What is Profit Distribution?

Originating from the characteristics of cooperatives, which operate like businesses but with a community nature, the profit distribution in cooperatives must adhere to the principle of ensuring the development of the cooperative and the benefits of its members. The profits earned by the cooperative during its operation, after deducting production and business expenses and the establishment of cooperative funds, will be distributed to members based on their capital contributions, labor, contribution, and the degree of service utilization of the cooperative.

To be specific: the profit distribution in cooperatives is based on the following factors:

- Members' capital contributions to the cooperative;- Labor contributions within the cooperative;- Services provided by the cooperative to support the production and business activities of the members.

The profit distribution is based on each member's labor, contributions, and the degree of utilization of the products and services provided by the cooperative, avoiding uniform distribution. However, to some extent, distributing profits or sharing the cooperative's earnings based on capital contributions could undermine the spirit of cooperation, emphasize profit motives, and potentially transform the cooperative into a business or joint-stock company model, losing its inherent "community" essence.

Therefore, the profit distribution must ensure fairness, equality, and the development of the rights and benefits of both the members and the cooperative as a whole.

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