Marketing the Multinational in Shenbao, Shanghai, 1872–1889

Abstract

Foreign multinational enterprises (MNEs) operating in China, especially during the nineteenth century, have attracted less interest from historians than Chinese firms and expatriate merchant houses. However, in this period, MNEs shaped advertising in Shenbao, China’s most vital modern Chinese-language newspaper. Through our examination of the advertisements they placed during the newspaper’s first phase of publication, 1872–1889, we argue that MNEs were more significant to the history of business in China than heretofore recognized. We contend that they influenced Chinese print media advertising by pioneering product differentiation and branding in this newspaper. They did so, we suggest, because this approach to marketing, which differed from those used by most other foreign and Chinese domestic advertisers, provided a competitive advantage to overcome their liability of foreignness, and was facilitated by their global reach in the form of knowledge flows from offshore bases to onshore branches.

Introduction

“The most powerful among the foreign fire hoses cannot match the chemical fire extinguisher,” began an 1877 advertisement in the Shanghai Chinese-language newspaper Shenbao. “Each time Zhurong rages,” the advertisement continued, invoking the Chinese god of fire, “saving buildings from destruction depends first and last on the chemical fire extinguisher.” “The moment the extinguisher arrives,” readers were even further assured, “it can transform danger into safety.” This remarkable device was also characterized as “difficult to imitate,” “cheap,” “refillable,” “very light,” “easy to use,” and particularly suitable for shopkeepers with “valuable stock.” ¹ The advertisement concluded with the advertiser: 利記洋行 Lijiyanghang (Favorable Sign Foreign Firm) in Hongkou, Shanghai—a firm led by Jairazbhoy Peerbhoy, a Khoja opium dealer based in Bombay.

The advertiser of the chemical fire extinguisher was one among a modest number of trading and service sector multinational enterprises (MNEs) that operated in late nineteenth-century mainland China. Headquartered abroad, or in Hong Kong, yet with mainland offices, chiefly in Shanghai (the largest and most vibrant of the “treaty ports” opened after the 1842 Treaty of Nanjing), such MNEs were a relatively new form of foreign enterprise in that they did business on the mainland from an offshore base. They were different in this regard from traditional expatriate trading houses: firms run by expatriate merchants, mostly from Britain, but headquartered on the mainland and often without operations elsewhere. ² These MNEs sold various products and services, usually related to Western technology and industry, and usually in the same import/export roles as mainland-based expatriate firms. However, unlike the better-known modern manufacturing MNEs that operated in China in the twentieth century, they scarcely manufactured anything. ³ Like Jairazbhoy Peerbhoy’s firm, most of these nineteenth-century MNEs advertised in Shenbao. Founded in 1872 by Englishman Ernest Major, Shenbao rapidly attracted a wide readership and thus significant interest among advertisers. Indeed, the newspaper was a new avenue through which to reach Chinese customers for all kinds of businesses. Most customers in this earliest stage of Shenbao were far from the average Chinese consumer, whose literacy and purchasing power were limited. For the major part, advertisers targeted Chinese industrialists and merchants, including dealers in consumer goods who sold items to consumers. Qing government officials were also occasionally a target audience.

In this paper, we examine advertising among early multinationals in Shenbao between 1872 and 1889. Using the newspaper’s digital archive, in conjunction with the aid of English-language Chinese commercial directories, we offer new insights into the history of business and marketing in China. We demonstrate how late nineteenth-century MNEs, falling between traditional expatriate firms and modern MNEs in a transitional period, were more significant than hitherto recognized. We argue that they played leading roles in the emergence of modern advertising in China as pioneers of product differentiation and branding strategies in the advertising section of what was to become China’s most important newspaper. Although MNEs were likely not the only firms to foster this innovation, we suggest they were particularly well-placed to do so. Many had the scale to make such investments, were able to draw upon their global reach to transfer new knowledge from headquarters offshore to onshore offices, and required this approach to overcome the competitive disadvantage of their liability of foreignness, manifested by cultural distance and an absence of thick local networks. ⁴

Histories of Foreign Enterprise in China

There is extensive literature on European and American trading houses and MNEs in China between the eighteenth and mid-twentieth centuries. Since the late 1940s, scholars like Michael Greenberg have used the archives of firms such as Jardine Matheson to highlight the role of foreign enterprises in trade, political intrigue, and conflict between China and Western nations. ⁵ Dedicated histories of these businesses have also been written since the 1950s, enabling insights into their operational practices and decision-making processes. ⁶ Such research has expanded more recently and has included modern manufacturing MNEs. Sherman Cochran’s 1980 study of British American Tobacco (BAT) between 1890 and 1930 is a landmark work, as is his 2000 analysis of four MNEs, BAT, Standard Oil, Mitsui and Nagai Cotton Company, and two Chinese domestic enterprises, Shenxin Cotton Mills and China Match Company. ⁷ Drawing chiefly on firm records, Cochran has shown that foreign businesses found ways to adapt to the Chinese market, including via Chinese-speaking expatriates in Mitsui’s case. ⁸ Other historians, such as Thomas David DuBois and Pierre-Yves Donzé, have each built on Cochran’s efforts through research on foreign MNEs in China like Nestlé and Siemens in the twentieth century, revealing that these firms, too, employed a range of strategies relating to product quality, branding, and distribution in Chinese commercial environments. ⁹ In one of the most recent additions to the scholarship, Robert Bickers has presented a nuanced view of British imperialism and global exchange through a history of British firm John Swire & Sons and its China-based trading arm Butterfield & Swire. ¹⁰ This historical literature on multinationals in China is a small but significant part of historical scholarship on MNEs more generally, dominated by twentieth-century examinations of American- and British-based MNEs in Europe and overseas colonies. ¹¹

Marketing has typically been studied in broader analyses of foreign business in China. Howard Cox, Huang Biao, and Stuart Metcalfe, for example, have explored marketing as one aspect of the evolution of foreign business activities in China. They have shown that having Chinese compradors sell products for them was usual for firms like Butterfield & Swire, as it enabled them to avoid the complexity of marketing themselves, although they regularly sought to escape the comprador system and exert more control over supply chains. ¹² Although overseas MNEs might be seen as more likely to take direct responsibility for marketing, there was often no difference between them and other businesses. The most meaningful of BAT’s marketing, for instance, was delegated to Chinese firms, whereas Western employees in China were limited to putting up advertising posters. ¹³

There have only been a handful of studies on foreign advertising in Shenbao. Weipin Tsai has completed one of the most detailed and authoritative works on this topic. Focusing on the interwar period, perhaps the most important for the development of Chinese nationalism, Tsai has used foreign and Chinese domestic advertisements as windows into consumer culture. According to Tsai, these highlight a complicated relationship between commercialism, individualism, and national identity. ¹⁴ Barbara Mittler, starting with an earlier time period, has examined images in Shenbao and several other Chinese- and English-language newspapers in Shanghai, revealing, like Tsai, some of the nuances of Shanghai urban culture. ¹⁵ Other historians have looked at mostly twentieth-century advertising by foreign firms in terms of how they tried to appeal to Chinese consumers, particularly through innovative artwork and messaging. Shengdong Lin, Paul Van den Hoven, and Yiqiong Zhang, for instance, have illustrated how foreign enterprises, including MNEs, regularly sought to refine their English-language advertisements for use in China during the early twentieth century. ¹⁶ Further relevant research by Laura Alfaro, Cathy Ge Bao, Maggie Chen, Junjie Hong, and Claudia Steinwender has shown that China’s 1923 trademark law encouraged more attention to branding in Shenbao advertisements by Western firms. ¹⁷ A far larger body of Chinese-language literature centers on advertising among Chinese domestic enterprises in Shenbao, although this too deals principally with twentieth-century developments, especially Chinese nationalism. ¹⁸

We seek to build on all the above literature by looking at advertising among foreign MNEs in Shenbao between 1872 and 1889. Ours is an innovative approach to the study of MNEs in China, and more widely, in that it explores their activity on the basis of their advertising: both an underexamined aspect of their day-to-day operations and an underutilized source material, distinct from the business records typically utilized for such research. We also examine an earlier period than much of the literature on MNEs, which deals mainly with the twentieth century, and consider lesser-known MNEs in China alongside prominent ones. Further, we expand the literature on advertising in Shenbao, first through closer attention to different categories of advertisers and different approaches. Second, we focus on the newspaper’s largely neglected initial stage of publication in the nineteenth century, a formative period in the growth of advertising in China. We show how MNEs deployed a pioneering approach amid Shenbao’s earliest advertisements and thus, we argue, had a leading role in the emergence of modern Chinese advertising.

Marketing and Advertising Strategies

The late nineteenth century is often viewed as the era of the development of mass marketing. Expansion of national economies, especially in Europe, the United States, and Japan during this period—driven by such factors as population growth, innovations in transport (railways and steamships), and the expansion of sources of raw materials (coal, iron ore)—generated the emergence of large-scale enterprise in consumer industries in particular, but also in a range of other sectors, notably in industrial goods and arms production. ¹⁹ Benefitting from economies of scale, firms sought to sell a standard product to a very large market at the lowest cost, a competitive strategy known as price leadership. ²⁰

Once established in their home markets, firms often sought to leverage advantages in production and/or marketing to gain a foothold in foreign markets. They particularly targeted markets that were closely connected geographically and culturally, such as Canada and Britain in the case of U.S. enterprises, and for which comparable marketing strategies could be applied. In some markets that were farther afield but still culturally proximate, such as colonies, firms would more often export rather than manufacture locally and either rely on local agents to implement their marketing practices or establish their own sales branches. ²¹ Occasionally, large firms would emerge elsewhere, such as the Sassoon enterprises in British India and Jardine, Matheson & Co. in China, and expand into the metropole and other areas. ²² Typically, however, the most notable businesses of the era emerged in advanced economies and expanded into developing ones. These would become modern multinationals.

China presented an interesting challenge for Western firms as a potentially very large market but one that was neither geographically nor culturally close. ²³ In order to win Chinese customers, a price-driven mass marketing approach could not be successful of itself. Although Chinese consumers were generally receptive to foreign goods and associated services, they also had to be convinced of their value, particularly relative to cheap domestic imitations, and to trust sellers from different cultures. ²⁴ It was in this context that merchant houses often served as intermediaries for Western manufacturers, drawing on intricate local commercial networks built on face-to-face exchanges rooted in guanxi, usually with the aid of Chinese compradors.

An alternative marketing strategy adopted by modern firms is product differentiation. This involves promoting the unique properties of items, such as their high quality, reliability, authenticity, and novelty. The idea is to encourage customer loyalty by reducing uncertainty, and this is particularly valuable in introducing new goods. The hope is that price differences will be less important in purchasers’ decisions, and they will continue buying irrespective of fluctuations in prices. By enhancing customer loyalty, product differentiation can also strengthen sellers’ bargaining power with intermediaries and may encourage direct marketing that bypasses them. Many U.S. MNEs established their own marketing departments or divisions to deal directly with retailers. ²⁵

A key method in marketing strategy, particularly product differentiation, is branding, whereby firms use advertising and the development of a legal device, the trademark, as an assurance of their products’ particular properties and to help customers identify their products and distinguish these from others. Besides emphasizing, objectively, products’ key features, branding can also be used subjectively to associate products with a desirable lifestyle. ²⁶ It is also seen as a means of promoting firm reputation, with potential spillover benefits to firms’ other products. Enhancing the reputation of foreign firms was important in order to engage in new, highly competitive and culturally distant markets.

Traditional advertising was strongly text based and focused on providing information. From the later nineteenth century, we witness a change in both such features. Developments in printing technology and the new application of creative talent to advertising, particularly by specialist agencies, saw visual images replacing large sections of text. Persuasive advertising also increasingly intruded upon the traditional informative approach. These two initiatives—images and persuasiveness—worked in tandem to promote the development of brands.

Recent research suggests that mass marketing was not the only advertising strategy pursued during the late nineteenth century, but in fact product differentiation also mattered. Gordon Boyce and Simon Ville have observed, “Brands and trademarks became important in helping manufacturers to reach consumers in emerging national markets.” ²⁷ However, there are few studies of these strategies, and most deal with twentieth-century history. We argue that the experience of foreign MNEs in late nineteenth-century China—and their configuration as a transitional form, effectively, between expatriate trading houses and modern multinationals—was conducive to an earlier-than-expected application of product differentiation, in Shenbao, in order to promote both these firms and their products and services.

Shenbao Newspaper

The newspaper Shenbao was established in 1872 in Shanghai by Englishman Ernest Major, with the expressed political aim of connecting Chinese people with their rulers. “The people,” stated Major in an explanatory article to readers six days after its first issue on April 30, 1872, “have no means of voicing opposition to those above.” However, a newspaper run by the people, rather than the state-run periodicals operating during this period, would, according to Major, “benefit the people, and also benefit the state.” This had indeed been the situation overseas, Major further extolled of the foreign medium that he had just introduced, but Shenbao would, he reassured readers, receive direction from the “Chinese intelligentsia and gentry.” ²⁸ Indeed, Shenbao, although protected from official censorship under foreign ownership within Shanghai’s International Settlement, was managed chiefly by Chinese staff. It quickly became China’s most important forum for political discussion, although it remained conservative in general and accessible only to a relatively small, educated section of the population in the largest cities. ²⁹ Published daily, except Chinese holidays and Sundays initially, circulation may have reached as high as ten thousand by 1877, but reliable figures are unavailable. ³⁰ It would go on to assume an even greater importance after Ernest Major retired and it was reorganized in 1889, and again after it came under Chinese ownership under Xi Zipei and Shi Langcai in 1911. ³¹ Shenbao peaked in the 1930s, with over 150,000 daily readers, and closed in 1949 when the People’s Liberation Army took control of Shanghai. ³² We have chosen 1872–1889 because this was its initial phase of publication, after which it came under different management, and this period has been examined far less than later periods.

Although politics made Shenbao popular with readers, its growing readership also made it popular among advertisers, foreign and domestic alike. Two of its eight pages (pages 6 and 7) were initially dedicated to advertising, but advertisements began to span three pages (5, 6, and 7) only two months after its first issue in 1872. One year later, four pages out of eight was the norm. In 1882, an additional page was added to Shenbao for advertisements, and by the end of 1889, the newspaper was twelve pages, five of which consisted completely or chiefly of advertising, although advertisements were still concentrated almost entirely near the back. Its evident popularity among advertisers highlights that Shenbao also met an unsatisfied demand among businesspeople to market their products. Marketing arrangements were pursued on an ad hoc basis during the period under consideration, nevertheless. With no advertising department until 1912, and no professional advertising agencies active in China until later still, advertisements were placed after consultations between Shenbao personnel, probably including Ernest Major, and those businesses that sought to buy advertising space. ³³ This process would have involved Chinese employees or compradors, whose role in these instances was comparable to that of advertising agencies in later years. These firms relied on a dialogue between compradors and Shenbao staff to decide on Chinese wording, perhaps even firm names in Chinese if they did not have names already. Few firms employed foreign Chinese-language experts, at least in these early years. The bulk of advertisements during the period of our study consisted wholly or mostly of text, They were accessible mainly to, and indeed targeted, literate Chinese industrialists and merchants (many of whom dealt with regular Chinese consumers) and, to a lesser extent, scholar-officials within the Qing government who were responsible for implementing the Self-Strengthening Movement—an initiative for Chinese modernization on Western terms, particularly industrialization, in this era. ³⁴

Shenbao itself was very much a foreign product. Mittler has called it “an alien medium packaged to suit Chinese tastes,” staging a “carnivalistic intrusion into Chinese territory.” ³⁵ However, she has demonstrated that, at the same time, it and other Shanghai Chinese-language newspapers of the same period quickly became markedly different from the English-language newspapers also established in Shanghai, notably the North China Daily News and the North China Herald. They grew decidedly less foreign from an early date, while their English-language counterparts remained much the same over time. ³⁶

We have examined advertisements using the Shenbao digital archive compiled in 2011 by the Green Apple Data Center of Changsha, Hunan, China, accessible via the Erudition platform worldwide. Through this database, Shenbao is text searchable and fully viewable, including on a page-by-page basis, over its entire period of publication between 1872 and 1949. To locate advertisements run by foreign MNEs, we have used a novel method to first identify their head and branch office locations, primarily by searching the Chronicle & Directory for China, available through the China Families platform directed by Professor Robert Bickers at the University of Bristol. These directories normally contain the information needed. However, where the locations of firms’ headquarters and branch offices are uncertain, we have confirmed them through a combination of other primary sources such as newspapers, mainly the North China Daily News and North China Herald; otherwise, we have not included them in our analysis. The directories also contain firms’ Chinese names, which we have used in text searches of the Shenbao digital archive for their advertisements. For context, we have used the same method to locate advertisements placed by expatriate firms headquartered on the mainland and either with or without branch offices elsewhere. To provide additional context, including advertisements placed by Chinese domestic firms, we have manually sampled and analyzed four issues of Shenbao each year at three-month intervals, and then carried out follow-up text searches of notable firms. ³⁷ In addition, we have manually surveyed all artwork over our seventeen-year time period.

The Multinationals

We have identified sixty-three MNEs operating in Shanghai between 1872 and 1889. They often also had offices in other port cities such as Hankow (Hankou, Wuhan, Hubei) and Foochow (Fuzhou, Fujian). Twenty-six of these firms were British, that is, based in Britain, and twelve were based in the British Raj. Fourteen were German, five were American, two were French, two were Japanese, one was Danish, and one was Dutch. In business directories, these firms were most frequently listed as “merchants,” usually meaning general import and export. There were forty-three “merchants” among sixty-three MNEs. There were also ten banks, three telegraph companies, two drapers, two dealers in medicine, two shipping concerns, and one alcohol dealer. The breakdowns of MNEs by nationality and business type are shown in Tables 1 and 2, respectively. In contrast, the Chronicle & Directory for China and maritime customs reports indicate that hundreds of mainland-based expatriate firms, mostly British, and other European and American “merchants” operated in China in this era, and that a similarly large number of overseas firms were represented by agents, generally the same expatriate firms. ³⁸ We have no numerical data on Chinese domestic firms operating during the period under consideration. We are confident in assuming, however, that there were many more, indeed many thousands, of such enterprises.

Table 1. Foreign MNEs by Nationality, 1872–89

Note: Table compiled by the authors

Table 2. Foreign MNEs by Enterprise, 1872–89

Note: Table compiled by the authors

The listed locations of firms’ headquarters and branch offices might have meant little in terms of many day-to-day activities. Hong Kong–based MNEs like Jardine, Matheson & Co., for example, were close to mainland markets but also had important connections to London. Other, overseas-based MNEs, like German shippers Siemssen, were established and based in China initially but later started operating from overseas. ³⁹ However, we argue that such locations were meaningful in relation to Shenbao advertisements. Multinationals in China advertised distinctively in this newspaper, we show, introducing product differentiation and branding as precursors to modern multinationals.

Fifty-one of these MNEs advertised in Shenbao. British MNEs predominated overall in terms of advertisement volume. They ran over ten thousand advertisements combined, led by the Hong Kong–based British pharmacists A. S. Watson & Co. (屈臣氏大藥房 Quchenshidayaofang). Japanese and German MNEs were next, with up to ten thousand altogether, primarily by the two shipping businesses Mitsubishi (日本三菱輪船公司 Ribensanjinglunchuangongsi) and Siemssen (禅臣洋行 Chanchenyanghang), though most of their advertisements were brief shipping notices. They were followed in volume by American firms, and then Raj, Danish, and French firms, although the latter three placed relatively few advertisements. The sole Dutch multinational in China that we have identified, Textor and Co. (德全洋行 Dequanyanghang), did not advertise in Shenbao. A. S. Watson & Co. and the two shipping firms ran the most advertisements of all MNEs, whereas the bankers (seven British, two German, and one French) and three telegraph companies (two British and one Danish) placed the fewest. Advertisements were widely distributed across time and pages, even among individual firms. Our numbers are insufficient to permit breakdowns by nationality, firm type, time, and page distribution. They do, however, permit us to say that, although other kinds of firms advertised more overall, multinationals as a group were far more likely to advertise in Shenbao. The vast majority of foreign expatriate firms, firms overseas represented by agents, and Chinese domestic firms had no presence, whereas around 80 percent of multinationals placed advertisements. Further, these MNEs were some of Shenbao’s most regular advertisers. Although practically all of its advertisements were simple shipping notices, Mitsubishi was not only the single most prolific of the MNE advertisers, but the most prolific advertiser overall in Shenbao in this period. Even a number of small and little-known MNEs based abroad like British drapers Sayle & Co. (些厘公司 Xieligongsi), headquartered in Cambridge, matched and often eclipsed the advertising of some of the largest expatriate and Chinese domestic firms. However, even some of the largest foreign MNEs, like the Bombay-based Sassoon family concerns, which opened offices in Shanghai and several other Chinese ports, did not advertise in Shenbao, in this case probably due to their focus on the opium trade. We suggest, nevertheless, that as a distinctly foreign medium, particularly in this earliest phase, Shenbao was highly conducive to advertising by MNEs because they brought new strategies to China, and because they were better positioned to do so than other firms because of their global reach.

Products and Services

The vast majority of the MNEs advertised intermediate and consumer goods in the pages of Shenbao, and individual operations generally concentrated on a few key lines. British firm Holliday, Wise & Co. (義記洋行 Yijiyanghang), for instance, based in Manchester and one of Shenbao’s most prolific advertisers, emphasized its imported textiles—intended for makers of clothing and related items—and it diverged only rarely from this product focus. ⁴⁰ The German firm Carlowitz & Co. (禮和洋行 Liheyanghang) was established in Canton in 1846 but operated in Shanghai beginning in 1877 from its Hamburg headquarters after reorganizing as a multinational. It similarly focused marketing on specific types of needles and thread, also targeting makers of clothing and associated products. ⁴¹ Often, firms advertised certain consumer goods alongside these intermediate goods. Another Hamburg firm, Justus Lembke & Co. (謙信洋行 Qianxinyanghang)] marketed two main items: pigments, intended for Chinese producers of paint, ink, and textiles; and premium fob watches, intended for well-to-do men. ⁴² A few firms advertised industrial goods as well, such as the American firm Fogg & Co., based in New York. Although it mostly advertised intermediate goods for shipping operations, including metal plates, sheets, pipes, screws, nails, tar, and resin in Shenbao, the firm occasionally also advertised related machinery: a mechanical dredger, a kerosene generator, a metal lathe, and a handheld water pump. ⁴³ It was uncommon, however, for these MNEs to focus solely on consumer or industrial goods; they generally treated them as supplements to intermediate goods. Two key exceptions were British firms A. S. Watson & Co., Hong Kong druggists dating back to 1841, and the much younger Caldbeck, Macgregor & Co. (廣和洋行 Guangheyanghang), based in London, which imported alcohol. Nonetheless, specialization to any significant degree, seen among most of these MNEs, including those in service industries, was unusual of Shenbao advertisements generally throughout this period. The most visible advertisements stressed range over specialization. Shanghai-based British expatriate merchants MacKenzie & Co. (隆茂洋行 Longmaoyanghang), for instance, advertised a wide variety of unrelated products, often in the form of extended lists, on behalf of firms in the UK and the United States. ⁴⁴ This was also seen from the Hong Kong–based MNE Jardine, Matheson & Co. (怡和洋行 Yiheyanghang), although this approach was less common among MNEs. ⁴⁵ Chinese domestic firms often concentrated on certain specialties, but comprehensive lists were also usual for them, particularly dealers of imported goods like Zengtai Foreign Goods Shop (增泰洋货店 Zengtaiyanghuodian) and booksellers such as Yitang Bookshop (義堂書坊 Yitangshufang). ⁴⁶ However, as other researchers in this area, such as Tsai, have pointed out, marketing a single item or a narrow category thereof, often with minimal text and combined with artwork, had become largely standard across Shenbao by the twentieth century. ⁴⁷ This evolution in advertising culture reflected the decline of the foreign merchant house, the principal interest of which was general trade, and the rise of both modern multinationals and Chinese domestic enterprises, which were involved more directly in comparatively few sectors of the Chinese economy. ⁴⁸ Nineteenth-century MNEs, we suggest, spearheaded this shift away from the general and toward the particular: a defining feature of product differentiation.

The MNEs tended to assert ownership over products and services that they advertised. Japanese firm Mitsui (三井洋行 Sanjingyanghang) advertised what it claimed was the firm’s own line of matches, along with paper products manufactured in a Tokyo plant. ⁴⁹ Likewise, German merchants Schellhass & Co. (元亨洋行 Yuanhengyanghang) and Pustau & Co. (鲁麟 Lulinyanghang), both headquartered in Hamburg, advertised their own brands of matches. ⁵⁰ However, it was probably the case that none of these firms had produced such items directly, as they were mostly trading firms, but they still attempted to represent these as their own, deliberately linking the products that they advertised to themselves in the interests of branding. It was normal, too, for firms to claim ownership over products by emphasizing related services. Mitsui also placed advertisements for Japanese dried kelp, which, it explained, was sourced from various producers. However, it placed an emphasis on its own selection and packing above all else, highlighting how this could ensure “no danger of dampness and spoilage.” ⁵¹ Carlowitz & Co. similarly stressed its imported needle quality control measures, which it stated could guarantee “no trouble with broken heads and broken tails,” yet obscured the needles’ manufacturers. ⁵² Although it was not uncommon for these MNEs, the standard for expatriate firms was to advertise on behalf of overseas businesses and minimize themselves, and even depend on overseas firms’ direct advertising in Shenbao to identify them as agents. ⁵³ Chinese firms differed further still, scarcely advertising on behalf of overseas interests, yet regularly advertising imported products, although they rarely constructed these as their own like the foreign MNEs. On the contrary, many produced domestically but then marketed products as imported (counterfeits), whereas others put forward their own products and services as alternatives to foreign ones. ⁵⁴ In later decades, as historians including Tsai have detailed, advertising in Shenbao would be defined by foreign firms, including modern manufacturing MNEs, marketing their goods and services, and Chinese firms marketing domestic alternatives, often couched in nationalist ideology. ⁵⁵

Foreign multinationals were also relatively active in introducing previously unadvertised or distinctive technologies and practices to Shenbao readers, building reputations as special advocates of innovation. F. Peil, a Krupp representative with headquarters in Cologne and branches in Hong Kong and Shanghai, was the first to market Western armaments, from 1872. This was the only firm to concentrate its efforts entirely on armaments and industrial goods, targeting larger capitalists and bureaucrats. ⁵⁶ Denmark’s Great Northern Telegraph Company (大北電報公司 Dabeidianbaogongsi) was the first business to market the telegraph in Shenbao, along with a unique Chinese codebook, in 1876, seeking to foster use of the new technology among Chinese merchants. ⁵⁷ Similarly, Jairazbhoy Peerbhoy, the Bombay-based opium dealer, advertised Shenbao’s first chemical fire extinguisher in 1877. ⁵⁸ Fogg & Co. also introduced several technologies, mentioned earlier. The British Chartered Mercantile Bank of London, India, and China (有利銀行 Youliyinhang), although atypically of the MNEs in this category, was the first to market an item previously unseen in Shenbao as well, that is, the money order. “Those with the order,” its 1881 advertisement noted, “can pay silver dollars without error,” highlighting the bank’s innovation in the interests of Chinese merchants transacting business with their foreign counterparts. ⁵⁹ Mitsui, in the same vein, placed the first advertisement for a currency exchange service in 1878. ⁶⁰ Other classes of firms introduced previously unadvertised technologies and practices as well, especially foreign exporters without local offices (represented by agents) between 1879 and 1881. Using large, impressively decorated advertisements, and in many cases nominating Ernest Major at the Shenbao office as their agent in Shanghai, these mostly British companies marketed an extensive variety of industrial machinery, with a primary emphasis on steam engines and steam-powered devices. However, these efforts, although grander, were shorter lived than those of the MNEs that we have identified, focused mainly within a two-year period. ⁶¹ This was probably related to their having had less control over the promotion of their products than those with local offices in the host economy. China-based foreign firms and Chinese domestic merchants were inconsistent in this regard, too, and many were even notably reluctant to challenge potential buyers with new offerings. Even so, such firms would go on to market many of the technologies and practices initially introduced by these MNEs.

To build trust and further set themselves apart, practically all multinationals avoided advertising products or services that might have been construed as questionable by readers of Shenbao. Western lottery tickets, regularly referred to in this period as “Luzon tickets” as they were first brought to China by Spanish traders from the Philippines, were often advertised by expatriate and Chinese firms. ⁶² However, very few of the MNEs did the same, probably because of lottery’s dubious social value. ⁶³ Only one MNE advertised tickets consistently: British alcohol dealers Caldbeck, Macgregor & Co., and probably only because as dealers in one vice, they had no qualms marketing a second. ⁶⁴ None of the MNEs, even though there were several opium dealers among them, advertised opium or opium paraphernalia. The Bombay-based opium importer Jairazbhoy Peerbhoy advertised fire safety equipment, a far cry from his main source of income. A. S. Watson & Co. even advertised medicines purported to help people overcome addiction to opium, tobacco, and alcohol. ⁶⁵ Marketing socially acceptable products and services appears to have been taken most seriously by the multinationals in our research, but this became increasingly important in the twentieth century. Cochran has demonstrated in particular how advertising medicines, including in Shenbao, became intertwined with notions of morality, which was a key tool in branding. ⁶⁶ Chinese nationalism was often the foremost consideration in such marketing, with advertisers asserting the value of whatever they sold to the nation: communicating virtue as a form of institutional advertising. ⁶⁷

Advertising Themes

Novelty was a relatively strong theme in advertising by the MNEs. This was apparent when previously unadvertised technologies and practices were introduced to readers. Firms touted the benefits of various innovations, typically via appeals to science, modernity, and Westernness. Jairazbhoy Peerbhoy’s chemical fire extinguisher advertisement, for instance, explained that the extinguisher used the power of modern chemistry to control fires, making it more effective than the conventional water pump and also harder for unscrupulous merchants to imitate. ⁶⁸ Firms sought to dispel potential fears at the same time. Peerbhoy’s advertisement drew on mythology to offer readers a sense of the familiar, referencing Zhurong, the Chinese god of fire. Others highlighted safety. The American firm Fearon, Low & Co. (協隆洋行 Xielongyanghang), headquartered in New York, clearly qualified that the new synthetic textiles it was advertising were not treated with insecticides, and the firm Justus Lembke & Co. also carefully explained that its new types of pigments were nontoxic. ⁶⁹ Besides stressing novelty when introducing new technologies and methods, MNEs also emphasized new styles of already widely used items, including intermediate, consumer, and industrial goods. Fogg & Co. deployed the phrase “newly arrived” in the headings of a large proportion of their advertisements for various common items in the 1870s, and the British firm Hewett & Co. (裕昌洋行 Yuchangyanghang), operating from London, applied it to all its advertising, principally for shipping supplies and drapery, almost daily from 1877 to 1879. ⁷⁰ Invoking novelty in this way made sense because most classes of things, especially intermediate goods and shipping services, but even harder-to-buy goods, including machines and arms, could be sourced elsewhere, notably from expatriate firms in the case of imports. Indeed, although Hong Kong–based MNEs faced little disadvantage, other MNEs lacked the connections of these mainland-based enterprises, so they used novelty as a means to distinguish what they themselves marketed, and Shenbao as the medium. In addition to the novelty of their products and services, several MNEs described how they were newcomers to China, though well-established in Europe, the United States, and/or Japan. They thus suggested new, unmediated connections between China and foreign hubs of commerce and industry. ⁷¹ Advertisers based abroad with no presence in China stressed novelty in advertisements as well, especially regarding machinery, but, as noted earlier, on inconsistent bases. On the other hand, expatriate and Chinese domestic firms more often noted histories of doing business in China and, for the latter businesses, Chinese tradition, and so this stronger emphasis on novelty as a group often would have made multinationals seem different to readers. ⁷²

Another theme they stressed quite strongly was product and service exclusivity. The idea that only certain things or the best of certain things could be obtained from these firms was often communicated implicitly, either through firms’ relatively narrow advertising focus and the implication that they were specialists, or by their marketing of products and services over which they asserted some form of ownership. Justus Lembke & Co.’s focus on certain pigments and fob watches, and Mitsui’s advertisements for expertly selected dried kelp, to use two examples discussed earlier, lend themselves to assumptions that what these firms provided were exclusive to them. The MNEs also frequently described products and services as exclusive in explicit terms. British alcohol dealer Caldbeck, Macgregor & Co. ended its alcohol advertisements in the mid-1880s with the phrase: “There is only one branch in Shanghai and no other.” ⁷³ London drapers Watson & Co. (挖臣洋行 Wachengyanghang) stated that their textiles and related items, along with their French jewelry, were not only unique to them and better priced than those of competitors, but they came with special service from Mr. Dong Panya (東盤啞), the Chinese-speaking foreign manager. ⁷⁴ Like novelty, exclusivity enabled early multinationals to differentiate their products and services—and themselves. Expatriate and Chinese domestic firms placed a much lighter emphasis on exclusivity overall. Expatriate enterprises like the British firm MacKenzie & Co. occasionally noted their exclusive relationships with overseas firms, but it was their habit to minimize themselves in advertisements, as mentioned previously. ⁷⁵ Some Chinese firms stressed product and service exclusivity, although equivalency—to their foreign counterparts—was a more common theme in their advertisements in this period. ⁷⁶ As Chinese businesses gradually built their brands over time, however, exclusivity emerged alongside equivalency as one of the most important themes across advertising in Shenbao, especially during later years as it became clear that matching imports in the name of Chinese nationalism was insufficient for marketing purposes, as Tsai has detailed. ⁷⁷

Alongside exclusivity, MNEs laid special emphasis on authenticity, marketed to readers via descriptions of “labels” or “watermarks.” London-based Harris, Goodwin & Co. (華太洋行 Huataiyanghang) was first to inform Shenbao readers of a specific trademark on advertised products in 1877, that is, the “C. J. Corporate & Registered Trademark” associated with a series of its imported knives and steel files. Even though they did not provide the details of the products’ manufacturers, the advertisement urged potential customers to accept the trademark as an assurance of product integrity. ⁷⁸ German firms Schellhass & Co. and Pustau & Co. similarly stressed the labels on lines of matches, the “dog label” and “Pustau label” lines, respectively, during the 1880s, as did a number of other multinationals in relation to their products. ⁷⁹ Trademarks were especially important for design-based consumer goods—what Teresa da Silva Lopes calls “marketing based”—because they could be counterfeited more easily than products such as machinery, while also reinforcing branding, that is, offsetting the widespread availability of otherwise hard-to-distinguish competing consumer goods like matches. ⁸⁰ Intermediate goods like fabric, however, were also identified accordingly. ⁸¹ Such exhortations were paired with warnings to avoid imitations in some cases, as when Carlowitz & Co. introduced its “lion label” and “dragon label” imported needles in the 1880s. ⁸² MNEs published condemnations of those who had imitated their labels on several occasions, and they occasionally flagged follow-up action. In 1885, to highlight one case, Schellhass & Co. chastised the “shameless people who forge the firm’s dog label” and noted a “consular investigation.” ⁸³ However, although such trademarks may have been registered by head offices where firms were based, authenticity and the “label” were chiefly buying aids in China in this era. There were few legal protections until China’s trademark legislation of 1923, and even then it was hard for firms to protect their trademarks, as detailed by scholars like Eiichi Motono and Eugenia Lean. ⁸⁴ Even though the “foreign mark” was noted in Shenbao’s first issue by Chinese foreign goods dealer Henglong Foreign Goods (衡隆洋貨 Henglongyanghuo) as a guarantee of authenticity, MNEs were clear leaders in describing specific labels or marks on products in their advertisements as purchasing aids for customers. They also took the lead in defending these in the absence of trademark law via public condemnations of counterfeiters. ⁸⁵ In several instances, their having led Chinese firms in this approach—a moral if not legal defense of their trademarks—is unmistakable. In 1887, for example, Bremen-based German firm Melchers & Co. (美最時洋行 Meizuishiyanghang) issued a joint notice with Shanghai merchant Wan Shunfeng (萬順豐) about another trader “secretly changing labels”—removing Melchers & Co. labels from genuine goods and affixing them to counterfeits. ⁸⁶ This practice became widespread, even though, as Alfaro, Bao, Chen, Hong, and Steinwender have observed, it became less necessary after the 1923 trademark law. ⁸⁷

Many MNEs also made efforts to convey modesty in advertisements. Several firms downplayed their activities or their degree of success. F. Peil described itself as a “little firm,” despite maintaining offices in Cologne, Hong Kong, and Shanghai. ⁸⁸ Carlowitz & Co. did the same, and attributed its success in business to having been “blessed by wealthy merchants.” ⁸⁹ Similarly, British alcohol traders Caldbeck, Macgregor & Co. stated in 1886 that their business in Shanghai had expanded beyond their meagre capacity to manage, so they were inviting others to sell alcohol on their behalf. ⁹⁰ There were also instances in which firms were engaged in business disputes and posted notices pertaining to their grievances, in which they attempted to portray themselves as humble. Holliday, Wise & Co. announced in 1889 that it had never been involved in a lawsuit, but it had been wronged and would be forced to seek recompense through the courts unless the other (unnamed) party agreed to resolve their differences in person. ⁹¹ Although modesty would have been perceived as a virtue by many readers of Shenbao, given its important place in notions of Chinese morality, MNEs’ attempts to seem modest were often at odds with their efforts to stand out from rivals with their unique offerings, to sell themselves to potential customers. Expatriate and Chinese firms also tended to try to appear modest in their advertisements, but they were less likely to stress their own merits or those of their own products and services. ⁹² These MNEs as a group were thus the first to wrestle with these contradictory ideas, although this tussle between appearing both humble and special would progress to become widespread in Shenbao advertising, especially as Chinese firms sought to compete ever more assertively with their foreign equivalents by stressing selfless devotion to national products for the good of the nation while trying to sell their wares and themselves. ⁹³ Foreign advertisers without offices in China, unlike MNEs, rarely attempted to convey modesty to readers in the period of our study. Lists of accolades (including pictures of prize medals won) were typical in their advertisements, reflecting their comparative ignorance of the sensibilities of local readers. ⁹⁴

Artwork

MNEs played a vital role in developing decorative advertisement headings. The British firm Sayle & Co. were the first advertisers to have such a heading in 1874. Initially, the firm added its own name to its auction notices, replacing the standard “auction” used by other businesses with “Sayle & Co. auction.” Then, it experimented with a simple line, ordinarily used to separate different advertisements, between its heading, which it spread over two lines of text, and the main body of its advertisement (Figure 1). Sayle & Co. eventually settled on “Sayle & Co. auction” spread over two lines of text, which still set it apart from other firms. ⁹⁵ British MNE Holliday, Wise & Co. introduced another new heading format in 1876, that is, enlarged text surrounded by an elaborately decorated border, which closely resembled a shop sign (Figure 2). ⁹⁶ Holliday, Wise & Co. operated its own Chinese-language printing press from at least 1875, most likely for brochures and catalogues, so it was in a favorable position to innovate in this regard. ⁹⁷ The following year, the same heading style was adopted by two Chinese domestic advertisers—Lanlingweimeizi (蘭陵味梅子) and Guangjiju (廣濟局)—and then became increasingly popular with all advertisers. ⁹⁸

Figure 1. Sayle & Co., 1874.

Figure 2. Holliday, Wise & Co., 1876–77.

Perhaps the most significant contribution of the MNEs to advertisement artwork in Shenbao was introducing illustrated trademarks. In 1877, British firm Harris, Goodwin and Co. informed readers of the “C. J. Corporate & Registered Trademark” associated with some of its imported knives and steel files, and also featured an illustration of the trademark: a black flag containing a white “C. J.” surrounded by the words “Corporate & Registered Trade Mark” on a white background (Figure 3). ⁹⁹ This was the first advertisement of its kind. Consistent with the aforementioned tendency among these firms to assert ownership over what they advertised, Harris, Goodwin & Co. obscured the business to which the trademark belonged, claiming it, effectively, for its own use in China. This is also a key example of MNEs concentrating on specific products to build brands. The second illustrated trademark to feature in Shenbao, that for John Hall & Son’s gunpowder in 1879, was part of the two-year advertising blitz by British firms without Chinese branches, often represented in China by Ernest Major, as discussed previously. ¹⁰⁰ Although most such firms preferred pictures of products in their advertisements, the occasional appearance of their trademarks as well highlights how this aspect of branding had indeed already emerged in the UK, and how Harris, Goodwin & Co. had more than likely imported the practice into China from its head office. Later trademark illustrations during the period under consideration were typically from overseas firms without Chinese offices, were sporadic, and were most commonly deployed by expatriate agents advertising for them. ¹⁰¹

Figure 3. Harris, Goodwin & Co., 1877–78.

The first firm operating in China to depict its own trademarks in Shenbao was also an MNE. A. S. Watson & Co.’s pagoda flanked on the left by a right-facing rampant dragon, and on the right by a left-facing rampant unicorn—all surrounded by the four phrases (in Chinese) “use dragon unicorn foreign pagoda” (above); “others cannot imitate” (below); “Hong Kong foreign dispensary” (right); “A. S. Watson & Co. label” (left)—was featured in 1882 (Figure 4). ¹⁰² Carlowitz & Co.’s “lion label”—a right-facing white rampant lion atop “Carlowitz & Co. NE Plus Ultra Betweens No. 1 Diamond Drilld Eyed [sic]” in white text on a black background surrounded by a black and white border—along with its “Carlowitz & Co.” label—禮和洋行 (Liheyanghang [Carlowitz & Co.]) above “Betweens No. 4 Diamond Drilld Eyed [sic]” with the same background and border—were next to appear in Shenbao in 1884 and 1888 (both shown in Figure 5). ¹⁰³ Carlowitz & Co. also pictured a hybrid of its own and one of its suppliers’ trademarks in 1888. This consisted of an unnamed glass manufacturer’s initials (CCDG) arranged around a cross and placed between 禮 and 和 (Lihe [Carlowitz & Co.]). ¹⁰⁴ Justus Lembke & Co. and Mitsui (Figure 6) followed Carlowitz & Co. ¹⁰⁵ These illustrated trademarks complemented descriptions of product authenticity in advertisements mentioned earlier, serving as visual aids for customers to avoid counterfeits and reinforcing branding visually: part of the visual turn Mittler has discussed in Shanghai newspaper advertising of this era. ¹⁰⁶ These also appeared on actual products, according to advertisements, which made identification easier, and potentially made products more accessible to illiterate consumers on the mass market. We expect, too, that these were used on posters and billboards, but this was not specified. As mentioned above, John Hall and Son’s was the first to show its own trademark in Shenbao. However, from the UK, this firm is unlikely to have been conscious of the specific situation of counterfeiting in China, so did not stress its importance or cast it as a purchasing aid for customers. Expatriate firms did not feature trademarks of their own in advertisements, tending toward pictures of products. Chinese domestic firms’ advertisements were also more likely to contain pictures of products than those of the MNEs. These were much smaller and simpler than illustrations from foreign firms (which had a technological advantage in printing initially), and such illustrations could have functioned as logos. However, these were seldom used in advertising as visual devices intended to support messaging on authenticity and brand building, and few firms advised their customers that these appeared on products. Rather, these illustrations were used mainly in efforts to help advertisements stand out on the page. ¹⁰⁷ Over subsequent decades, however, the firm trademark became a feature of many if not most Shenbao advertisements, sometimes appearing by itself but more frequently also with illustrations of products and idealized scenes, and typically with instructions to customers regarding the trademark’s importance. Understanding the lengths that these MNEs went to protect their brands is important because this is a strategy of MNE expansion that is largely overlooked in the historical literature. ¹⁰⁸

Figure 4. A. S. Watson & Co., 1882.

Figure 5. Carlowitz & Co., 1888.

Figure 6. Mitsui, 1889.

Conclusion

We have argued that trading and service sector MNEs in China, as a transitional firm type between traditional expatriate enterprises and modern manufacturing multinational enterprises, pioneered a distinctive approach to marketing in Shenbao during a formative period between 1872 and 1889. Although modest in number, these firms were overrepresented as advertisers, and were among the most prolific of this era. They tended to place advertisements for certain limited ranges of products and services, typically intermediate and consumer goods targeting Chinese businesspeople for the most part, and some also advertised industrial goods and arms to major capitalists and bureaucrats. The firms tended to assert ownership over advertised goods and services as well. They regularly introduced technologies and practices unseen in Shenbao previously, too, and most avoided morally dubious products and services. Among the central themes distinguishing advertisements by these MNEs was novelty, both in relation to what they advertised and their own firm identities. Exclusivity and authenticity were further marketing tropes, closely linked to firms laying claim over advertised products and services, as was modesty, that is, as a type of cultural counterbalance to their other thematic choices. With regard to artwork, these enterprises also pioneered decorative advertisement headings and illustrated trademarks. Most of these marketing strategies would later become standard practice across the advertising pages of Shenbao.

Their approach to marketing in Shenbao comprised some of the earliest examples of product differentiation and branding in modern Chinese print media. Indeed, firms did not merely apply the mass marketing approach to advertising that prevailed abroad in this era—typified principally by low cost and basic information on firms’ goods and services—to the Chinese commercial environment. This was in spite of the fact that doing so typified Shenbao’s advertising section to a large degree in its initial phase of development, having been used widely by other foreign and Chinese domestic firms. Instead, MNEs used quite new concepts within their advertisements, strategies that were only just coming to the fore outside China. These innovations in advertising prioritized the distinctive qualities of products and services, and indeed those offering them, and how to communicate this information to customers.

Their pioneering product differentiation and branding in Shenbao had three main origins, we suggest. First, it appears that foreign MNEs regarded this approach as having offered a competitive advantage over other firms in China in the 1870s and 1880s. Facing issues of cultural distance and thus less able to utilize the complex commercial networks of the Chinese economic environment than entrenched expatriate or Chinese domestic firms (many of which also appeared in Shenbao’s advertising section), MNEs treated product differentiation and branding as a kind of new edge, an innovative competitive advantage. Second, headquartered offshore, where advertising techniques were more advanced and where they were closer to businesses whose products they handled, MNEs were well-placed to pioneer such advertising in Shenbao. At the same time, with branch offices on the Chinese mainland, unlike those overseas firms that operated through local agents, they were markedly more cognizant of their local audiences, tailoring their methods to suit Chinese readers’ expectations. Finally, many MNEs possessed the corporate scale to make these investments. They were not the only group of large firms capable of doing so, but their investment decisions must be seen in combination with their other motives, discussed above, of overcoming the liabilities of foreignness and leveraging their global reach.

We have presented these insights as a contribution to several bodies of historical study that concern foreign enterprise in China. In terms of the literature on multinationals, we have shone new light on an early form MNE in China and how it operated, specifically with regard to marketing in the Chinese-language newspaper Shenbao. Utilizing this unconventional source, and a novel method of identifying MNEs via business directories, we have shown how these multinationals were far more active than most previous research would suggest (and indeed considerably earlier, during a transitional era from expatriate traders to modern multinationals). Not only that, but we have shown how they were pioneers of a particular marketing approach in what was China’s most important newspaper pre-1949. This expands our understanding of multinational enterprise in general, too, revealing a rather surprising aspect of its significance beyond the more traditionally explored sites of MNE operation in twentieth-century Europe and the United States. Concerning literature on foreign business in China more broadly, we have shown the substantial contribution of MNEs to this important Chinese-language newspaper. We have also shown that there were differences in marketing approaches between these early multinationals and other types of foreign firms and Chinese domestic firms. It is in this vein that we have also aimed to build on other studies of Shenbao advertising, through widening the scope for reflection thereon in terms of the different categories of foreign business and the different eras of the newspaper’s life.

We believe that our investigation could be extended further in several related directions. In particular, given that we have revealed more potential for research on early forms of MNEs in underexplored locations using underexamined materials and a new method of identification, we expect more could be done on China and other locations in order to understand this form of enterprise and its role in economic development. We have highlighted, additionally, more opportunities to revisit the vast scholarship on foreign business in China via alternative archives, especially Chinese-language newspapers, perhaps even in combination with traditional sources such as business records, which we have not used here. Moreover, we anticipate that further study specifically of advertising in Shenbao from both foreign and Chinese domestic advertisers could reveal more about businesses’ approaches to marketing, including in later time periods, along with other aspects of their operation on which we have only touched here. These aspects could include firms’ product ranges and their import, export, and manufacturing approaches, their links with other businesses overseas and in China, and their roles in social activities like politics and charity.