ABSTRACT
The rural industry in southern Jiangsu was known for collectively establishing factories to drive the overall community development. Household contracting had a huge historical impact on all the villages regardless of their former development model. Contracting output to households was a move toward de-collectivization. One of the core issues facing household contracting was how to deal with collective assets. Hecun Village used a combination of decentralization and retention. Externally, the whole village was mobilized to find and build a market network for raw materials, funds and sales outlets; internally, certain market-oriented operational elements such as the performance evaluation and the contracting system were incorporated into the collective system. Under this collective management model, the incentives that drove the company managers were higher income and higher social status, as well as management experience. In Hecun Village, the biggest impact of household contracting on the power structure of the rural collective was the highlighting of the importance of the village organization.
