The Changing Nature of Sino-Foreign Business Relationships, 1842-1941

Cox, Howard and Chan, Kai Yiu (2000) The Changing Nature of Sino-Foreign Business Relationships, 1842-1941. Asia Pacific Business Review, 7 (2). pp. 93-110. ISSN 1743-792X (electronic) 1360-2381 (paper)

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Abstract

During the second half of the nineteenth century, foreign business enterprises relied considerably upon the service of compradors to extend their economic interests in the Chinese economy. Utilised initially to overcome the barriers presented by language difficulties, compradors were employed by western firms to undertake a variety of tasks covering both supervisory and co-ordination functions. With the growth of industrial interest by foreign businesses during the twentieth century, however, the comprador system fell into disrepute and during the 1930s was largely abandoned.This paper employs research based on primary source materials to trace this institutional transition for two specific cases. The Kailan Mining Administration (KMA), whose origins are to be found as an Anglo-Belgian free-standing company, took control of both the Kaiping and Lanchow coal mines in 1912. In order to expand its sales, the company employed the services of the comprador Liu Hongsheng who successfully built up the company’s market around Shanghai. In doing so, however, Liu became an important force in coal distribution in his own right, leading to tensions that were resolved through the creation of a joint venture operation called the Kailan Sales Administration (KSA) in 1925.British-American Tobacco (BAT) was set up in 1902 to administer the foreign markets of the American Tobacco Company and Britain’s Imperial Tobacco Company. In China, a distribution system was created using many Chinese collaborators of whom two were of particular importance. Wu Ting Seng, a member of the Chinese gentry, played a crucial intermediating role for the western company in a variety of its dealings with the Chinese. Cheang Park Chew, on the other hand, was an influential Cantonese merchant whom BAT used to distribute its goods throughout the Shanghai region. In both cases, BAT chose to alter the institutional arrangements with these collaborators from the contractual form to joint venture partnerships, unsuccessfully in the case of Wu, but with phenomenal success in the case of Cheang’s mercantile enterprise, the Wing Tai Vo Tobacco Corporation.

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