Transnational networks of human resources and knowledge in East Asia: a case study of Taiwan merchant Wang Xuenong (1870–1915) and his trading company

Abstract

Taiwan is an island and trade has always been the locomotive of its economic development. From the 1620s to the 1960s, cane sugar was Taiwan's most representative export commodity. Yet little attention has been paid to the business strategies of sugar traders and the changes in their thinking. How did the Takow (Kaohsiung) merchants who first went to Japan and Hong Kong to conduct cross-border trade in person learn about international trade and build a network of human resources that crossed borders, especially after the 1870s? And how did they face the great changes of an era in which tradition and modernity were intertwined, so that, following the regime transfer in the 1890s from the Qing Dynasty to the Japanese empire, they were able to expand their business territory and become major sugar merchants in southern Taiwan?

This article examines the career of Wang Xuenong—a well-known sugar merchant in Taiwan during the Meiji period (1868–1912). It attempts to explain, from the perspective of cross-cultural knowledge transfer and human resource strategies, why and how sugar merchants such as Wang, who had gone to Japan in the early years of the Meiji Restoration for purposes of cross-border trade, introduced a trading company system that incorporated a mixture of East Asian and Western elements. It further investigates how they expanded their business from the sugar trade into a wider commercial domain that included mechanical rice milling and steamship transport. Finally, it looks at how their actions affected a transformation of Taiwan's commercial culture from the late Qing Dynasty to the early days of Japanese rule, and the historical significance of these changes in Taiwan's transitions towards industrialisation and modernisation.

Introduction

Taiwan is an island and trade has always been the locomotive of its economic development. From the 1620s to the 1960s, cane sugar was Taiwan's most representative export commodity. Yet little attention has been paid to the business strategies of sugar traders and the changes in their thinking. Sherman Cochran pointed out that the participation of entrepreneurs and their employees in trading activities is a highly personal process and it is necessary to examine the space in which they operate—especially the role of long-distance traders as cross-border cultural brokers.¹ In other words, how did the regions or countries in which traders worked influence them, especially given the changing political and cultural conditions of each area?

Taiwan's sugar cane production is centred in the south. After the opening of the treaty ports in Taiwan in the 1860s, sugar was consistently the most important export commodity of southern Taiwan.² The export market eventually expanded from China to Japan, Europe, the USA, and Australia. In the mid-1880s, driven by comparative advantage, the Taiwan sugar markets gradually concentrated in China and Japan.³ As early as the 1870s, Takow (Kaohsiung) merchants came to Yokohama to conduct business. Most previous studies have focused on the role of Western trade firms and compradors in the ‘treaty-port system’ or ‘treaty-port economy’, or on how they used the privileges garnered from the unequal treaties to protect their property and business.⁴ However, this literature has seldom explored how the indigenous merchants directly involved in cross-border trade encountered new knowledge, learned international trade technology, utilised a range of human resources, and further expanded their trade networks by going to other countries and places.

Both Wang Tay-Sheng and Kao Shu-yuan noted that, by the late Qing Dynasty, Taiwanese officials and merchants had already taken the initiative to learn and imitate the Western company system because of their contact with foreigners.⁵ However, they did not discuss in detail when, and through which channels, Taiwanese learned about these matters; the characteristics of the late Qing companies; nor the influence of Japanese business culture and the broader socio-political changes of the Meiji Restoration (1868–1911) in Japan on Taiwanese traders and the process of knowledge transfer.

The sugar trade between Taiwan and Japan in the late Qing Dynasty involved several firms, some of which were Western trading companies. Chen Fuqian (1834–82) had established Soon Ho Hong in Yokohama by the 1870s at the latest and it became one of the two major centres of the city's Chinatown.⁶ After that, the Hexing Company was formed by the Soon Ho manager, Chen Zhonghe (1853–1930), and Chen Fuqian's family, and this new firm benefited from Soon Ho's influence. Soon Ho Hong and Hexing Company generally used Takow as their headquarters and sent staff to Yokohama to set up a branch. Several related studies have sketched the career of Chen Fuqian and the history of his family's business in Taiwan and Japan.⁷ However, past research often overlooked the fact that Soon Ho Hong became the Yokohama branch of the Hexing Company after the former was established in 1887. In 1890, W. W. Myers (1846–1920)—a medical officer with the Imperial Maritime Customs who was stationed in Takow—said that the Hexing Company, not Soon Ho Hong, controlled most of the sugar exports from southern Taiwan.⁸ With the Hexing Company as the foundation of his business, Chen Zhonghe and his family, who had replaced the Chen Fuqian family as the leading Takow sugar traders, became the most prominent sugar merchants.⁹

In addition to Chen Fuqian and Chen Zhonghe, Wang Xuenong (1870–1915), who came from Lingyaliao (now Lingya District, Kaohsiung City) (Figure 1), was trained in the Soon Ho Hong and the Hexing Company. He was a sugar merchant who had been doing business and living in Yokohama for 10 years.¹⁰ He and his boss, Chen Zhonghe, were Taiwanese businessmen who had seen the Meiji Restoration in Japan with their own eyes.

Figure 1. Places related to the sugar traders in Taiwan. Source: created on Google Maps by the author.

In April 1895, after the Treaty of Shimonoseki was signed and Taiwan ceded to Japan, many of Taiwan's local gentry and businessmen moved back to China with their families. Wang Xuenong went the other way. Taking advantage of the chaos and returning to Taiwan, he went to Tainan—the prefectural capital that had long been Taiwan's political and economic centre—and began doing business. He established several modern sugar companies one after another, most notably the famous Ensuigo Sugar Company, which was the first to be founded using only Taiwanese capital.

Wang further revitalised the Tainan Sanjiao—the most powerful merchant organisation in Taiwan. The Sanjiao was an association of three major trading guilds, or brokerage cartels, that had become extremely influential in Taiwan and its maritime trade during the nineteenth century; its force was felt not only in trading circles, but also in politics and society. With regime change, Sanjiao members had scattered, with most going to mainland China, and the organisation had collapsed. Wang revived it and he became the first head of the Sanjiao association (kumiai) at the invitation of Shinpei Goto, the minister of civil affairs.¹¹ Although arguably a representative example of Taiwan sugar merchants during the transfer from the Qing Dynasty to the Japanese empire, Wang Xuenong himself—not to mention his relationship with Chen Zhonghe—has not been the subject of much research.

This article takes up this case. From the perspective of knowledge transfer and human resource strategies, it explains how sugar merchants such as Wang, who had already traded in Japan since the 1880s, introduced trading companies that mixed Eastern Asian (Chinese and Japanese) and Euro-American elements into Taiwan; how they expanded their business territory; and how this influenced the transformation of Taiwan's commercial culture from the late Qing to the early days of Japanese rule, as well as the historical significance of this transformation for Taiwan's transitions towards industrialisation and modernisation.

Chen Zhonghe, Wang Xuenong, and the transnational sugar trade in Japan after the 1870s

In southern Taiwan, sugar was generally exported from the two treaty ports of Anping and Takow, but the export markets were different. Due to consumer preference, Takow sugar was mainly exported to Japan, while Anping sugar was sold to central and northern China.¹²

The difference in the export markets of Takow and Anping sugar affected the trading experience of the sugar merchants in the two places and their views on foreign cultures and practices. Takow sugar was initially exported to Yokohama, the first treaty port in Japan, and then in smaller amounts to Kobe. Sugar merchants also initially moved to Yokohama.¹³ In circa 1856, Chen Fuqian was the comprador of the American firm W. M. Robinet & Co. After the firm closed down, he became the comprador for the Dent Company, a British concern. Chen established Soon Ho Hong in Qihou (now Qijin, Kaohsiung) in circa 1863 and the Soon Ho store in Lingyaliao in 1870 when the scale of its trade expanded. That store was responsible for the purchase of sugar in southern Taiwan and the sale of opium. It had three sugar warehouses located in Donggang, Aligang, and Yanshuigang for advance purchasing of sugar.¹⁴

In the same year, Chen Fuqian hired Chen Zhonghe, who was only 17 years old, to escort the sugar in a Western sailing vessel directly to Yokohama for sale. At first, the vessel went back and forth to Yokohama once a month and exchanged money at Dadetang.¹⁵ In 1876, Soon Ho Chan, another warehouse specialising in the sugar trade, was officially established in a rented building in Yokohama, and it also had branches in Nagasaki and Kobe. When Chen Fuqian passed away in May 1882, Chen Zhonghe returned to Takow, where he ‘served as the general manager of the Soon Ho Hong, and sold sugar to Yokohama’.¹⁶ Thus, since 1870, Chen Zhonghe had been doing business in Yokohama and he stayed in Japan at least from 1876 to 1882 to run the Soon Ho Chan in Yokohama.

When the family divided the property in 1887, most of the enterprises established by Chen Fuqian were inherited by his younger brother, Chen Beixue, who was mainly engaged in business in Tainan and therefore became a powerful sugar merchant.¹⁷ In November of that year, Chen Zhonghe recruited members of Chen Fuqian's family in Takow and established Hexing Company as a joint venture with capital raised through shares. The Hexing Company primarily operated import and export trade between China, Hong Kong, and Japan. In the tradition of the ‘98 firms’ (jiuba hang 九八行), it accepted commissioned sales and took a 2 per cent commission. The Soon Ho Chan in Yokohama became its branch.¹⁸ In 1890, the Hexing Company already controlled more than half of the sugar produced in Fengshan County,¹⁹ replacing Soon Ho Hong, and became the largest company controlling Takow sugar. At that time, Chen Zhonghe also represented Hong Kong insurance companies such as Antai, Wan'an, Ji'an, and Pu'an, and acted as the comprador of the Penang Qianyuan Insurance Company of Malaysia and the British Wright & Co.²⁰ Later, Chen Zhonghe and the Chen Fuqian family had disputes and were involved in litigation over the Hexing Company and Soon Ho Chan of Yokohama.²¹ Even so, after 1887, with Hexing Company as his base, Chen Zhonghe spread his network throughout Japan, Hong Kong, and Southeast Asia, gradually replacing the Chen Fuqian family and becoming Takow's most important sugar merchant.

In 1883, after Chen Zhonghe returned to Takow, the 13-year-old Wang Xuenong entered Soon Ho Hong to learn the trade. After just two years, he was sent to Soon Ho Chan in Yokohama as a bookkeeper and was promoted to deputy general manager in 1890.²² Wang Xuenong's quick promotion indicates that he must have won Chen Zhonghe's appreciation and trust. Chen took a personal interest in training Wang, who enjoyed Chen's patronage and was assigned important responsibilities. In the process, Chen and Wang established a close and lasting relationship as ‘master and servant’.

Following the 1895 cession of Taiwan to Japan, armed anti-Japanese forces surged across Taiwan. Chen Zhonghe fled to Xiamen because he was being forced by Liu Yongfu, the leader of the anti-Japanese rebels in Tainan, to donate money and rice to their cause. Wang Xuenong therefore returned to Taiwan to manage Hexing Company affairs on Chen's behalf. Wang also provided information to the Japanese forces on the resistance and supplied the army with provisions. In October 1895, Liu Yongfu was defeated and escaped to China. The Republic of Formosa in southern Taiwan collapsed and, in November, the war officially ended.²³ In January of the following year, Chen Zhonghe returned to Takow from Xiamen and led Wang Xuenong and other subordinates to continue assisting the Japanese with intelligence on the Taiwanese resistance. As a result, Hexing Company was even besieged once by anti-Japanese guerrillas and Chen Zhonghe had to flee.

From the actions described above, we can make some inferences. Wang Xuenong and Chen Zhonghe had resided and traded in Japan for a long time and had witnessed the achievements of the Meiji Restoration first-hand. In the face of Japan's annexation of Taiwan, they adopted a strategy of accepting Japanese rule and even assisting the new government against the anti-Japanese Taiwanese forces. Therefore, they derived much benefit from the colonial government, as will be described below.

The arrangement of business territory between boss and employee

Both Chen Zhonghe and Wang Xuenong had long-term trading experience in Yokohama. Wang Xuenong had lived in Japan for more than 10 years, starting when he was still a youth, and he often travelled to and from Kobe and Osaka.²⁴ Unlike traditional Chinese people, who always stayed in Chinatown and did not get involved with the locals, both Chen and Wang could speak Japanese very well. Chen Zhonghe established a trade relationship with Abe Kōbei (1847–1919) as early as 1873, ‘as [he] knew things about Japan’,²⁵ and Wang Xuenong ‘had close relationships with Japanese businessmen’, even closer than he had with other businessmen.²⁶ They were thus able to establish a new kind of human resource network within the Japanese commercial community, and they further gained an understanding of Japanese business culture and management principles. Moreover, Yokohama and Osaka, which they often visited, were important commercial cities during the Meiji Restoration²⁷ and so Chen Zhonghe and Wang Xuenong had the opportunity to observe closely how Japan moved towards commercial modernisation. They can be said to have been the Taiwanese who knew Japan best at that time and so they were able to act as brokers of commercial culture to transfer knowledge to Taiwan.

Chen Zhonghe's early trading experience in Dadetang is also worth noting. Dadetang was actually operated by the Guangzhao commercial group, which was composed of businessmen from Guangzhou and Zhaoqing.²⁸ The Guangzhao commercial group made up the overwhelming majority of the overseas Chinese in Yokohama, and also controlled the Chinese Guild Hall, which was established in circa 1870.²⁹ It can be seen from Chen Zhonghe's election as the trustee of the Guild Hall in 1876 that he had a close relationship with the Guangzhao commercial group.³⁰ Furthermore, Chen also conducted trade with the Fujianese Taichang firm in Nagasaki.³¹ These contacts may well have helped him to extend his trade network to Hong Kong and Southeast Asia.

In conducting the sugar trade between Taiwan and Japan, shop staff were sent to Yokohama and Kobe for a long time; in addition, sometimes it was necessary for them to pass through Hong Kong or remit the payment from Yokohama Shoji Bank to Hong[Kong] Shang[hai] Bank (the predecessor of HSBC Bank) in Hong Kong and then purchase oil, opium, and foodstuffs to bring back to Taiwan.³² After 1885, Taiwanese brown sugar encountered fierce competition in the Yokohama market from the mechanised sugar production of Westerners from Hong Kong.³³ Therefore, traders who were dispatched to Hong Kong often had to purchase goods and investigate business conditions in Hong Kong, and so acquired a thorough experience of Hong Kong; they also took the opportunity to learn international trade management skills.³⁴

Chen Zhonghe was ‘familiar with the general trends of Asia’ because, apart from his familiarity with Japan, he had also travelled to Xiamen and Hong Kong and was able to speak English.³⁵ The Hexing Company, which he managed, did not adopt the traditional Taiwanese hong (行) or hao as part of its name.³⁶ It had just seven shareholders and formed a private company or a closed company based on family capital. He most likely adopted this approach from Western companies (yanghang 洋行)³⁷ in order to conduct international trade. The motivation was the British enactment of the ‘company law’ in 1862 and its introduction into Hong Kong in 1865; the law required a minimum of seven shareholders to form a company. This also made it more common for new firms to use the term ‘company’ (gongsi) in their names.³⁸ Moreover, in order to compete against the Western powers, the new Meiji government of Japan established a trading company (Kōshō Kaisha) in 1869 with the participation of Inoue Kaoru and Godai Tomoatsu, both of whom had experience with Western companies. The Satsuma Rebellion of 1877 stimulated inflation and the establishment of companies gradually became popular.³⁹ In other words, setting up trading companies in Hong Kong and Japan to carry out international trade became a trend.

In the 1890s, the businesses established by Chen Zhonghe and Wang Xuenong and foreign partnerships were mostly called companies and seldom used the term hong in their names. Dechang Company (Dechang Gongsi), established by Wang Xuenong, was even called ‘Dechang Foreign Company’ (Dechang Yang Hong 德昌洋行).⁴⁰ In other words, even though, as Li Pei-Chen has noted, the Hexing Company system still had its limitations, to only regard it as a ‘mature form of the traditional Chinese joint-stock (合股) [venture]’ is to underestimate it. The 1911 work Civil Law in Taiwan noted that, in the late Qing Dynasty, Taiwan's traditional joint-stock ventures had undergone changes for the first time, with the addition of ‘precise and reasonable’ contracts. Wang Tay-Sheng called the form a ‘joint venture with a twist’ (bianxing hegu 變形合股),⁴¹ which is more appropriate.

Hexing Company had not yet fully become a Western-style enterprise. Still, the historical significance of Taiwanese businesses (starting with Hexing in the 1880s) using ‘company’ in their names as well as adopting more detailed joint-stock contracts cannot be ignored. Chen Zhonghe and Wang Xuenong had long lived abroad to conduct foreign trade and they had deep experience in Japan and Hong Kong. As early as the late Qing Dynasty, they had even expanded their business network into Southeast Asia. They were the first generation of Taiwanese merchants who personally engaged in cross-border trade in the late nineteenth century. They had a wealth of experience in ‘commercial warfare’, understood the new developments in the international arena at the time, and were the first to follow the ‘company’ trend in order to manage cross-border trade.

Chen Zhonghe did not completely adopt a management model based on blood, but instead appointed men of talent. Clearly, Wang Xuenong was employed by him because Wang was good at accounting. Wang even managed the business on Chen's behalf when the latter retreated to Xiamen. The relationship between Chen Zhonghe as owner and Wang Xuenong as an employee was similar to that of Chen Fuqian and Chen Zhonghe. However, perhaps based on their personal experience and due to their witnessing the contention and litigation over property that occurred between Chen Fuqian and Chen Beixue's family,⁴² they learned a lesson and moved from the ‘master–servant’ relationship to establishing respective spaces within the business and cooperating closely.

In doing this, they may have taken reference from Japanese traditional business customs. For example, Echigoya was the predecessor of the Mitsui Consortium. The staff to be hired were divided into various classes according to age and ability. After long-term employees were promoted from being workers who lived at the company to bekke (branch homes) who commuted from their own homes, the head family could let them become independent families and use the trademark of the store as a way to share commercial credit. Most businesses in Kyoto and Osaka had the habit of allowing long-term shopkeepers (bantō) who were not related by blood to eventually stand alone as a reward for service.⁴³ Chen Zhonghe, who returned to Takow from Xiamen, and Wang Xuenong, who had helped protect the master's property during the war, also faced this issue. Wang Xuenong, who was 26 years old and quite capable, wisely decided to set up independently in Tainan.

In fact, the production and trade patterns of Takow and Tainan sugar in the late Qing Dynasty were quite different. Starting from Chen Fuqian, Takow sugar gradually fell into the hands of one or two traders, including Soon Ho Hong and later Hexing Company. In contrast, the trade in sugar produced in the Tainan area had since the early Qing Dynasty been controlled by a network of sugar guilds that sold to North and Central China, making it difficult for foreign merchants to compete with it.⁴⁴

In the 1890s, the Takow sugar production area was mainly controlled by Hexing Company; it was thus a case of ‘one mountain cannot accommodate two tigers’. Wang Xuenong, who wanted to be independent, would naturally not choose to compete with Chen Zhonghe in Takow. Chen Zhonghe returned to Takow from Xiamen at the beginning of 1896 and, in December of that year, Wang Xuenong went to Tainan and established his own business: Dechang Company.⁴⁵ Wang Xuenong still maintained a close connection with Chen Zhonghe through co-investment partnerships⁴⁶ but each had his own separate business territory. Wang Xuenong's business was rarely involved in the Takow area, although Hexing Company's network expanded to Tainan through Wang's connections. Instead, the ‘master’ and the ‘servant’ jointly divided the sugar trade in southern Taiwan. This brought about a new situation, known at the time as ‘Takow, Chen Zhonghe; Tainan, Wang Xuenong’; they were the two largest merchants in southern Taiwan before 1905. Their story shows how the first batch of Taiwanese businessmen with international trade experience in the late Qing Dynasty absorbed new knowledge from foreign countries, seized opportunities, and developed their own business territories.

A trading company with a mixture of Eastern Asian and Euro-American resources and systems

Having come to Tainan at the end of 1896, Wang Xuenong first gathered 15 ‘shareholders’ from Taiwan and China.⁴⁷ With 30 shares totalling 30,000 yuan, he founded together with them a joint venture known as Dechang Company.⁴⁸ Based in Tainan Prefecture, it conducted ‘business [in places] including China, overseas, [and] the southern and northern [parts] of Taiwan’. Wang set up a warehouse in Yokohama and the concern operated in Japan, Hong Kong, Xiamen, Shantou, Shanghai, Ningbo, Tianjin, Yantai, and other places, picking up and distributing goods, especially cloth. Dechang also acted as a 98 firm for purchasing and selling goods from the north and south of Tainan Prefecture.⁴⁹ In other words, as it responded to the range of trading situations from domestic to global, Dechang Company integrated the qualities of traditional 98 firms and of modern foreign companies. It coordinated with Tainan's sugar export market—mainly the part of it that stretched northwards from central China—and expanded its trading network from Japan and Hong Kong to China and Southeast Asia.

With his experience in multinational trade spanning Japan, Hong Kong, and China, Wang Xuenong understood global trends and could recruit capital from outside Taiwan. Although Dechang imitated the establishment of Hexing Company in form, it was also innovative. The 17-item contract noted the ‘naming [of the enterprise as] Dechang Company’; the issuance of ‘stocks’ (gupiao) to shareholders as certificates of their shares, which could be passed on to their heirs; and the election by the shareholders of Wang Xuenong and He Dexiu⁵⁰ to serve as the principal and deputy dangshi (manager), as well as the establishment of an unpaid xieliren (associate). It also specified in detail the capital composition of the firm, the powers and salaries of the managers, responsibilities concerning profit and loss, the distribution of income, the establishment of a provident fund, shareholder loans, the transfer of shares, auditing of accounts, business closure, and various regulations concerning corporate ethics from managers down to shareholders.⁵¹

This was quite different from the relatively simple content of a traditional joint-stock firm contract. Dechang Company in its formation thus revealed the spirit and norms of a modern company. It is worth noting that the amount of capital paid in by shareholders received fixed interest every year. ‘Those who put money into the firm’ were to receive 10 per cent interest every year. In other words, in addition to holding shares, shareholders could leave money in the company, on which they obtained a fixed interest. This was somewhat similar to the sashikuwa-kin (差加金, additional investment) of Osaka Commercial Company, which was established in 1869 as one of the first Japanese trading companies.⁵² Second, the principal and deputy managers were paid not only a set monthly salary, but also, along with the associate, a dividend known as a ‘shadow share’. Moreover, 5 per cent of the company's profit was used as a provident fund and passed on to the employees as a yearly bonus; the rest was shared equally by the shareholders. Third, the managers ‘handled the overall business’ and, in consultation with the associate, controlled the appointment of the staff, except for the accountants (zhangfang, kuaiji) in charge of the money, who were elected by the shareholders.⁵³

This joint-stock contract, as well as the contract of the Jiexing 捷興 Company (known popularly as Laiji Chan 唻記棧) that was set up in 1895 and also came out of the Hexing Company, did indeed take Hexing Company as their model. But, besides adding coordinators,⁵⁴ they also added provident funds, stock inheritance, and more rigorous corporate ethics regulations. Furthermore, Dechang Company's corporate institutionalisation was on a higher level than that of the Hexing Company. It had separated investors (capital owners) and operating managers (professional managers), and had escaped the constraints of raising funds primarily within a given family. The associate system was shaped even more by the commercial laws of Japan, as well as by those of Hong Kong and other British territories; the system was not part of Taiwan's traditional business practice.⁵⁵

Dechang Company clearly had a more pronounced Japanese element. This is because, although Japan began to use the term ‘company’ at the end of the Tokugawa period (1603–1867), it was not until 1881, after a period of exploration, that the company law was drafted; it was only officially promulgated in 1889. In the second half of the 1880s, with the enterprise boom, a wave of liberalisation facilitated the establishment of companies.⁵⁶ During this period, Chen Zhonghe returned to Taiwan, while Wang Xuenong stayed in Yokohama and witnessed this process first-hand. Therefore, in 1896, when Wang founded Dechang Company, he included Japanese commercial law and corporate ethics in its constitution.

A comparison of the Dechang example with the joint-stock contracts established by Ruixing Foreign Company or Fucheng (Tainan)'s Shimoji in around the 1880s⁵⁷ highlights the advantages of Dechang Company in capital raising and governance structure. It not only integrated Chinese, Japanese, and Western corporate organisational models, but also adopted the strengths of both traditional and modern enterprises. Wang Xuenong knew how to use bank financing and to negotiate bills (yahui 押匯) of import and export⁵⁸; he further hired a Japanese staff member, Eguchi Otosan, to assist in the operation.⁵⁹ His ability to utilise multiple forms of knowledge and a variety of human resources helped Wang Xuenong to recruit capital, obtain investment from abroad, and expand his trade network. This facilitated the success of his early career and he quickly rose to become the richest man in Tainan.⁶⁰

Dechang Company mainly exported sugar, rice, and salt while importing cotton cloth and groceries. Later, it also became involved in tobacco manufacturing and the sesame, longan, and camphor industries.⁶¹ Of these, the trades in sugar, rice, and tobacco were the most representative. Compared with his contemporaries, Wang Xuenong was more like a modern merchant; his picture, for example, demonstrates his choice of a ‘Westernised’ and modern persona (Figure 2). He was the first sugar merchant to register a trademark in colonial Taiwan: following the issuance of the trademark law in Taiwan in 1899, he quickly registered trademarks for tobacco in 1901 and sugar in 1905 (Figure 3).⁶²

Figure 2. Wang Xuenong. Source: Taiwan zongdufu 臺灣總督府 [The Office of the Governor-General of Taiwan], Taiwan lie shen zhuan 臺灣列紳傳 [Biographies of Taiwan Local Gentry] (Taipei, 1916), p. 309.

Figure 3. Sugar trademark registered by Wang Xuenong in 1907. Source: Hui-wen Xu 許蕙玟, ‘Yanxu he xinsheng: Rizhi qianqi Taiwan de shangbiaofa yu shangye (1899–1921)’, p. 74.

Trademarks registered by Wang Xuenong in 1907

For the sugar trade, Wang Xuenong mainly used loans from the 74th Bank and the 34th Bank of Japan in order to make advance payments to sugar producers for the purchase of sugar, so as to ensure that the products were obtained; they were then shipped to Yokohama and Kobe for sale. Trade with Hong Kong and Xiamen was done through the Hongkong and Shanghai Banking Corporation.⁶³ Most of the long-distance trade to Japan was carried by Japanese or foreign ships to Yokohama and delivered to Dechang Chan (warehouse) or Soon Ho Chan for sale; later, in 1898, the Kobe Dechang Chan was established.⁶⁴ Beginning in 1900, the trade network was further expanded to Nagasaki by commissioning the Nagasaki Taichang firm and Taiyi firm to act on Dechang's behalf in the sale of sugar and rice.⁶⁵ The documents of the Taichang firm held in the Archives of the Institute of Taiwan History reveal that Chen Zhonghe and Wang Xuenong had long been in contact with Chen Guoliang and Chen Shiwang, the father and son who ran the Nagasaki Taiyi firm since 1901; and the network of Chen and Wang in Southeast Asia and Hong Kong was formed to some extent through the introductions provided by the Taiyi firms as a consequence of their relationship with the Taichang firm.⁶⁶

The purchase of sugar was originally centred in the Tainan area. By 1903 at the latest, most of the sugar in northern Taiwan was also sold to Japan under the OSL code by Dechang and Japanese sugar merchants could hardly compete with it. Dechang did not withdraw from the ‘world of sugar’ until the Russo-Japanese War in 1905 and Chen Zhonghe and Wang Xuenong experienced a ‘sugar crisis’; only then did all northern sugar fall into the hands of Japanese sugar merchants.⁶⁷

Dechang's secondary business was not limited to the sugar trade, but also included the transporting of rice to Yokohama, Kobe, Moji, and Nagasaki. Since the 1890s, rice had been in short supply in Taipei and it was often imported from Lukang or southern Taiwan.⁶⁸ Therefore, Wang Xuenong often hired steamships or junks to transport rice to Tamsui and Keelung for sale. In January 1902, due to the loss of the second rice harvest that year in Tainan, Dechang Company imported cheap Annam (Vietnamese) rice on the ship Maizuru Maru, which had a capacity of 1,000 koku. In February 1903, due to the failure of the harvest of the previous year in Japan, brown rice was carried from Tainan to Yokohama and Kobe for sale.⁶⁹ Such actions fully demonstrated Wang's skill in coordinating his business with the pulse of the international market, expanding his Tainan-centred trade network to Southeast Asia, and connecting the Southeast Asian and Japanese rice trade.

In addition to domestic and foreign trade in commodities such as sugar and rice, Dechang was still engaged in the business of traditional Taiwanese guild merchants. It handled ‘the trade of the northern and southern ninety-eight firms’ and had the characteristics of both a 98 firm and a ‘bow firm’ (chuantou hang).⁷⁰ In 1898, according to newspaper reports, Dechang Company was ‘concurrently operating in the northern and southern jiao trades and undertaking entire steamships; the goods shipped were hard to calculate. However, sugar, rice, and cedar (Chinese fir) were the major commodities’.⁷¹ From 1902 to 1904, the trading pattern between Dechang Company and Fuchang—a sugar firm operated by Huang Guangnuan in Futougang Street, Tainan—can be seen from a glance at an extant commissioning list. Using steamships such as the Busan Maru, Taitung Maru, and Lilia, Wang transported Fuchang's Fuqing (TC, HGC, Tainan sugar), Taiqing (KG, Taiwan sugar), and northern sugar (OSL) to Soon Hoon Chan or Dechang Chan in Yokohama, as well as to Dechang Chan in Kobe, who sold it on to the local Japanese merchants, and then collected from Fuchang various sorts of commissions (hangzhong, jiuba zhong), guild fees (huichou, sanjiaohui feiyong), warehouse rent, freight shipping fees (zaizi), unloading fees (longshoremen boli), pier charges (matoufei), insurance fees (security, fire insurance), and business tax.⁷² This was a typical form of 98 firm trade; Wang Xuenong, like Chen Zhonghe, also acted as an agent for foreign merchants in the marine insurance industry.⁷³

Among Taiwan's traditional import and export traders, those with less capital tended to operate only 98 firms. Those with strong capital bases, however, further owned ships and directly transported goods for export; they operated bow firms⁷⁴—that is, they were engaged in the shipping industry. In February 1898, Dechang Company became a bow firm with its own ship for transportation. Wang Xuenong probably first used the Jindeshun—a new junk built by his father, Wang Quan (1847–1927), for transport.⁷⁵ It was not until 1906 that he actually bought it from his father. In 1900, Wang Xuenong purchased an old junk, Jinronglong, which had been made in Shiyang, Fujian during the Qing Dynasty and was larger than Jindeshun; he renamed it Hailong.⁷⁶ Perhaps due to the high cost of newly built junks, Wang Xuenong, who was very careful in calculating costs and operated by a strict budget, preferred to hire new ships from his father on a cooperative basis first; for purchase, he acquired Taiwanese junks or those made in the Qing Dynasty that had already been in use for some time. The fact that he clearly separated the property of his family and his company further shows the modernity and rationality of his business strategies.

The two junks Jindeshun and Hailong mainly carried cargo between Takow, Anping, and Donggang. However, it was difficult to control the arrival and delivery dates for ships that relied purely on the wind for power. For this reason, in August 1898, Wang Xuenong, who aspired to operate in the shipping industry, purchased two small steamships in the 200-ton to 300-ton range and named them Taiwanfu and Fengshan, respectively. Having been granted exclusive trading privileges by the Japanese authorities in Taiwan, he was now involved in both cargo and passenger transportation. Unlike the junks, these small steamships sailed not only along the coast of southern Taiwan, but also directly to Hong Kong for trade; they also carried passengers.⁷⁷ Wang Xuenong thus successively expanded from the maritime cargo industry into passenger transport through junks and steamships that he owned himself; likewise, the sailing route of his ships also expanded from the coast of southern Taiwan to Hong Kong.

In addition to running Dechang Company, beginning in 1898, Wang Xuenong successively put together a joint venture to form Haixing Company and set up a new mechanical rice-milling company, called Nanxing Company; both endeavours were accomplished with the support or cooperation of Chen Zhonghe. In 1898, Chen Zhonghe, Wang Xuenong, and Robert Hastings⁷⁸ established the South Formosa Trading Co. Ltd—a joint venture with a capital of 70,000 yuan in Anping.⁷⁹ The company had Hastings as the general manager; it specialised in foreign trade, with its purchase of sugar and rice centred on Yanshuigang and the Chiayi area. It exported sugar mostly to Tianjin. After 1899, however, due to tariff changes, transactions with Japan gradually increased. As Chen Zhonghe and Wang Xuenong handled trade affairs with European and American countries, the transaction bank was the International Bank and Haixing Company was also the bank's agent; in 1899, its transactions were also handled by a branch of the 34th Bank.⁸⁰ Like ordinary sugar traders, Haixing Company used loans to producers in order to secure its sources of sugar and rice. In 1904, the company became a corporation jointly established by citizens of Japan (Taiwan), the UK, and China; its purposes were the operation of machinery for sugar production, the import and export of various goods, transportation, and rice milling.⁸¹

Through their cross-border trade experience and networks, Chen Zhonghe and Wang Xuenong fully understood the needs of the mechanical rice-milling industry. In May 1901, given the profitable outlook of the rice export market,⁸² they established a joint venture with a British businessman in Anping, Charlie Hastings, to establish a new mechanical rice-milling company called Nanxing Company and a rice mill in Takow. Nanxing Company purchased a 40-horsepower machine that could grind 200 piculs per day. In August 1903, Hastings withdrew due to a dispute over interests and Nanxing became a ‘pure Taiwanese business’.⁸³ Nanxing Company was the first new electric rice mill in Taiwan; it changed from the traditional rice-milling method known as tulongjian. Chen Zhonghe and Wang Xuenong were also the first industrialists in Taiwan to use power machinery for rice milling.⁸⁴

In short, Chen Zhonghe and Wang Xuenong were unlike the traditional Chinese businessmen who, when living abroad, confined themselves to Chinatowns or those in Tainan who only traded with mainland China. They had lived and run businesses in Yokohama for a long time; they were not only proficient in foreign languages, but also conducted cross-border trade between Japan, Hong Kong, China, and Southeast Asia. To do so, as early as the 1880s, they introduced a ‘corporate system’ influenced by the British ‘company law’. Among the great changes that followed the First Sino-Japanese War, Tainan's gentry and important businessmen moved to China, leaving a vacuum in the business community. Wang Xuenong took advantage of this opportunity, moving to Tainan to expand Hexing Company's business territory. He also established Dechang Company to engage in import and export trade, and in shipping.

Wang Xuenong also joined hands with Chen Zhonghe and invited British merchants to set up a trading company and a new-style rice mill. The ‘company’ they created was not a blind imitation of Western models, but instead adopted aspects of both traditional Chinese joint-stock and modern corporate firms; it mixed Chinese, Japanese, and British elements. Its capital and human resources came from Taiwan, from Japan, from China, and from British businesses in Taiwan. With the support of their trading network, which included Japanese businessmen, overseas Chinese in Japan, British businessmen, and Chinese businessmen, and with Tainan as their headquarters, they expanded their operations to Japan, to northern China, and to Southeast Asia.

Conclusion

Previous discussions of companies (gongsi) have usually directly equated them with the form of the modern corporation as part of a process of Westernisation. They have overlooked the Taiwanese merchants who, from the 1870s onwards, had gone to Japan and Hong Kong to engage directly in the sugar trade; the changes they wrought in Taiwan's business culture during the late Qing Dynasty and the early period of Japanese control of the island; and their historical significance. This article has focused on Wang Xuenong and examined how he, along with his original employer, Chen Zhonghe, differed from the Chinese merchants who went overseas but operated primarily within Chinatowns. Because they were in business for a long time in Yokohama and travelled back and forth to Osaka, Kobe, Nagasaki, and other important commercial cities, both men were able to observe with great accuracy Japanese business culture and its changes during the early decades of the Meiji Restoration; and they absorbed both the corporate ethics and the management policies of Japanese business.

When Taiwan was ceded to Japan in 1895 and most important merchants fled back to China, Wang Xuenong seized his opportunity. He went to Tainan in 1896 and, combining both traditional and modern elements, set up Dechang Company. Wang Xuenong and Chen Zhonghe successfully set up a trading company as a joint venture with a British merchant in Anping and established the first modern mechanised rice-milling concern in Taiwan: Nanxing Company. Being fluent in foreign languages and cognizant of the international situation, Wang and Chen were able to combine knowledge, human resources, and networks drawn from China, Japan, and Britain, and set up a company that combined elements from these various business cultures. They obtained financing from banks, acted as agents for foreign merchants in the insurance industry, and constructed a trading network that was centred in Tainan that reached China, Japan, Hong Kong, and Southeast Asia. In so doing, they came to dominate the sugar industry in southern Taiwan and the import–export trade. Between 1890 and 1900, the diverse and detailed contracts of the company forms that they set up fully expressed their cross-cultural knowledge drawn from China, Japan, and the West, as well as the interconnections among their trading networks. That is to say, Wang Xuenong combined his knowledge of transnational trade and his access to human resources in Japan and Hong Kong to further upgrade and renew the organisation of his business. He integrated bank capital into the company's resources, pioneered modern mechanical power processing in Taiwan, and became involved in the transportation of sugar and rice. In all these ways, Dechang Company moved gradually towards becoming a modern company and helped to gradually precipitate industrialisation in Taiwan.

The complex career of Wang Xuenong reveals the insufficiencies of earlier discussions of treaty-port commercial culture and of Japanese colonialism. In the past, we have only paid attention to the influence that China and the Western powers exerted on Taiwan in the nineteenth century. We have not looked at how, from the mid-nineteenth century onwards, businessmen from Taiwan went themselves to Japan to conduct business and the mixture of Chinese, Western, and Japanese commercial cultures that consequently emerged. Moreover, the monopoly held by Taiwanese merchants and foreign companies throughout this period meant that Japanese merchants had little direct trade or contact with Taiwan. The important Japanese elements of this new form of company and of commerce were thus not an imposition from outside. This transformation as a whole should be understood not in simple impact–response terms, but rather as a complicated and gradual process in which businessmen from Taiwan took the lead in reshaping their business culture and Taiwan's position in international trade.