Learning to do Business in China: the Evolution of BAT’s Cigarette Distribution Network, 1902-41.

Abstract

This article traces the development of BAT's cigarette distribution network in China. It demonstrates that BAT utilised the connections that expatriate managing agencies had developed with Chinese merchants in the treaty port economy of Shangai during the late nineteenth century, and shows how these linkages were subsequently developed into a distribution network to serve the whole of China. The keys to the success of BAT's selling organisation in China lay in two main areas of competence: first, the company's ability to develop accounting and credit control systems that both monitored its cigarettes and minimised the risk of bad debts; and, secondly, in its ability to foster competition within its own sales teams by creating parallel distribution mechanisms throughout much of China, in particular through the creation of a joint venture with the Chinese-run Wing Tai Vo Corporation. By the 1930s BAT's products were widely available in China, despite the upheavals that acted to undermine the development of a national market there.