Relevnce of the ICA Co-operative Identity Statement to Consumer Co-ops: Japan (1997)

This document has been made available in electronic format
by the International Co-operative Alliance (ICA)

Relevance of the ICA Co-operative Identity Statement to
Consumer Co-operatives : Japan

(Source:  Report of the Special Workshop on ICA Co-operative
Identity Statement - From Theory to Practice, 17-21 Aug,1997
Jaipur, India, pp.110-123)

1.	Disseminating the ICIS Concept
The consumer co-op sector had discussed and adopted  "Consumer
Co-operatives Guidelines" through the International Consumer Co-op
Organization (ICCO) at the global level and "Operating Guidelines for
Consumer Co-operatives in Asia and the Pacific" through the ICA
Consumer Co-operative Committee at the regional level. These guidelines
were developed to interpret and supplement the ICIS from the viewpoints
of consumer co-ops, thereby helping the member organizations to
understand and practice the ICIS in their daily operations and activities.
 They provide the practical relevance of the ICIS, containing ideas and suggestions which can be easily taken into practices.

JCCU has undergone the perpetual process of disseminating the ICIS
concept among co-op leaders, members and employees of primary co-ops
since 1988 when we have made the extensive discussion of Mr. Lars
Marcus' paper on Basic Co-operative Values, followed by Mr. S.A. Book's
Report submitted to the ICA Tokyo Congress. It has also made efforts to
contribute to the global formulation of the ICIS through giving concrete
advises to Dr. Ian MacPherson. We have translated all these important
reports and published books and leaflets. More than 30,000 copies of the
leaflets on the new Co-operative Principles were distributed and widely
studied by the rank and file co-operators. The lectures and study groups
were organized in most of provinces to learn the ICIS. Mr. I. Takamura has
written a book entitled "Principles of Co-operative Management" both in
Japanese and English, which was also an important contribution to
disseminate the ICIS.

2.	Practicing the ICIS in Daily Operations and Activities
The consumer co-ops have made a wide range of efforts to put the ICIS into
practice in daily operations and activities. The relevance of individual
Principles may differ from one country to another and the manners to apply
the ICIS may vary from one organization to another. But here I'd like to
present examples pertaining to the most important principles; Member-
centered principles, Autonomy principle and Community principle.

a)  Back to the Origin: Membership
The membership is the overriding concept in the newly configured
principles; the first 3 principles are concerned about membership itself and
other principles confirm its sovereignty as well. However members apathy
had been the prevailing phenomenon in most of the European co-ops where
managers had sought to attract as many as customers, not confining their
services to the shrinking, indifferent members. The discussion on the ICIS
has brought the apparent change in the policy and practice in some of them.
They found the biggest competitive edge against corporate chains would
exist in the membership itself and started to serve to the members. For
example, the CWS in U.K. re-registered the members aiming to identify the
active members and distributed the monthly magazines "Members" and the
yearly calendars attaching discount coupons. By this membership drive, it
could register some 240,000 core members against nominal 2.6 million
members who are largely dead or sleeping. The CWS has also issued the
Dividend Card to give customers the tangible benefits, anticipating to recruit
new committed members. The consumer co-ops in the Scandinavian
countries introduced the members card with functions of credit card and
recording purchases for calculating dividend.

In Japan, members have been the utmost stakeholders as owners, users and
administrators of the co-ops. Such member-centered policy has partly
reflected the existing legal framework outlawing non-member business, but
more importantly resulted from the lessens acquired from bitter experiences.
Now the members exceed 19.4 million, accounting for 40% of households.
The individual member invests $200 as share capital, purchases $1,700 p.a.
at co-ops and participate to the co-ops' administration through Han groups,
district committees and the Boards. In this regard it can be said co-ops have
established the Japanese model of member participation. However, the
changing socio-economic environment forced co-ops to merge into the even
larger societies to attain the economy of scale where the distance between
ordinary members and the Board/Management became greater. Especially it
was felt difficult to reflect members' voice to the process of product
development which required highly technical skill and the speed. Co-op
Kobe started to evaluate and redevelop the own brand products of ca. 2,000
items through consulting with members panels, aiming to regenerate
members participation, thereby strengthen the competitiveness.

Another example of practicing the ICIS is the initiatives to attain the gender
equality. In Japan, women constitute the overwhelming majority of
membership and therefore the bulk of Board members at the primary
co-ops. However, their representation will be smaller at the regional/
national levels and the higher the ladder of the management. The male
managers at the top level and the female lay members at the grass root is
the typical scene. This phenomenon strongly reflects the societal division
of labour; men working as full-fledged work force to earn money for
families while women staying at home to take care of families or working
only on the supplementary basis. It's also attributable to the low awareness
of gender issues among managers, employees and members. JCCU started
addressing the gender equality since 1991 by forming Women's Council,
making investigation and action plans. The gender issues became
recognized as one of the priority areas among both male and female leaders
and study meetings on gender issues have been organized in some co-ops.
This year such efforts have culminated at the JCCU's Congress when the
female Board members has been increased from 2 out of 32 to 9 out of  40
as the affirmative action. This is regarded as a small but important step
towards more complete gender equality.

b)  Forging Autonomy and Independence
This principle is a most important addition to the past Principles of 1966
when it was not possible to enlist this for political reasons. It is still a
number one priority in most of the developing countries and in transition
economies. In Asia and the Pacific region, the Co-operative Ministerial
Conferences had been conducive in introducing the changes in the legal and
administrative framework towards the more autonomous operations of the
co-ops, but it will take time for them to change the mind sets of both
government officers and co-operative leaders to facilitate the autonomous
and sustainable development of co-ops and the constructive partnership
between them. The revision of ILO Recommendation No. 127(1966) and
the emerging UN Guidelines on Co-operatives will help change
governments' attitude, but more important factor exists in the determination
of co-op leaders and building of managerial capacity to attain real autonomy
and independence.

In Japan, the consumer movement has evolved by its own, namely through
the members' active participation. It has never accepted the government
subsidies nor foreign assistance because it thought such external inputs
might weaken co-op's self reliance and capacity to operate in the competitive
market. In the course of evolution, a number of obstacles had been laid
down by small retailers' associations which had pushed the governments to
press co-ops as the potential competitors. However, co-ops had weathered
such impediments by strengthening membership basis. Nowadays
consumer co-ops enjoy quite an independent position to the central and local
governments, but at the same time tend to become complacent without
effective ties with the civil society. They are seeking to act as reliable
partners with the public and private sectors to solve the most pressing issues
of the contemporary society such as environmental conservation and care
for the aging population which can not be tackled with by co-ops alone.
There exist some joint programs among governments, corporations, NPOs
and co-ops; Green Purchasing Network for encouraging use of
environmentally friendly products in offices and facilities, Life Cycle
Assessment for evaluating alternative processes from production to
disposal, Eco-Life Workshop for enhancing consumer awareness, etc.

c)   Contribution to Rebuilding Community
This is also an important addition since co-op's mission isn't to end at the
service to members; it extends to work for the sustainable development of
their community through policies approved by them. In many parts of the
world, consumer co-ops are making the pioneering efforts for
environmental protection through changing operations to save
energy/resources and reduce emission/wastes which cause negative impacts
on the environment. They are also active to raise consumers awareness and
behaviour affecting the environment. Some community co-ops are
supplying daily necessities to the shrinking population in the remote or
mountainous areas.

The extraordinary event had shown the invariable ties between co-op and
the community when a great earthquake had hit Kobe region in January
1995. More than 6,000 residents were killed while all the life lines (water,
electricity, gas, telephone, transportation etc.) had fatal damages. 15 stores
and head office of Co-op Kobe had been totally destroyed. Under such
circumstances, Co-op Kobe resumed its operations to serve the populations
and communities at large on that day. The managers and employees reached
to their stores on foot or by bike and sold the available products at the
regular or even cheaper price at the temporary stalls. The joint purchase
operations were also resumed by hand-writing because the central computer
system was destroyed. Members also started to help neighbours and victims
voluntarily. The co-op employees of more than 10,000 man-days rushed to
Kobe with their vehicles and supplies from all over the country. In addition,
Co-op Kobe had supplied foods and blankets to the local rescue centres
based on the agreements with local governments in case of emergency. It is
said such efforts had contributed to prevention of panic situation and early
stabilization of peoples life. It was often cited a member is  saying "Co-op
will never cheat us as Co-op is ours". Such a contribution was made
possible since Co-op Kobe has made a long standing endeavour to root in
the communities for several decades and won the confidence among the

3.	Critical Experiences Detaching from the ICIS
At the same time we have witnessed a number of co-ops detaching from the
ICIS in the past decades; facing tougher competition, they imitated the
competitors and lost the raison d'etre to be co-operative. In most cases they
failed to survive as the business enterprise as well. Such negative
experiences only contributed to strengthening our belief in the ICIS. Here
I'd like to depict some critical experiences to draw some lessons.

a)	Financial Crisis and Bankruptcy
The so-called bubble economy had influenced management of some co-ops
which faced the serious financial crisis including bankruptcy. A small co-op
in Tokyo went bankrupt this year mainly because opening of the extravagant
store and restaurant. Three consumer co-ops in Hokkaido have faced the
serious financial crisis since last year and one of them was filed in the
compulsory arbitration. They are now undertaking restructuring and
rehabilitating measures under the financial and technical support of JCCU
and other co-ops. The common features of these events are; management
domination in the Board, its inappropriate decision on investment,
manipulation of accounts, lack disclosure of the real state of finance etc. In
any case they are breaching basic values of honesty, openness and social
responsibility. These matters were critically discussed in the JCCU
Congress this year and special solidarity fund and support organism will be
created in JCCU.

b)	Lost Autonomy and Member's Control
In the Industrial countries after World War II, generally speaking consumer
co-ops have had neither subsidies nor interference from the government. In
other words, they are regarded as the purely private entities as the corporate
enterprises and therefore have the equal footing with the latter. In this regard
Co-ops' autonomy and independence is a self-evident matter. However they
have risks to be dominated or converged by the private sector. In some
countries, co-ops have raised capital from external sources including the
stock market or converted to the joint stock companies. In those cases,
members control was restricted to the extent of the outsiders interests which
might dominate the whole structure. This had happened when Co-op AG had
been controlled by banks and sold to a holding company in 1989. The CWS
was threatened to be taken over by a young entrepreneur backed by the City
but successfully fought back against such attack in April this year. These
recent events have demonstrated the importance of the ICIS.

4.	Integrating the ICIS into Long-term Planning
The ICIS should be disseminated not only among co-op leaders but the rank
and file co-operators. It can be put into practice in the daily operations and
activities, but should be integrated into long-term planning to ensure the
sustainable application of the ICIS. JCCU adopted "Five Year Plan of
Consumer Co-ops during 1996-2000" last year and "Co-op Ideals and
Vision for Consumer Co-op for the 21st Century" this year in which the
ICIS is incorporated.

"Five Year Plan" has set the ICIS as a starting point, under-standing that
co-ops could play their roles in the historical turning point and towards the
next century only through clarifying Co-operative Identity as independent
membership organizations and strengthening the contribution to the society
at large. It has placed special emphasis on the "increased social
responsibility", "openness in co-op administration", "reform of business
operations" and "intensified co-operation among co-ops".

"Co-op Ideals for the 21st Century" crystallize the beliefs that will sustain
the organization for decades. The ultimate goal of Co-op Ideals is "Creation
of a more human lifestyle and sustainable society through the concerted
efforts of individual citizens". While the Vision describes how the
co-operative movement should develop over the next ten years. The adopted
Vision is "Co-ops will play a strong role in creating a more human lifestyle
and sustainable society through operations and activities that enjoy the trust
of the membership."

Appendix - I
Consumer Co-operatives Guidelines
In view of the preparation of the document presented at the Tokyo Congress
in 1992, the entire world co-operative movement worked at how to update its
values, principles and objectives.

During four long years, a committee collected, selected and systematised a
large amount of different contributions; the outcome were important and
significant conclusions and proposals which have yet to be reviewed and
improved before the formal verification takes place in the 1995 Congress. In
other words, we are in possession of some solid and concrete indications on
which to develop future ideas, and of precious reference points that will be a
base to the complex work we have to carry out.

The co-operation concept is so full of history and humanity that its almost
seems abstract and outdated. The concept is certainly not to be implemented
in a single and compulsory way, since its nature allows it to be adapted to
very  different geographic, economic and social conditions.

Let's ask ourselves as openly and sincerely as possible which role is to be
entrusted to co-operation within the structure and dynamics of society. In
this connection, we find the reply given by Albrecht Schoene, Eurocoop's
Secretary General, convincing, and we therefore have nothing to add: "The
co-ops must constantly bear in mind their traditional values and draw their
strength for the future in their history. Freedom of exchange, equal rights
and equal progress and solidarity opportunities among citizens are the
co-operative ideas underlying the new global economy. Progress and
democracy are among other things the conditions that favour the
development of co-operation in peace and harmony."

The unitarian structure of the co-operative principles defined by the ICA
urges us all to identify the logical system within which the inevitable
differences existing between our co-operatives can be  harmonised and

In this connection, we think that we can identify a few particularly
significant responsibilities which are relevant to the matters of our concern.
In other words, these responsibilities are towards:

*	members and procedures of co-operative democracy
*	our heritage and ideals
*	consumers
*	employees
*	suppliers
*	the environment
*	public institutions
*	the world community
*	the entire co-operative movement

Let's remember that the above mentioned responsibilities are more or less
directly conditioned by the requirement of carrying out effective trade
activity, and consequently some good results.

Effective trade activity and good results are obviously indispensable for the
co-operative societies obtainment of the profits that are essential in order to
offer services to members and to guarantee an effective social policy; in
other words, to fulfill the above mentioned responsibilities.

We have made a list of nine responsibilities which can generally speaking
be considered as having the same importance. Nevertheless, the first is
certainly the most representative.

Responsibility towards members means that members, as co-operators, are
subject to and bearers of "natural" rights which the co-operative organisation
must respectfully, without any exception. The rights deriving from being a
"member-user" and at the same time a "member-owner" must especially be
developed and protected. The second role in particular requires the adoption
of economic participation factors that involve the member as much as
possible, so as to perform the function of programming strategic and
administrational directions and of controlling results. The co-operative
movement is aware that definitive control formulas are difficult to adopt;
however, progress has to be made through experimental innovation
processes in order to keep co-operatives and the movement as a whole - on
the right path and to avoid bureaucratic and technocratic degeneration. Thus
responsibility towards members also becomes responsibility towards the
democratic principles, including participation, which means establishing
rules that apply to all with no exceptions (the main one being one member
one vote). This means preventing any arbitrary behaviour in the functioning
of the organisms, as well as any manipulation of democratic processes, and
promoting the transparent training of managing groups, and the widest and
most active possible participation of the social base in the choices made by
consumer co-operatives.

Last but not least, let us forget that, as far as the necessity of carrying out
effective trade activity is concerned, responsibility towards members will
always mean offering them with concrete economic benefits, coupled with
good social, cultural and leisure time facilities.

Responsibility towards our heritage and ideals is in tight connection with the
above. In particular, the responsibility towards the co-op heritage is the
essential condition for co-operation to exist, and it is the tool without which
all becomes mere theory. It is worth stressing that a decisive portion of the
heritage in co-operative experience lies in its image, that is to say, the
external and general reflection of the behaviour of all those living and
working within the co-operative movement. This fact stresses the
importance of a specific notion of responsibility towards our ideals, which
implies defending and updating the characteristics that distinguish consumer
co-operatives from other forms of distribution, and organising member and
consumer training wherever socially useful. It is important to stress the fact
that consumer co-operatives are not only rational and efficient in their trade
activities, but also in the social and cultural field, being the forerunners of a
unique model which others are trying to reproduce in vain.

The remaining seven responsibilities pertain more directly to management\

Just as important is the responsibility towards consumers which implies
applying a competitive and effective policy that satisfies consumer
requirements in the following areas :
*	competitive prices (which involves elaborating a price policy aimed
	at protecting purchasing power)

*	product and assortment quality (which involves responding to the
	requirement for safety and health protection)

*	improved service (which involves structuring shopping according to
	the information requirements of the consumer and the organisation
	of his/her time).

More generally, this requires the co-operatives' commitment in keeping in
step with consumers, by studying society and individuals, in order to get a
better understanding of the market and to promote an increased awareness in
choices and models of consumption, while also bearing in mind the
growing cultural and individual differences.

Responsibility towards employees, which is not limited to recognising
contract guarantees, protecting work positions or encouraging participation,
yet which also extends to the duty of organising ever more advanced and
original forms of employee involvement in co-operative management, as
well as in the definition of economic and social strategic objectives.
However, considering the economic crisis that has hit many co-operatives,
it is important, for future plans, that employees be just as aware, as is the
management, of the need of being operative and of developing the features
that distinguish us in the middle of ever fiercer competition. From this point
of view, the development of serious and comprehensive training programs
is fundamental, not only in order to exploit new and existing skills, but also
to face the sudden market changes.

Responsibility towards suppliers expresses the contribution to market
transparency and to more functional relations aimed at reducing costs while
increasing consumer benefits. It also involves the commitment to sustaining
the manufacturing companies which work for quality in environmentally
acceptable ways and at reasonable costs.

Responsibility towards the environment is an issue which is of ever greater
concern to our members. 

The seriousness of the problem is not only limited to local or circumscribed
areas (dangerous nuclear plants, animal species in extinction, healthy food,
etc.), but concerns humanity in general, as well as the health of our planet.

Consumer co-operatives intend to take action on the market in order to
counteract the over-abundance produced by industrial societies, to build a
relationship with nature by using the resources without destroying them, so
as to set up an eco-compatible form of development.

This entails the urgent establishment - as a complement to the "production
culture" - of a "reproduction culture", requiring the constant attention of
social and economic entities to all the recycling possibilities of the materials
used in manufacturing products.

Responsibility towards public institutions is the necessity of interacting and
communicating with the public authorities without fear or hesitation, in
order to serenely call their attention to the entrepreneurial importance that the
co-operative movement enjoys within the national economy, as well as to its
role in social progress and in the promotion of citizens.

Responsibility towards society is, in a certain sense, the sum of various
specific responsibilities. The themes which require our involvement could
for example be: solidarity, the needs of humanity and peace.

Through Co-operation, various groups can also aim at improving quality.
We are referring to consumer organisations, environmentalist groups and
voluntary social organisations. Operative goals and social alliances could
be established with these groups which, we trust, share the co-operative
system of values, in order to obtain improvements, in the interest of all.

Responsibility towards the entire co-operative movement means taking part 
n the life of the national and international organisations, and practising
"external mutuality" which represents the most advanced frontier in world
co-operative development.

Operating Guideline For Consumer Co-operative in Asia & The Pacific
	Consumer co-operatives are both social and commercial entities.
They exist to provide their members with quality  goods and services at
reasonable prices. At the same time they must also make profits to grow
and give a reasonable return on funds invested by members. They practice honesty, openness and social responsibility in all their activities.

This operating guidelines is prepared to assist consumer co-operatives
reflect co-operative characteristics in their activities.

1.	Economic Viability

The first and foremost aim of consumer co-operatives should be to achieve
economic viability. Without profits, members would not enjoy any
economic benefit and the co-operatives themselves would eventually have
to close down. This implies that they should be run on sound management
principles and must be fully competitive with private enterprise. They
cannot expect privileged treatment by the Government as this would result
in less of autonomy weak structures and not robust growth.

2.	Distribution of Surplus

When there is a profit, funds should be first set aside for developing the
business. This is necessary to secure the long term future of the
co-operative. Next members should receive a return based on the extent to
which they patronize the co-operative. At the same time members who
contribute capital could be paid a competitive rate of interest.

3.	Meeting Members' Needs

Consumer co-operatives are member-driven organizations. As such they
need to provide goods and services that cater to the changing lifestyle needs
of members. Those needs should also be met effectively, which implies
superior service, efficiency and competitive pricing.

4.	Honesty and Openness

Consumer co-operatives traditionally have a special commitment to honesty
which distinguished them in the market place. They should adopt good
business practices. Goods sold should be fresh, wholesome and well within
expiry date. Items should not be short weight.

Co-operatives also have a bias towards openness, they should regularly
reveal to their membership information about their operations. They should
also be prepared to provide all the information a customer needs to know in
purchasing a product or service.

5.	Ongoing Education

There is a necessity that elected leaders and managers are competent and
honest. Ongoing education and training are provided to members, leaders,
managers and employees so that they can carry out their respective roles
effectively and also realize their full potential. Employees should be fairly
compensated according to the standards of the market place so that good
people are attracted and retained.

6.	Effective Management

A co-operative must have effective management. Elected leaders as
representatives of the members have specific roles and responsibilities of
laying down policies and guidelines and general supervision of the affairs of
the co-operative. Hired professional managers should be given considerable
scope for the exercise of initiative, judgement and enterprise. Elected leaders
should not interfere with the day to day running of the co-operative which
should be left in the hands of hired professional managers. Members as
owners should actively participate in electing competent leaders and
influencing the basic policies of the co-operative.

7.	Environmental Care

Consumer co-operative are also concerned about the deterioration of the
environment in which we live in. Much can be done to resolving many of
the problems. Mobilizing public opinion is a task which co-operative with
their large membership bases can do with remarkable effectiveness.
Co-operatives should also adopt business practices which are respectful of
the environment.

8.	Community Responsibility

Consumer co-operatives should conduct themselves as socially responsible
corporate citizens and be actively involved in local community causes.
Participation in community welfare caused is highly encouraged.

9.	Co-operation Among Co-operatives

Co-operatives can serve the interest of their members more effectively when
they collaborate among themselves at all levels. When co-operatives actively
co-operate with each other, the whole can be much greater than the parts.]

* Mr. Akira Kurimoto is the Manager of  International Department of
Japanese Consumers Co-operative Union (JCCU), Tokyo, Japan