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Sino-Japanese Business in China: The Luda Company, 1921–1937

Published online by Cambridge University Press:  23 March 2011

Tim Wright
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Abstract

The weakening of Japan's position in China following the Washington Conference led to the establishment of the Sino-Japanese Luda Company to run the Zichuan coal mines, operated by the Japanese army since 1915. The inability of the Chinese promoters to raise sufficient funds for the company, however, allowed the Japanese investors the major say in company policy. As a Sino-foreign company, Luda enjoyed special privileges which were zealously upheld by the Japanese consuls. Though these practices eroded Chinese sovereignty, they did not make the company a financial success. This failure resulted partly from the Japanese investors' greater concern with their country's long-term fuel supply than with Luda's short-term profits; but this paper also stresses both the ways in which the Chinese, in their attempts to reassert China's sovereignty, harrassed and restricted privileged foreign companies, and the overriding importance of locational and geological factors in determining a mining company's success.

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Articles
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The Journal of Asian Studies , Volume 39 , Issue 4 , August 1980 , pp. 711 - 727
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Copyright © The Association for Asian Studies, Inc. 1980

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References

1 The best analyses of the problem are Chi-ming, Hou, Foreign Investment and Economic Development in China, 1840–1937 (Cambridge: Harvard Univ. Press, 1965), pp. 138–55;Google Scholar and Dernberger, Robert F., “The Role of the Foreigner in China's Economic Development, 1840–1949,” in Perkins, Dwight H., ed., China's Modern Economy in Historical Perspective (Stanford: Stanford Univ. Press, 1975), pp. 43–46Google Scholar.

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4 Luda also owned the rights of the Fangzi coal mines, which it leased out to others to operate, and of the Jinlingzhen iron deposits, which it did not exploit in this period.

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08 For the history of the Zichuan mines during this period, see chōsabu, SMR, ed., Shisen Ha-kusan Shōkyū tanden chōsa shiryō [Research data on the coalfields of Zichuan, Boshan, and Zhangqiu] (Dairen: SMR, 1937), p. 450;Google ScholarWuheng, Yu, “Luda gongsi diaocha baogao” [A report on the Luda company], Shandong nongkuang gongbao [Shandong agricultural and mining gazette], July 1929, pp. 14–15, 22-27Google Scholar; Jiarong, Xie, Dierci Zhongguo kuangye jiyao [General statement on the Chinese mining industry, no. 2] (Beijing: Nongshangbu, dizhi diaocha suo, 1926), p. 38;Google ScholarMasao, Tezuka, Shina jūkōgyō hattatsushi [History of the development of heavy industry in China] (Kyoto: Taigadō, 1944), pp. 523–25;Google ScholarShina kōgyō jihō [Chinese mining journal], no. 54 (December 1921), p. 84;Google Scholar “Santō no tetsudō, kōzan oyobi Chintō kō ni tsuite” [On the Shandong railway and mines and the port of Qingdao], Mantetsu chōsa geppō [SMR research monthly] 8, no. 6 (June 1928): 134Google Scholar.

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12 Gentai, Inoue, “Santō tanden nōgyoshoku to sono gōban kaihatsu“ [Shandong's coalfields and their development by joint enterprise], Naigai chōsa sbiryō [Research materials from Japan and abroad] 4, no. 3 (March 1932): 208–17;Google ScholarSaitō, , Tai-Shi keizai seisaku, pp. 176–77.Google Scholar

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14 SMR, chōsakai, keizai, ed., Shina sekitan shijō taisuru kongo no hōsaku [Plans in relation to the Chinese coal market] (Xinjing: SMR, 1936), pp. 12–14, 17–25 et passim.Google Scholar See also kenkyūjo, Tōa, Nihon no tai-Shi tōshi, 1: 162.Google Scholar

15 Shisen Hakusan Shōkyū, pp. 456–58.

16 Chūgai shōgyō shimpō [Commercial news], 22 August 1922; and Ōsaka asahi shimbun [Osaka morning news], 27 October 1922, both in kenkyūjo, Kobe daigaku keizai keiei, ed., Shimbun kiji sbiryō shūsei [Collected materials from newspaper reports], vol. 5 (Tokyo: Ōhara shinseisha, 1974), pp. 100–101.Google Scholar

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19 For this, see Wright, T., “Entrepreneurs, Politicians and the Chinese Coal Industry, 1895–1937,” Modern Asian Studies 14, no. 4 (October 1980) (forthcoming).CrossRefGoogle Scholar

20 Shisen Hakusan Shōkyū, p. 458; Boorman, Howard L., ed., Biographical Dictionary of Republican China, vol. 1. (New York: Columbia Univ. Press, 1967), pp. 382–84.Google Scholar

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22 Shisen Hakusan Shōkyū, p. 363.

23 Ibid., p. 459; Tezuka, , Shina jūkōgyo, pp. 528–30;Google ScholarWou, Odoric Y. K., Militarism in Modern China: The Career of Wu P'ei-fu (Canberra: Australian National Univ. Press, 1978), pp. 50–51.Google Scholar

24 Shisen Hakusan Shōkyū, pp. 458–59; Tezuka, , Shina jūkōgyō, p. 528;Google ScholarShina kōgyō jihō, no. 57 (November 1922), p. 116.Google Scholar

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26 Shisen Hakusan Shōkyū, pp. 460–461; Kuangye Zhoubao [Mining weekly] (Nanjing) (hereafter cited as KYZB), no. 151 (21 July 1931), p. 868.Google Scholar

27 Shisen Hakusan Shōkyū, pp. 369–70, 392, 460.

28 For this and the next paragraph, see Shisen Hakusan Shōkyū, pp. 364–65, 461–63, 472–73; Shina kōgyō jihō, no. 58 (February 1923), p. 93;Google ScholarJōyaku isan, 1: 1016–54.Google Scholar

29 Shisen Hakusan Shōkyū, p. 469; Gengsheng, Xu, Zhongwai heban meitie kuangye shihua [History of jointly managed Sino-foreign coal and iron mines] (Shanghai: Shangwu yinshu guan, 1947), p. 207.Google Scholar

30 Shina kōgyō jihō, no. 58(February 1923), p. 96.Google Scholar

31 Shisen Hakusan Shōkyū, pp. 483–87.

32 Ibid., p. 471; Yu, , “Ludagongsi,” pp. 7–8;Google ScholarXu, , Zhongwai, pp. 200–3;Google ScholarChen, , Gongyeshi, dierji, p. 674, quoting Shenbao, 2 October 1923.Google Scholar

33 See Chengming, Wu, Diguozhuyi zaijiu Zhongguo de touzi [Imperialist investments in the old China] (Beijing: Renmin chuban she, 1955), pp. 54–60.Google Scholar

34 “While these civil wars were raging in the area in which we operate, the value of British protection and of the foreign staff was repeatedly demonstrated. There is no question that the existence of the British interest in the Administration [Kailan], and, for the first half at least of the period, the strong attitude maintained by the British government saved the Administration time and time again from spoliation by the different warlords who secured successively control of the area.“ Memorandum by Nathan, E. J., 1938, in Nathan Papers, Bodleian Library, Oxford. For an example of the problems faced by Chinese mines, see KYZB, no. 326 (14 March 1935), pp. 219–21.Google Scholar

35 Ajiakyoku, Gaimushō, ed., Saikin Shina kankei sho niondai tekiyō, 1927 [Outline of the problems of recent relations with China, 1927], 2 vols. (Tokyo: Gaimushō, 1928), 2: 320–23.Google Scholar

36 Yinhang yuekan [The bankers magazine] (Beijing) 8, no. 8 (August 1928): 86.Google Scholar

37 KYZB, no. 84 (28 February 1930), pp. 568–70;Google Scholar no. 105 (7 August 1930), p. 135; no. 113 (7 October 1930), p. 266; SMR, Sangyōbu, , ed., Kita Shina keizai sōkan [An economic overview of north China] (Tokyo: Nihon hyōronsha, 1938), tables, p. 69.Google Scholar

38 The Zhongxing mine was forced to close, Yili and Zhonghe (in Cixian, Hebei), Zhongfeng (in jingxing xian, Hebei), and Liuhegou (in Henan) all suffered heavy losses. Only the Jingxing mine, in which there was minority German participation, escaped relatively unscathed. Yinhang yuekan 8, no. 8 (August 1928): 85–86;Google ScholarDefeng, Hou, ed., Disici Zhongguo kuangye jiyao [General statement on the Chinese mining industry, no. 4] (Beijing: Shiye bu, dizhi diaocha suo, 1932), p. 313;Google ScholarSMR, chōsaka, Tenshin jimusho, ed., Kita Shina kōgyō kiyō [General statement on the mining industry of north China] (Tianjin: SMR, 1936), pp. 36–38;Google ScholarXu, , Zhongwai, p. 185.Google Scholar

39 Shisen Hakusan Shōkyū, p. 462.

40 KYZB, no. 145 (7 June 1931), p. 777; no. 164 (28 October 1931), p. 1078.Google Scholar

41 KYZB, no. 31 (21 January 1929), p. 505; no. 101 (7 July 1930), 73.

42 jingyu, Wang, comp., Zhongguo jindai gongyeshi ziliao, dierji, 1895–1914 nien [Source materials on the history of modern industry in China, second collection, 1895–1914] (Beijing: Kexue chuban she, 1957), p. 1112;Google ScholarZhen, Chen, Zhongguo jindai gongyeshi ziliao, disanji [Source materials on the history of modern industry in China, third collection] (Beijing: Sanlian shudian, 1962), p. 452;Google ScholarXu, , Zhongwai, pp. 92–95, 115–18, 150–51.Google Scholar

43 The Germans had requested a prohibition on modern mines in Boshan in the 1900s: see Schrecker, Imperalism and Chinese Nationalism, pp. 180–91.

44 KYZB, no. 36 (28 February 1929), p. 591;Google ScholarShisen Hakusan Shōkyū, pp. 475–76; Ajiakyoku, Gaimushō, Saikin Shina kankei sho mondai tekiyō, 1928 [Outline of the problems of recent relations with China, 1928}, 3 vols. (Tokyo: Gaimushō, 1929), 2, pt. 2: 161–64.Google Scholar

45 Zichu, Wei, Diguozhuyi yu Kailuan meikuang [Imperialism and the Kailan mines] (Shanghai: Shenzhou guoguang she, 1954), pp. 179–206;Google ScholarTadao, Matsumoto, comp., Matsumoto bunko Chūgoku kankei shimbun kirinukishū [Collection of newspaper clippings on China from the Matsumoto collection] (Tokyo: Yūshōdō microfilm, 1967), section on mining.Google Scholar

46 Shenbao, 18, 22, and 23 January, and 11 March 1924; see also Xu, , Zhongwai, p. 203.Google Scholar

47 Xu, , Zhongwai, p. 204;Google Scholar see also Mantetsu chōsa geppō 5, no. 9 (September 1925): 70.Google Scholar

48 This was by no means the only time different organs of the government adopted different policies on coal mines. The confiscation of the Zhongxing mine in southern Shandong by the War Areas Political Affairs Commission in 1928 was opposed by the Ministry of Agriculture and Mines. See Wright, T., “Shandong Mines in the Modern Chinese Coal Industry up to 1937“(Ph. D. thesis, Univ. of Cambridge, 1976), p. 402.Google Scholar

49 Shisen Hakusan Shōkyū, p. 41; Xu, , Zbongwai, pp. 206–7;Google ScholarKYZB, no. 74 (14 December 1929), p. 404;Google Scholar no. 85 (7 March 1930), pp. 581–82.

50 KYZB, no. 32 (28 January 1929), pp. 519–20.Google Scholar

51 Hou, , Foreign Investment, pp. 145, 152.Google Scholar For similar problems in pre-revolutionary Russia, see McKay, John P., Pioneers for Profit: Foreign Entrepreneurship and Russian Industrialization, 1885–1913 (Chicago: Univ. of Chicago Press, 1970), pp. 192–97.CrossRefGoogle Scholar

52 KYZB, no. 154 (28 July 1931), pp. 883–84.Google Scholar

53 Saikin Shina, 1928, 2, pt. 2: 156–57;Google ScholarKYZB, no. 91 (21 April 1930), p. 679;Google Scholar no. 95 (21 May 1930), p. 746; no. 113 (7 October 1930), p. 266.

54 See Buck, Urban Change, ch. 7; Shisen Hakusan Shōkyū, pp. 15–16; Huiruo, Zhang, ed., Diwuci Shandong kuangye baogao [Fifth Shandong mining report] (Jinan: Shandong zhengfu jiansheting, 1936), p. 226.Google Scholar

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56 KYZB, no. 335 (21 May 1935), p. 353;Google Scholar no. 336 (28 May 1935), p. 375; Wanyan, Zheng, ed., Minguo shijiunian Shandong kuangye baogao [Shandong mining report, 1930] (Jinan: Shandong zhengfu shiye ting, 1931), pp. 146–50.Google Scholar

57 See Wright, , “Shandong mines,” p. 470. Here 32 cents per ton overstates Luda's profit, as it is per ton of Zichuan output, while some income also accrued from the leasing out of the Fangzi mines. The profits of the Sino-Japanese Bodong mine in Boshan were said to have been low because its Japanese co-owner bought its coal cheaply at the mine and sold it for a high price in Japan. (See Zhang, Diwuci Shandong kuangyebaogao, p. 379) It is possible that such hidden profits were also made on Zichuan coal, but the small amount exported to Japan and the cost and price figures for sales in Shanghai make this unlikely.Google Scholar

58 This last calculation is complicated by the complex capital structure of Luda described above.

59 Richthofen, Ferdinand von, China: Ergebnisse Eigener Reisen unddarauf Gegundeter Studien, vol. 2 (Berlin: Verlag von Dietrich Reimer, 1882), p. 205.Google Scholar

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63 Shisen Hakusan Shōkyū, pp. 551–52. While there are few accurate figures for Zichuan sales, they sold roughly 20–25% of their coal to the railway, 15% to shipping at Qingdao, 30–45% within Shandong, and exported 15–30% (5–10% to Japan and 10–25% to Shanghai). The category of exports, in particular, was subject to sharp fluctuations.

64 KYZB, no. 398 (14 September 1936), pp. 221–22;Google ScholarMasao, Tezuka, Jihen zen ni okeru Shina sekitan no seisan to ryūdō [Prewar coal production and marketing in China] (Tokyo: Tōa kenkyūjo, 1940), p. 247.Google Scholar

65 This group demanded that more than half the shares in the proposed company should be held by Sino-Japanese firms, and that it should control production as well as sales. See Shisen Hakusan Shōkyū, p. 32.

66 KYZB, no. 249 (7 August 1933), p. 131;Google Scholar no. 271 (21 January 1934), p. 485; no. 275 (21 February 1934), pp. 552–54;no. 319(21 January 1935), p. 100; no. 354 (14 October 1935), p. 659; Shisen Hakusan Shōkyū, pp. 33, 565–67.

67 Shisen Hakusan Shōkyū, pp. 564, 587–89.

68 Nathan to Turner, 11 November 1936, 10 March 1937 (enclosure), 27 May 1937, in Nathan Papers.

69 Shisen Hakusan Shōkyū, pp. 559–620; KYZB, no. 386 (14 June 1936), pp. 17–19;Google Scholar no. 389 (7 July 1936), p. 65; no. 395 (21 August 1936), p. 161; no. 401 (7 October 1936), p. 263; no. 405 (7 November 1936), p. 321.

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71 Ibid.