility and cohesion. A Board of Directors elected by the people has a high degree of cohesion. As Sun Dawu said "if employees can vote by hand then they will not easily choose to vote with their feet". 

(B) Democratic elections guarantee the harmony between the leadership. Elections are a kind of political, rule-based politics. To enter the board of directors there must be a vote of more than 500 voting, veteran employees. They rely on the personal character, ability, performance and prestige of the encumbent. There is no need to be anybody to become chairman. The recognition of the elected directors is by the same virtues, abilities, performance, prestige and so on. Yangmou politics means to win people hard to avoid the next defeat: to lose people means  to not worry about being retaliated against.

(C) Democratic elections guarantee the quality of personnel in decision-making bodies. If one wishes to become a director then one must first go through the primaries. A joint recommendation of 10 people is required. Then, there is a re-election. Finally, there is a real election of the board where one must convince the voters of the subsidiaries. One must win the trust of others in the subsidiaries. Finally, one must win at least 400 votes of more than 500 people who are veteran employees, team leaders and cadres with more than 10 years of service to enter the Board. It may be difficult in democratic elections to select a super talent as the ancient Han Xin or Wu Qi, but it also avoids the mediocrity.

(D) Democratic decision-making can effectively avoid a lot of bold, arbitrary decisions. Any resolution of the Board of Directors shall be a one-person, one-vote of the Directors. Before the voting the parties will be allowed to give full expression of their personal views. This mechanism can roughly guarantee the correctness of decision-making, but also can mobilize people involved in the decision-making to implement the initiative. (A large percentage of board members will hold the number one position.)

(E) The release of the democratic management of the potential of everyone is to mobilize the enthusiasm of everyone. Democratic management is generally bottom-up management. Usually the grass-roots needs to reflect up for implementation. In the implementation of the "parliamentary system", the afternoon group subsidiaries rapidly increased profitability and produced more high quality products. All employees actively contribute to wisdom thereby rapidly releasing the great potential in a cause and effect relationship. At the same time, democratic management involves co-governance of enterprises through sharing the results of the development of management. Dawu Group employees in the enterprise effectively "co-rule" after the real "share" of the group's development results which also ensures the motivation of all Staff.

Summary and Enlightenment

When the Dawu Group implemented the "parliamentary system" in 2004, it was only a relatively good township and town enterprise. The employees were basically the "old peasants" in the nearby villages, and there were few college students. As an enterprise, its external environment changed. As a business, its requirements for decision-making efficiency is also much higher than the general administrative agencies; as a rural-based farming enterprises, their internal relations between the staff is close and complex.

In the widely popular theory of quality in the external environment with regard to the development stage of view it is in any case not suitable for agricultural and livestock groups or the democratic system. However, within such a group of enterprises in the rapid development stage of the grandparents living together with the "old peasants" along with scholar-led entrepreneurs it is not only suitable to establish a democratic system, but also far higher than the same period of China's economic development. The speed and much higher the quality of development of most enterprises prove the strength of democracy. The management reform of the Dawning Group can also be regarded as a glorious practice of democracy--especially the parliamentary system in China.

No matter how successful is the Big Dipper Group; nevertheless, some people can cite counter-examples to prove the harm caused by democracy; especially, when they come into contact with one-sided information. Then the transformaton of the group can bring us what inspiration? If some of the abstract elements of the transformation of the afternoon group can be summed up then one can find similar democratization of the country as an analogy. In a broader context one can get some inspiration.

(A) The most powerful force to take the initiative to promote reform. To ask about who has the largest of influence at the afternoon group it is undoubtably Sun Dawu himself. New Year's Day is also Sun Day afternoon to promote the implementation of the afternoon. One of the most powerful forces takes the initiative to promote the reform of democratic management. The process will no doubt be smooth. The executives and ordinary people may not be able to understand the intention of this system, but with the implementation of this system over a period of time we will get the New Deal co-governance, sharing business opportunities and real gains. The final set up of the system means unbreakable authority.

Sun Dawu--as chairman of the board--never intervened in the Group's decision-making and management. It is only the board of directors and  members of the Council who have the power and responsibilty in this area. Sun Dawu's proposal was rejected by the board of directors more than once. Sun Dawu respected the decision-making power of the board. Sun Day afternoon is now unable to overthrow the system according to his own statement.

A very similar case involved Japan's post-war reforms. After the war the Japanese did not know what democracy was, but under the occupation forces commander MacArthur's strong impetus, Japan opened the reform process, and soon the new system in Japan began on a track of sound development. Whether in the United States or Japan, there are people who do not agree with the views of Marshal MacArthur, but they can not compete, and ultimately these people benefit from MacArthur's actions.

In contrast, those countries that failed in democratization reform, mostly because of the strong force that destroyed the initial system, resulted in a lack of authority and difficulty to implement the system. Imagine Gaddafi, Mubarak and other dignitaries if they could take the initiative to promote their own reforms, and carefully protect the new system of operation. Then their lives would be able to radiate a different luster.

One of the most powerful forces is to take the initiative to promote a civilization and progress of the system. The best care of this system is to regulate all aspects of power to ensure the healthy development of this system at the lowest cost to promote an organizational civilization and progress. This approach  is such a powerful force and the greatest fortune!