AbstractThe advent of the private-owned non-profit museum is a
consequent of that the central government reformed the cultural management
system and cultural policy. In terms ofenactingthe new policy on museums industry
cannotfollow
the development of the private-museums, the private-museums encountered aseries of issues in operation. This article lists some issues and explains fromthe perspective of the cultural policy. Thus, it provides some suggestions forthe central government and defines the role of the government in managing andsupervising the private-museums. The suggestions are not detailed enough becauseof a lack of field investigation.
Keywordprivate-museum, public
institution, arts management, cultural policy
Introduction
Private-owned non-profit museum (PNPM)
is a new type of museum in the recent 20 years in China, as the government
encourages the development of cultural industry since 2000.According toMarket
survey of Chinese Museums(2014), the number of PNPM increased quickly andPNPM is located in 28 provinces except Guangxi, Sinkiang and Tibet. However,the percentage of PNPM only occupied 11.9% of total number of the museums (theprivate-owned and the state-owned) in China.Although PNPM is not a new
type of museum in the western system, the development of PNPM in China is not
mature in comparison with that of westerners. In many cases, learning the
experience fromthewestern infrastructureis less likely to address these issues directly. This is because the issuesshould be addressed in the domestic circumstance, the laws and policies in thisfield. However, the policy is not effective enough in addressing the issues.
1.The laws and policies towards PNPM
1.1 Theprimarylegal definition of PNPM
In 1996, Ma Weidu obtained permissionto establish Guanfu classical art museum, the first private-owned museum inChina. Meanwhile, another three private-owned museums also were allowed toestablish. At the beginning, these museums were treated as ‘public institutions’.In other words, these museums have equal status in comparison with thestate-owned museums.
1.1.1 The changes in the policies relating toPNPM
PNPM is developing quickly since the government formulatedthe new law in 2002. The government acknowledged that the private collectionwas a part of the protection of cultural relics according toLaw of the People's Republic of China on the
protection of cultural relicsandRules
for the implementation of the protection of cultural relics.According toAnnual report on development of China’s
cultural industries(2003), the museum industry is defined as a part ofcultural industries. In 2005, the state council enactedSome provisions on the entry of non public capital into the cultural
industryin which the government encourages the private-capital to investin museum industry.
The most recent policy in this field isOpinions on promoting the development of
private museums (2010)enacted by the central government. In the opinions,the central government intends to reform the registration process of PNPM andstipulates that the local government should provide the relevant resources tosupport the development of PNPM. Nevertheless, this policy is informal becauseit doesn't have enough legal effectiveness. It is just official opinionrelating to PNPM.
1.1.2 PNPM
as private non-enterprise entities
In 2000, the central governmentstartedto adjust the policy towards PNPM. PNPM was guided and managed by the statedepartment for cultural administration and cultural heritage sector before2000. After the new policy was implemented, PNPM is supervised by civil affairdepartment and defined as ‘private non-enterprise entities’. According toInterim Regulations on the registration and
administration of private non-enterprise units(1998), ‘privatenon-enterprise entities’ is a sort of not-for-profits organization (NPO).
1.1.3PNPM as not-for-profits organization
It is internationallyaccepted that ‘Profit distribution limit principle[1]’is the primary principle of NPO in operation. However, the central governmenthas not formulated the legalization of what is ‘not-for-profits activities’ andadopted this principle in supervising and managing PNPM, especially in taxpayment process.
To cope with thissituation, some regional governments formulated the policy to define NPO so as tomanage it more effectively. For instance, Zhejiang provincial governmentformulatedInterim Measures for the
administration of private non enterprise unitsin 2004. In other words,although the local governments have interim measures to manage PNPM, theinterim measures are not the central government policies and laws. It seemsthat these measures could not protect the legal rights of PNPM effectively inpractice.
Although governments havethe policies of tax exemption to NPO, but the policies are not systematic. Inthis case, the directors of NPOs are less likely to know their legal rights intax exemption. In fact, according toAdministrative
measures for the administration of the enterprise income of the social
organizations of public institutions of public institutions, there are ninecases that NPOs could get tax paid back.
Gidron (1992) clarifies therelationship models between NPOs and governments as four models, governmentdominant model, dual model, collaborative model, and the third sector dominantmodel. From the legal definition of PNPM, it could argue that the operationalmodel of PNPM is the third sector dominant model. This model is the converse ofthe government dominant model. In this context, the link between PNPM andgovernment is an intimate connection. Wuthnow (1991) argues that NPO, marketand government, these three elements depend on other two elements directly. Thecommunication and exchange (information and resources) among three parts arenecessary. The issue is that PNPM lacks a connection with government. Thisissue will be discussed later.
1.1.4Register as PNPM
AccordingtoMuseum management regulations(2001),Beijing, individual could apply to establish a museum during the processes ofregistration, qualificationand approval examine and verify for free.
1.2 The state-owned museums and PNPM are in the unequal status
Although the government formulated a series of laws
and policies in relation to PNPM, it could not get the same treatment as the
state-owned museums.There is a little legalprotection in tax payment and sponsorship for PNPM. In many cases, mostinvestors may be unwilling to invest their money in this field. Furthermore,the government approves of that private capital is able to invest in museumindustry but it is not allowed to invest in the state-owned museums. Meanwhile,there is no specific regulation and policy in how public capital invest inPNPM. On this occasion, they differ in managing system.
1.2.1 The state-owned museums as ‘public institutions’
According toProvisional
Regulations on the registration and administration of public institutions(2004), ‘public institution’ is established by state organs or governments andfunded by governments and aims to develop social welfare. In this case, thestate-owned museums could negotiate with government directly but PNPM cannot.It is widely known that China is a centralized state and the central governmenthas more financial power comparatively. Governments play a determined role inpublic projects. As governments supported organizations, the state-ownedmuseums have moreopportunitiesto participate in public programs. It couldargue that the relationship model of the state-owned museum is governmentdominant model.
The generations of1960-1970s who grew up in the environment of planning economy don’t trust thatPNPM could have the same function in comparison with the state-owned museums.It seems that the old generations may have bias on PNPM.
1.2.2 Taxdifference
Although PNPM asprivate non-enterprise
entities could get tax abatement according to Administrative measures for the collection and administration of income
tax on private non-enterprise units, thereis no formal law of what is ‘not-for-profits
activities’ in Chinaas previous mentioned. Civil department and commerce department’s
opinions differ in interpreting of ‘not-for-profits’. In this case, as NPO, if
a PNPM has relevantoperatingactivities, it would be required to pay for the
operating taxes by commerce department.
1.2.3 Employment
The long-term employee in public institutions iswell paid with a comfortable working environment. In addition, most employeeswould be employed during their whole lives until their retirement. In thiscase, working in the state-owned museums is like a steel bow among the public.Most professionals in the field of arts management prefer to work in thestate-owned museums. Conversely, most PNPMs face a fact that only few talents arewilling to work in PNPM. The lack of professional staffs is a serious issue inPNPM because the staffs in PNPMs are not well paid with a comfortable workingenvironment.
1.2.4 The lack of specific laws and a single department to manage and
guide PNPM
Thecompetent authorities of
the state-owned museums arethe state department for
cultural administration and cultural heritage sector. Correspondingly, the competent
authority of PNPM is civil department in registration process and its operating
activities are supervised and managed by Commerce department.In other words, thegovernment does not have a single department or agency to guide and managePNPM. A lack of the specific policy to manage and guide PNPM makes they areless likely to map their market correctly.
2. The problemsand
factsinoperating PNPM
Theestablishments of Shangheart museum, Dongyu art museum and Taida museum were the focus of most attentionin 1998. These museums are all private-owned and sponsored by enterprises.Unfortunately, these museums were closed because of a lack of money andoperational skills in 2001. It seems that most PNPM would survive stressfullyat beginning stage. Although there are some PNPMs operating successfully, suchas Today art museum, they also have some issues in operation.
2.1 Some NPOs registered as enterprise to operate their organizations
For example, Ullensart centre, founded byGuy & Myriam Ullens in 2006 and located in 798 art district that aims topromote Chinese contemporary art and investigate international and Chinesecontemporary art. As a not-for-profits independent space, Ullens foundation hasinvested millions of Euro to operate this area. However, because the centralgovernment has not formulated the policy to support and guide this field andregistration is comparatively complex, Ullens foundation had to register ascommercial enterprise to operate this space.
2.2 PNPM prefer to apply business strategy to address financial issues
Many PNPMs prefer to apply commercial operationalmodel to calculate the budget. On this occasion, if PNPM well calculates itsbudget, they will consider more about profits. However, this behavior motivatesthe investors to consider more about the profits rather than its non-profit purposesand objectives. For example, Wang (2012) said that some PNPM in Beijing soldtheir collections to make profits. It seems that a part of PNPMs don’t havetheir principles in operation.
To apply commercial strategy could address thefunding problem and hold relevant commercial activities could increase thenumber of donation, but the manager should know that the commercial activitiesshould not be irrelevant because holding the irrelevant activities leads to thedecrease of the number of donation directly (Rendina Herman 2001). In manycases, when PNPM intends to apply business strategy, they should investigatethe attitude of potential visitors.
2.3 The development of PNPM isquickly but a high percentage of private collectionsare fakes
According toEcological white paper on Chinese private museums(2012), the number ofregistered PNPM is more than 200 in 2007 and this number is more than 1000 in2012.
The state department ofcultural administration
and cultural heritage sectorcommissioned China museum association to investigate the
Standardization of PNPM. The data shows that nearly 90% of total PNPMs are not
standardized in operation. The most significant issue is counterfeit.Theauthenticityof private collection is a serious issue in this field. Nevertheless,government has not formulated the laws to regulate this area (Chinaartnet,2014).
2.4 The lack of partnership and depend on large companies
Since the government allowed private capital to
invest in museum industry (2005), property companies in this context, aimed to
build art museums in communities in order to promote a community culture.
Meanwhile,the museums could become an added value incommunities. For example, Today Art museum is a PNPM and invested by a propertycompany in Beijing. The relationship between PNPM and large company is notpartnership or sponsorship. In fact, some PNPMs depend on large companiesfinancially and some PNPMs are even the departments of large companies, such asZhengda Modern art museum in Shanghai. The large companies don’t anticipatethat PNPM could make profits in its operating. However, Yu (2008) states thatthe property companies wish PNPM would operate independently in the future butthe central government should define the legal status of PNPM more clearly andreform the policy towards NPO.
2.5 PNPM is regarded as apart of cultural tourism industry
There are the plenty ofdomestic tourist resources in China. It is widely acknowledged that museumscould be developed as a part of cultural tourism industry. In this case, theinvestors of PNPM think that the tickets could become the main income of PNPM.Although PNPM could not make enough profits by tickets, it boosts the tourists’consumption in this case. This is the motivation for the establishment of PNPM.
The museum industry hassocial benefits but is hard to make economic benefits. Conversely, the tourismindustry is profitable. To connect the museums with tourism industry is a newway to attract visitors. The typical instance in this area is the Jianchuanmuseum group in Sichuan Province, the biggest private-owned museum group inChina, located in the town of Anren. The museum group is opened to the publicsince 2005.The investor of the museumgroup, Fan Jianchuan thinks that developing PNPM as a part of cultural industryis a good developing model. In addition, Fan is also the director of the museumgroup. Fan wishes to develop the museum group with tourism, entertainment anddining in order to make the town of Anren to become a place of interest withcultural features.Themain income of this group is not only ticket fee but also from dining andaccommodation. Li (2012) states that GM-TCD (General Museum Tourism ComplexDevelopment) is a main trend of the development of museum industry, meanwhile,this model also encountered a series of issues.
2.6 The state-owned museums are dominant but develop slowly
As
previous mentioned the state-owned museums are ‘public institutions’. In China,
public institutions havebureaucratic characters. In
other words, the museums are unwilling to change their infrastructure of
management. In addition, the operational model is based on planning economic
system and could not be operatedliberally. Public institutions are managed and guided bycultural department directly. Du (2006) states that government’s attitude andplan influence the operation of museums directly in practice. Because they arepublic ownership, they are not allowed to cooperate with business to someextent. Most the state-owned museums focus on Chinese traditional Art forms andantiques protection. Furthermore, Li (2015) argues that most the state-ownedmuseums lack residential curators. In a word, the internal development(talents, collections, the ability of curating) of the state-owned museums isslow even though the external development (buildings and facilities) is fast.
The operational model of the state-owned museums hasnot adopted international principles and encountered the issues relating to thecooperation with foreign organizations. The central government has acknowledgedthat the state-owned museums as public intuitions should be reformed in orderto connect with international model. According toNational culture development plan(2012), the central governmentwould reform the museum industry. It predicted that the percentage of PNPMwould be nearly 50% of total museums in next 50 years. However, according toThe discourse about reform of the social
security system for the labor and personnel in the cultural institution (2007),the reform of public institutions requires a high level of budget.
2.7 Unclear objectives inoperation
In the
museum industry, the state-owned museums arethemajorityin China. In addition, as previous mentioned, PNPM cannot get equal treatmentfrom the government. This situation would not be changed in a short period.Nevertheless, some PNPMs may borrow operational experience from the state-ownedmuseums in practice, such as the themes of exhibition. Wang (2012) argues thatas some investors don’t know the authentic function of PNPM, they stillconsider PNPM a place to contain and display their private collection. Educationalfunction, in this context, is not their objective in operation. PNPM wasregarded as a container for private collection at the beginning of itsdevelopment.
3. The strategies in this
field
3.1 Simplify the Registration Process of PNPM
The registration process of PNPM mainly has three
parts, apply, qualificationand verify, which meansthat the applier is required to go to the civil affair department more thanthree times to finish the process. ‘Deepening the reform of the system’ alwaysappears in the central government’s documents because the government acknowledgedthat the old bureaucratic infrastructure was problematic. In this case, theidea of simplifying the registration process is practicable. It could simplify threeparts of the whole process to two parts, apply and verify. The applier couldsubmit all the qualification documents at one time.
3.2 Clarify the tax exemptions
The central government has to make the tax
exemptions more systematic and understandable for PNPM in order to allow PNPM
to know the tax exemptions towards their operational activities more easily. In
addition, the central government could stipulate that theindustryand commerce department has responsibility to notice PNPM their legal rights inrelation to the tax exemptions. For instance, the department could publish theinformation of tax exemption on its website.
3.3 Build a specific counselto manage and guide PNPMor empower the civil department to manage PNPM
In comparison with the state-owned museums andcommercial galleries, there is no definite department to manage and guide PNPM.PNPM is supervised by civil department and commerce department as previousmentioned. The central government should clarify which department has morepower in supervising PNPM. The government also could set up a specific counselto manage PNPM. However, the government would not have the budget to found thiscounsel. On this occasion, the government could stipulate that civil departmenthas a determined role in supervising PNPM.
3.4 Encourage the state-owned museums to cooperate with PNPM
The state-owned museums have more professionals and
collections but they are not good at operatingmarketing and promotion.Conversely, PNPMs that apply business strategy in practice have marketingprofessionals. In this case, the central government could encourage thecooperation between the state-owned museums and PNPMs in the cities likeBeijing, Shanghai and Guangzhou through the policy. For example, if themarketing talents from PNPMs could increase the number of visitors in thestate-owned museums, PNPM would get the financial rewarding from thegovernment. The new policy could allow the state-owned museums to employ theprofessionals from PNPMs for a short term.
3.5 Allow state-owned capital to invest inselectedPNPM andthe portion of private-owned capital to invest in the stated-owned museums
Some PNPMs develop successfully, such as Today Artmuseum. In this case, the state-owned capital could invest in these PNPMsbecause these museums have more experience and skills in operation and usingthe money effectively.
There is fact that the state-owned museums also have
financial burden. Li (2015) states thatthese state-owned museums are more likely tochoose the laziest way, renting the museums as venues for other organization orindividuals for not-for-profits purpose to survive. Although ‘public ownershipas the main form’ is a basic policy in China, it does not mean that theprivate-owned capital is not allowed to invest in the state-owned museums. Thegovernment could allow a portion of the private-owned capital to invest in the state-ownedmuseums in order to enhance the cooperation between the state-owned andprivate-owned museums.
3.6 Participate in buildinga league of PNPM
As the container of private collections, PNPMs lackthe intercommunication. In this case, to build a league is an effective way topromote experience sharing and information exchanging. In addition, the leaguecould promote the idea that PNPM is not only a place to conserve and display privatecollections but also a field for public education and promote their reputation.
Conclusion
At primary stage, PNPM is like a container of private
collection. It depends on investor’s financial condition directly. As the law
of tax exemption to PNPM is not clear and systematic, it prefers to apply
commercial model in operation. Furthermore, the investors don’t pay much
attention to the educational function of PNPM. As a result, it makes no clear
difference betweenPNPM and commercial gallery.In this case, thedevelopment of PNPM is problematic although the scale of the private-ownedmuseum industry is increasing.
Even though there are a series of issues inoperating PNPM, the central government’s policy is not effectively enough.However, the government has acknowledged the important role of PNPM in publiceducation and the development of PNPM could help the government address theissues in the state-owned museums. Furthermore, museum is in a key position ofthe cultural tourism and entertainment industries. The government intends toreform the cultural system of the museum industry but this reform is complex.This article gives some suggestions to address the issues in operating PNPMfrom a policy perspective. The suggestions define the government role inmanaging PNPM and state that the government should create a reasonableenvironment for PNPM in order to encourage it develops positively. Nevertheless,the detailed methods and further field investigation are needed.
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[1]The profits are not distributed to the owners or operators in NPO.
Conversely, the profits are distributed to the stockholders in commercial
organizations directly.