Electric Pioneers: Nationalist Lobbying, Technology Transfer, and the Origins of the Chinese Electric Lamp Industry, 1921–1937

Abstract

This article uses the case of Oppel Electric Manufacturing Co. Ltd.—the most important Chinese manufacturer of light bulbs before 1937—to explore the early development of the Chinese electrical lamp industry. The article first explores the Chinese market for electrical lamps before the 1920s and shows how the market was dominated by imports and lamps locally manufactured by foreign firms. It then traces how Oppel was established in the 1920s and subsequently grew into a successful manufacturing business able to compete with foreign products. The article explores how the fact that government institutions were major purchasers of light bulbs allowed Oppel to engage in nationalist lobbying and thereby win government contracts. The article shows how the absence of Western-style intellectual property rights allowed Oppel to transfer technology cheaply, efficiently, and without needing to enter into Sino–foreign joint ventures. These discussions of nationalist lobbying and China’s intellectual property environment contribute to our understanding of China’s early industrialization, both in terms of the rapid industrial growth early twentieth century China saw and the leading role that Chinese firms played in this growth.

This article explores the development of Oppel Electric Manufacturing Co. Ltd.—the premier Chinese light bulb manufacturer between the company’s beginnings in 1921 and the outbreak of the Second Sino-Japanese War in 1937. To date, Oppel’s development has been covered only in superficial hagiographic accounts of its founder Hu Xiyuan’s life. ¹ In following the development of Oppel, this article contributes to our understanding of the historical development of the Chinese electric lamp industry, which so far has been neglected. This gap in the literature is surprising given that historians have long studied the development of this industry in other countries. ² This article uses the case study of Oppel to explore the challenges the nascent Chinese electric lamp industry faced in the 1920s and 1930s and how it managed to grow and compete with foreign firms and products. ³ Thereby, it will also shed light on the history of the Chinese electrical appliances industry more broadly, which has been understudied. ⁴

This article also aims to make two broader contributions to the scholarly literature on Chinese early industrialization during the early twentieth century, a period noted for the rapid growth of industry it showed. ⁵ Economic historians have pointed out that this rapid growth of industry was mainly driven not by foreign but by domestic Chinese-owned industrial firms, which were able to win significant shares of markets that previously were made up of foreign goods. ⁶ In connection to this significant industrial growth and competitiveness of Chinese enterprises, the question arises: What drove Chinese consumers’ decision making regarding domestic and foreign products? This has been studied by several scholars. Gerth’s study of the National Products Movement (NPM) traced the rise of “product nationality” and “nationalistic consumption.” On the relationship between entrepreneurs and Chinese governments, Gerth’s study of the NPM has shown how this movement lobbied different governments to implement protectionist policies. Specifically, Gerth discusses how entrepreneurs in the Chinese clothing industries lobbied central and local governments to encourage the wearing of clothes that were of traditional Chinese style and made by Chinese with Chinese materials, or even stipulate the wearing of these clothes for certain groups under its sway, such as civil servants or students. ⁷ In contrast, Dikötter’s monograph on the introduction of new, foreign, modern commodities in nineteenth- and twentieth-century China argued for the central role pragmatic factors such as the price and quality of commodities played in Chinese consumption. Dikötter argues that “The demand for imported goods was such that manufacturers in China could only be competitive by offering similar articles at a cheaper price.” ⁸

Cochran’s study of the Chinese cigarette industry has shown that while Chinese cigarette producers successfully used nationalist marketing, the effect of this marketing had its limitations too, depending on the region and the ebbs and flows of Chinese nationalism. ⁹ Nakajima’s work on the cosmetics industry takes a balanced approach to this question, highlighting the use of both nationalist and more pragmatic sales strategies. ¹⁰ More recently, Sheehan’s study of the Dongya Corporation—most importantly, a prominent yarn producer—has shown that while Dongya tried to use both the appeal of modernity and patriotism in their marketing and that the support of patriotic consumers might well have helped the company to some extent, “The evidence from Dongya supports a conclusion that economic considerations . . . were more important than patriotism in consumers’ choices.” ¹¹ Regarding government–business relations and the Nationalist government’s policies, Sheehan posits that although Chinese entrepreneurs could at times lobby the government for support in the form of favorable tariffs or bank loans, the Nationalists were an “uncertain developmental state” that supported businesses inconsistently. ¹²

This article supports much of this previous research in that it shows that while Oppel also made use of nationalist rhetoric in its advertisements, in general the more important factor determining the success of Oppel light bulbs was that it could offer high-quality products at a comparatively low price. However, more importantly, this article argues that the question of how useful it was for Chinese businesses in early twentieth-century China to connect their products to Chinese nationalism cannot be generalized. ¹³ Rather, the case of the electric lamp industry shows that it needs to be studied industry by industry, looking at the specific sales patterns for each product. The case of the electric lamp industry differs from the clothing, cigarette, cosmetics, or yarn industries in one significant way: unlike other consumer products of the prewar period primarily purchased by individual consumers, an important part of light bulb sales were bulk purchases by government institutions that had an interest in showcasing their commitment to Chinese nationalism. This article shows that when Chinese government organizations acted as major direct purchasers of an industry’s products, economic nationalism and nationalist lobbying gave these industries a powerful tool to win government sales contracts, outcompete foreign firms and replace foreign-made products. In turn, this harnessing of economic nationalism to win government contracts was an important element within the wider success of Chinese industrial firms in early twentieth-century China. Even though the Nationalist state might have been an uncertain developmental state, in industries where government institutions were major purchasers, entrepreneurs could use the government’s nationalist rhetoric to lobby for government purchases of their goods.

A second contribution this article makes to understanding the industrialization of pre-1937 China is that it explores what role the country’s specific intellectual property environment—specifically the absence of a functioning Western-style patent system—played in its early industrialization. ¹⁴ In a recent survey of Chinese industrialization, Brandt, Ma, and Rawski stressed that an important driving force behind the impressive growth of Chinese industry during the early twentieth century was an “openness to the international economy” due to its importance for the “access it allows to new technology and knowhow through foreign direct investment (FDI), imports of intermediates and capital equipment, and the movement of people and ideas.” ¹⁵ However, despite this emphasis of the importance of global technology flows for Chinese industrialization and the key role patents and intellectual property regimes have played in regulating these flows, ¹⁶ scholarship on China’s early industrialization has so far neglected the question what role China’s specific intellectual property environment played in the growth of Chinese industry during the Republican period. ¹⁷

The absence of intellectual property rights (IPR) in early twentieth-century China has traditionally been seen as a sign of Chinese backwardness. ¹⁸ Such notions driven by Western determinism have recently been challenged by historians of China, ¹⁹ but the question whether the lack of IPR, in particular regarding patents, helped or hampered Chinese early industrialization remains unexplored. This is especially surprising given that the debate to what extent IPR helps or hinders industrialization has remained inconclusive. ²⁰ The electric lamp industry is a useful case for studying the impact of the lack of IPR on early industrialization in China because patents were a major tool used by large Western electric lamp manufacturers like General Electric (GE) to control domestic and global markets. ²¹ Incidentally, in Schiff’s classical study of economic development without patent laws, he highlights how Philips, the leading Dutch light bulb manufacturer, benefited from the absence of a patent system in the Netherlands before 1912. ²² As this article will show, a similar argument can be made about Chinese light bulb manufacturers, who, in the absence of an effective Western-style patent system, were able to transfer technology and manufacture light bulbs without fear of infringing on patents.

This article starts by outlining the sale and use of electrical lighting in China before the 1920s. The following two sections then discuss Oppel’s growth and performance in the period up to 1937. I then use the case of Oppel and the Chinese electric lamp industry to explore Chinese consumption and intellectual property law in relation to Chinese early industrialization.

Background: Electric Lighting in China Before the 1920s

Electrical lighting entered China in 1878. From the late nineteenth century, it first spread to cities along the China coast and then also increasingly to urban centers in China’s interior. Electric light could be found not only in government buildings and public spaces but also in department stores and shops and, after 1911, increasingly in private homes. By the start of the 1920s, electrical lights could be found in over two hundred Chinese cities. ²³ Wright has estimated that gross annual output of electrical power in China jumped from 65 million kilowatt hours in 1912 to 756 million in 1922 (and thereafter continued to grow to 3967 million kilowatt hours in 1936). ²⁴ Accordingly, it seems accurate to say that by the 1920s, the spread of electrical lighting and lamps had reached a certain level of development in China. Indeed, E. L. Clark, an engineer who worked for GE in Shanghai, explained in 1922:

With over 280000 K.W. of installed capacity in China, electrical development can be said to have passed the experimental stage. . . . The growth in demand for electricity has been very rapid in the last few years, the demand now reaching many of the small cities and villages in China.

He added that “outside of the larger cities, most of the [electrical] power goes for lighting” and also points out that there were large differences between the large power station found in a city like Shanghai and much smaller installations in the interior. ²⁵ A similarly striking contrast can be seen in terms of the geographical distribution of electricity supply. As Figure 1 shows, the spread of electrical power and lighting plants in 1924 was heavily concentrated in the Yangzi-Delta.

Figure 1. “Map showing the extent of electric light and power plants in China.”

Source: Chinese Economic Monthly 1, no. 9 (June 1924): between pages 38 and 39.

Given that electricity supply and electrical lighting were relatively widespread at least in parts of China by the start of the 1920s, what were the lamps people in China used and where did they come from? While all sorts of electric lamps could be found in China, ²⁶ by the 1920s the incandescent light bulb had become the most widely used electrical lamp. ²⁷ At the same time, electrical light bulbs also became the most widespread and commonly used electrical appliance in China. ²⁸ Before the 1920s, the light bulbs used in China were exclusively foreign-made. According to a report by an American trade commissioner, German Osram, Wotan and A.E.G. lamps, American GE lamps, Dutch Philips lamps and, to a lesser degree, the lamps manufactured by the Japanese-American Tokyo Electric Co. (which was a GE subsidiary) were the most popular before World War I. ²⁹ Growing Chinese demand for electric lamps was reflected in the significant growth—with a temporary downturn during World War I in line with the general trend of imports during the war—in the imported lamps and lamp ware into China between 1900 and 1924 (Figure 2). ³⁰

Figure 2. Lamps and Lampware (Net Imports in Haikwan Taels), 1900–1924.

Source: Chinese Maritime Customs Service, Returns of Trades and Trade Reports, 1900–1918; Chinese Maritime Customs Service, Foreign Trade of China, 1920–1924.

Just as lamp imports had temporarily dropped during the war, the first foreign lamp manufacturers started to produce light bulbs in China. The first foreign lamp manufacturer that opened its doors in China was the China General Edison Company (CGE), a subsidiary of GE and established in Shanghai in 1917. CGE produced GE lamps for both the Chinese and export markets. By 1922, it reached a production capacity of “four to five million lamps a year.” ³¹ In 1917, the Japanese China Denki Kogyo Co. Ltd. was also established in Shanghai with a yearly production capacity of around 1.5 million bulbs. ³² By the first half of the 1920s, the competition among foreign lamp producers that sold their light bulbs in China had become fierce, leading to what the North-China Herald called an “Electric Lamp War.” Prices for light bulbs decreased sharply and in February 1925 eventually a price agreement to stabilize prices and prevent competition was concluded after “two years. . . [of] bitter trade war.” ³³ In 1924, the Western brands Philips, GE, and Osram possessed “almost complete domination” of the Chinese electric lamp market. ³⁴

We thus see that by the 1920s not only were large numbers of electric lamps imported into China, but foreign companies had even begun to manufacture light bulbs in China. Any new Chinese company wishing to enter the electric lamp manufacturing business thus not only would have to deal with foreign products but would even face foreign competitors on the ground.

The Establishment of Oppel

Oppel founder Hu Xiyuan (Figure 3) was born in Zhejiang Province in the late 1890s. He went through the newly introduced modern education system and eventually graduated from the Chekiang Technical Institute (Zhejiang gaodeng gongye xuexiao) where he majored in electrical engineering (dianji zhuanye). In 1921, he moved to Shanghai. ³⁵

Figure 3. Hu Xiyuan, photo from 1936.

Source: Xinren zhoukan 2, no. 22 (1936): 23.

As Hu later recalled, he had since his childhood been fascinated with electric light. After his move to Shanghai, he started to study and experiment with how to manufacture light bulbs by looking for relevant information in libraries and searching for necessary equipment and materials on the market. Initially, he mainly relied on books in his experiments, which however remained unsuccessful. He then switched to the more hands-on try-and-error method of experimenting. He also drew on the help of Zhou Zhilian, an engineer who had attended the Department of Mechanical Engineering (jixiexi) at Nanyang University (Nanyang Daxue) and had also studied in Germany, and Zhong Xunzhen, who had studied in Japan and was a graduate of the Nanyang Railway and Mining School (Nanyang Lukuang Xuexiao). In trying to manufacture a lightbulb they were experimenting and probing and gradually improving their manufacturing method. On April 4, 1921, as Hu later recalled, he and his colleagues managed for the first time to manufacture a functioning light bulb. ³⁶ Such processes of experimentation were not unique to Hu and his collaborators. As Lean has recently shown, informal experimentation played a key role in the process of Chinese industrialization. ³⁷

Despite some later claims to the contrary by Hu and Oppel, ³⁸ it seems unlikely that Oppel was the first Chinese light bulb factory or the first Chinese factory to manufacture light bulbs. In a 1933 interview on the development of the light bulb industry, Hu himself explained that the first Chinese light bulb factory was established in 1920 and until 1922 several other factories were established. However, due to fierce competition from foreign companies, these factories closed. Hu does not comment on Oppel in the interview and makes no claims of either producing the first Chinese light bulb or of Oppel being the first Chinese light bulb factory. The interview only describes Oppel as the “longest established” Chinese light bulb factory. ³⁹ The account given by Hu about the early Chinese electric bulb industry is borne out by two overviews of the industry from the same period that appeared in the Shangye Yuebao, the publication of the Shanghai Chamber of Commerce. These explain that the first Chinese light bulb factories failed due to different reasons, such as lack of technical knowledge, the low quality of their products, or a shortage of capital. ⁴⁰ Thus, Oppel was likely not the first Chinese light bulb producer, and we should simply see it as the first Chinese light bulb factory that achieved long-term success.

While Hu, Zhou, and Zhong had succeeded in manufacturing a light bulb, this did not mean they were ready to produce them at scale. In 1921, Hu purchased several pieces of machinery for manufacturing light bulbs in Japan and during the summer of the same year sold some of his family estate and used the proceeds from the sale to establish his first light bulb factory at Beifujian Road in Shanghai’s International Settlement. The new factory quickly ran into problems, though. Unskilled workers and issues with the machinery and equipment meant that Hu’s production costs remained high and the quality of the bulbs insufficient, so that the products were not yet ready for the market. ⁴¹

Thus, it seems like Hu’s endeavor could have ended in failure similar to other early Chinese light bulb factories. However, in November 1922, Zhou Zhilian introduced Hu to Opel, a German engineer who owned a small light bulb factory in Shanghai. Opel’s factory was not doing well as it was not able to compete with the big foreign light bulb brands. As Opel wanted to give up the company, Zhou encouraged Hu to buy it to secure better equipment for Hu’s factory. Subsequently, Hu bought up Opel’s complete machinery. As part of their agreement, Opel worked as an engineer at Hu’s factory. ⁴² Little is known about Opel’s background, but, according to one source, he was an industrial specialist (gongye zhuanjia) and had worked for many years at a light bulb factory in Germany before coming to China. ⁴³ Subsequently, Opel and Hu worked on the improvement of the light bulbs together until Opel left the factory in May 1924. While Hu focused on the business side of developing the factory, Opel seems to have focused on technical engineering work. Together, helped by specialist advisers, they finally managed to sufficiently decrease the cost of the light bulb production, increase their quality and make them usable for consumers. ⁴⁴ It thus seems likely that Hu’s decision to buy up and bring in Opel was not solely driven by his desire to acquire Opel’s machinery, but also to draw on Opel’s expertise in light bulb manufacturing. Drawing on this expertise, it appears, was key in enabling Hu to make his light bulbs usable and his business endeavor successful.

In 1925, Hu reorganized the company as a limited liability joint-stock company with the name China Yapuer Lamp Factory Company Ltd. (Zhongguo yapuer dengpaochang gufen youxian gongsi) and registered it as a corporation with the government. ⁴⁵ It is from 1928 that we have the first official documentation about the existence of the company in the form of Oppel’s registration as a limited liability joint-stock company with the new Nationalist government and the registration of its trademark in the same year. ⁴⁶ According to the documents that Oppel submitted to the government, an initial founding meeting with sixteen shareholders and chaired by Hu was held on October 1, 1927. Hu and four others were elected to the board of directors. ⁴⁷ According to the submitted regulations of the firm, it solely focused on the production of light bulbs. Only Chinese nationals could own shares of the company. From the submitted documents, we also learn that Oppel sold around 600,000 lamps per year. ⁴⁸ In the trademark registration, we see for the first time the English name of the company: Oppel Lamp Manufacturers Ltd. ⁴⁹ Both the Chinese and English names of the company thus reflected that at this time the company only manufactured light bulbs. ⁵⁰ We see that by 1928, Hu had built Oppel into a formidable electric lamp manufacturer, even though, judging from its sale numbers, its production capacity still lagged behind foreign factories in Shanghai.

Oppel during the 1930s

During the 1930s, Oppel experienced further growth. Hu grew the company’s share capital from 30,000 Yuan in 1928 to 300,000 Yuan in 1933. ⁵¹ In 1929, Oppel established a new light bulb factory at Liaoyang Road in the International Settlement. ⁵² Besides the production of light bulbs at its main plant at Liaoyang Road, Oppel also started the production of other daily electrical appliances and established a second factory for this purpose. The company changed its name to Oppel Electric Manufacturing Co., Ltd. (Zhongguo yapuer dianqichang). Hu acted as managing director and general manager of the company. ⁵³

Oppel’s rapid growth reflects the larger development of the Chinese electric light bulb industry. By 1933, Oppel was clearly the largest Chinese light bulb manufacturer in Shanghai in terms of capitalization and production capacity and thus also in China more broadly, producing around one-fourth of Chinese manufactured light bulbs (Table 1). However, several other light bulb manufacturers were now also operating in Shanghai. In total, they had an estimated output of over one million bulbs per month. This growth had two important consequences. First, according to a Chinese government report from 1936, Chinese electric light bulb manufacturers in Shanghai, the center of light bulb manufacturing in China, by then far surpassed foreign manufacturers in terms of the number of light bulbs produced per year. According to this report, foreign light bulb manufacturers in Shanghai produced around eight to nine million light bulbs a year. This compared to fifteen to sixteen million light bulbs produced by Chinese manufacturers. ⁵⁴

Table 1. Overview of the Chinese Electric Light Bulb Industry in Shanghai, 1933

Note: As the “capital” (ziben) for Oppel here is congruent with the stock capital given in official government record for 1933, it is fair to assume that in the source of this tabulation “capital” refers to paid up stock capital.

Source: “Shanghai diandengpao zhizaoye diaocha,” Gongshang banyuekan 5, no. 17 (September 1, 1933), 76–77.

Second, Chinese manufacturers managed to capture a large part of the light bulb market formerly controlled by foreign-made bulbs. The 1930s saw a sharp decrease in the import of electric light bulbs into China (Figure 4). Part of this decrease will have been because in 1932 GE, Philips, and Osram, who in the mid-1920s had dominated the Chinese light bulb market but subsequently had lost market share to cheaper Japanese and Chinese lamp manufacturers, founded a joint venture called the China United Lamp Company (Culco). This joint venture was to handle the distribution of the three brands’ light bulbs in China. The three companies hoped this would allow them to reduce prices. As part of the agreement, Osram and Philips lamps were no longer imported but manufactured locally by CGE in Shanghai. ⁵⁵ At the same time, Japanese light bulb imports into China saw a steep decline. By the 1930s, anti-Japanese sentiment negatively affected the sale of Japanese bulbs. ⁵⁶ Following China’s regaining of tariff autonomy in 1929, Japanese manufacturers also felt the negative influence of import tariffs. Moreover, Japanese, and particularly Chinese, producers of light bulbs in Shanghai took market share away from Japanese imports. ⁵⁷ Consequently, like the trend of overall light bulb imports, Japanese light bulb imports plummeted from 386,315 Customs Gold Units in 1932 to only 35,803 Customs Gold Units in 1936. ⁵⁸ Japanese production of light bulbs in China also was limited. In 1936, there existed four Japanese light bulb factories in Shanghai, which produced only two to three million light bulbs per year. This paled compared to the around six million light bulbs produced by the CGE alone or the fifteen to sixteen million produced annually by Chinese manufacturers. ⁵⁹ There is also evidence of a Japanese light bulb factory in Hankou, which, however, was small and produced low-quality bulbs. ⁶⁰

Figure 4. Value of Chinese Imports of Electric Light Bulbs, 1932–1937 in Customs Gold Units.

Source: Chinese Maritime Customs Service, The Trade of China, 1932-1937.

For GE, Osram, and Philips, who now all produced locally through Culco, import tariffs naturally were no problem. If there had been no formidable Chinese competition, they should have been able to capture much of the market again. As Rawski explains, “In a market economy, it is only after private business responds to new opportunities that tariff or other protection can spur the pace of industrialization.” ⁶¹ However, Chinese manufacturers, who, as we saw, came to produce more light bulbs than foreign manufacturers, were ready. Indeed, not only had continued Chinese competition been a driving force behind the decision to found Culco, but despite this new joint venture of GE, Philips and Osram and the growth of anti-Japanese sentiments, Culco was unable to regain the former market share of the three Western brands due to the fierce competition from Chinese manufacturers. ⁶² As a Chinese government publication explained in 1933:

Previously bulbs made by CGE, Inc., a foreign concern in Shanghai, were most largely used by Chinese, while Philip’s and Osram lamps, imported from Holland and Germany respectively, were also in fair demand, but these foreign makes have been gradually displaced by Chinese products, especially Oppel and Hwa Teh [Huade]. ⁶³

A 1936 report by the Japanese Chamber of Commerce and Industry in Hankou confirms this. It explains that by 1936, light bulbs worth around 200,000 Chinese dollars were imported annually into Hankou. Of this, around 40 percent, or 80,000 Chinese dollars’ worth of light bulbs, were produced by Chinese manufacturers. ⁶⁴

Thus, we see that, led by Oppel, Chinese light bulb manufacturers managed to make significant inroads into the Chinese light bulb market previously controlled by foreign-made bulbs. This success in competing with foreign manufacturing was representative of the larger electrical equipment manufacturing industry. By 1933, foreign factories made up only 28.9 percent of total production in the electric equipment manufacturing sector. This compared favorably to other industries (See Figure 5). ⁶⁵ However, not all was rosy for Chinese manufacturers of light bulbs. Most importantly, by 1936, the competition between Chinese light bulb manufacturers had become intense and some Chinese manufacturers were dumping low-quality goods into the market. Prices dropped and customers lost trust in Chinese light bulbs, which harmed the Chinese light bulb manufacturing industry. Oppel’s business was also dampened somewhat by these developments. ⁶⁶

Figure 5. Proportion of Production by Foreign Factories in 1933 in China in %, Different Industries.

Source: Cheng, Foreign Trade, 40.

Nevertheless, on the eve of the Sino-Japanese War, Hu could look positively on the rapid development of the company and its leading position within the Chinese light bulb manufacturing industry. Oppel and other Chinese light bulb manufacturers were part of a larger trend in prewar China, whereby foreign-made products and companies first entered the Chinese market and then found “Chinese imitators who rapidly attained strong, often commanding, positions in . . . markets initially dominated by foreign products.” ⁶⁷ The following sections will explore what specific conditions made it possible for Oppel to capture this market share, first from the perspective of domestic consumption and then through the lens of technology transfer and intellectual property law.

Nationalist Lobbying and Government Business

As Gerth has shown, many Chinese entrepreneurs in the early twentieth century played to nationalist sentiments to advertise and sell their products and demarcate them from foreign competitors. A crucial element of the movement was the distinction between the categories of “national product” (guohuo) and “foreign product” (yanghuo). ⁶⁸ Oppel was no exception to this. Gerth points to Oppel as a firm that in the beginning concealed that it was Chinese but then used nationalist branding and participated in and benefited from the movement for the promotion of Chinese national products. ⁶⁹ A look at Oppel’s advertisements from the 1930s shows that the firm regularly emphasized that its products were Chinese and not foreign. For example, an advertisement from 1933 (Figure 6) states that Oppel’s products are “famous national electrical products.” Another example from 1934 also shows the words “national products” (guohuo superimposed at the top of the advertisement (Figure 7). According to Hu, Oppel’s advertising focused very much on “promoting national products” and often carried the slogan “Chinese people please use Chinese products.” ⁷⁰ Clearly, an important pillar of the firm’s marketing strategy was emphasizing the national character of Oppel’s products.

Figure 6. Oppel Advertisement from 1933.

Source: Tuhua Chenbao, February 12, 1933, 35.

Figure 7. Oppel Advertisement from 1934.

Source: Shishi xinbao, December 22, 1934.

However, the case of Oppel also shows that we also must ponder the specific sales channels of individual products when we consider the importance of nationalist marketing for Chinese products in the early twentieth century. While some products might be mainly sold to and be purchased by individual customers, others might also often be sold in bulk to larger institutions or organizations. According to a 1933 report by Erich Roesler of Culco, their agents’ electric lamp sales in China could be divided into four groups: “A–[Small and big] Dealers, B–Power Companies, C–Municipal & Government Institutions [and] D–Large Consumers.” ⁷¹ The fact that institutions of the government and of municipalities were major purchasers of electric lamps in China could be exploited by Chinese lamp manufacturers such as Oppel by playing up the national character of their products. Not only did the early 20^th century see a general rise in Chinese nationalism. But the new Nationalist government established in 1927 also strongly supported national products, soon ordering the Ministries of Interior and Education to buy national products if possible and provincial governments and governments of directly administered municipalities to encourage the public to support national goods. ⁷²

Several examples help to illustrate how Oppel could exploit its status as a Chinese company to win government contracts from central, provincial and municipal government institutions. First, there is evidence that Oppel used the Association of the Shanghai Electrical Appliances Manufacturers (Shanghaishi dianqi zhizaoye tongye gonghui), whose founding member and chairman Hu was, to lobby the central government. On May 13, 1936, the association wrote to the Executive Yuan, the highest office in the central government’s executive branch, and asked that government organizations should buy Chinese electrical goods. The Executive Yuan promptly followed suit and on May 21 ordered subordinate organizations to prioritize Chinese products when buying electrical appliances. Following the issuing of the order, organizations ranging from the Ministry of Finance and the Department of Railways, to provincial governments, such as that of Jiangxi, to municipal governments, such as that of Beiping, accepted and passed on the order to respective subordinate organizations. ⁷³

Government-owned companies also bought Oppel products. After prominent businessman Liu Honghsheng had in 1932 taken over the directorship of the state-owned China Merchants Group (Guoying Zhaoshangju, CMG), a major Chinese shipping company, Hu persuaded Liu that CMG should use Chinese-made products and signed an exclusive contract with CMG for the delivery of light bulbs. When a new manager replaced Liu in February 1936, CMG started to purchase foreign bulbs. Hu then used various national products groups and the press to successfully pressure CMG to again utilize Oppel bulbs. Then, on May 20, 1936, it was reported that CMG signed a three-year contract with Oppel that made Hu’s company the exclusive provider of bulbs for CMG “in order to avoid the loss of economic rights.” ⁷⁴ In 1935, the Shanghai-Nanjing and Shanghai-Hangzhou-Ningbo railway lines, which originally had only used foreign bulbs, also signed a contract with Oppel for a large number of light bulbs. ⁷⁵

Oppel also directly contacted or petitioned provincial governments to persuade them to use Oppel light bulbs. In 1936, Oppel, referring to the order of the Executive Yuan mentioned above, wrote to the Shandong provincial government to introduce its products and ask the provincial government to promote national products. In response, the Shandong government ordered the mayor of the provincial capital Jinan, the Research Office for Rural Reconstruction (Xiangcun jianshe yanjiuyuan) and various county chiefs and other local officials to order their subordinates to purchase Oppel products as much as possible. ⁷⁶ In another instance, in 1937 Oppel petitioned the government of Jiangsu Province to promote its products, including light bulbs. The petition stressed that there existed a substantial demand for light bulbs in Jiangsu. The provincial government obliged and ordered its subordinate institutions, county heads and special commissioners of administrative inspectorates to promote and buy Oppel products. ⁷⁷

Two more examples illustrate how Oppel could also exploit its status as a Chinese company to win government contracts from municipal governments. In 1931, the Chinese newspaper Shenbao reported that previously the Shanghai’s streetlamps had all been foreign-made. However, given that this caused “heavy losses of economic rights every year,” Huang Boqiao, the head of the Public Utilities Department of the Shanghai Municipal Government, signed a contract with Oppel for the supply of all streetlamps of the city once the existing contract with foreign merchants expired in that year and the remainder of foreign lamps in the city’s storage was used up. Besides the fact that Oppel was a Chinese firm, Huang had been impressed with Oppel’s factory and the quality of their light bulbs, which could rival that of foreign producers. Given the continued high quality of Oppel lamps, the contract was extended in 1933. ⁷⁸ Another similar example is that of the Nanjing municipal government. Despite being the capital of China since 1928, Nanjing at first only used bulbs manufactured by GE and other foreign brands for its street lighting. While Oppel pressed Nanjing’s Public Utilities Department on why it did not use Chinese light bulbs, the company’s efforts at first remained without success. Although Oppel guaranteed the high quality of their light bulbs, the municipal authorities stated their skepticism about the quality of the company’s products as compared with foreign bulbs. Hu then drew on the help of groups in Shanghai that promoted national products and questioned Nanjing as to why it used GE bulbs, even though Oppel bulbs were of high quality, a lower price and were Chinese products. Oppel also continued to negotiate with the Public Utilities Department and eventually received orders for the supply of a significant part of the streetlamps of Nanjing. ⁷⁹ By 1936, various municipal and provincial governments throughout China used Oppel lamps. ⁸⁰

In sum, we thus see that the company could leverage the fact that its products were Chinese to win contracts for bulk sales to government institutions. This was a particularly potent means of marketing for light bulb manufacturers like Oppel as the government was one of the major purchasers of light bulbs in the Chinese market. Unfortunately, more detailed quantitative data on individual contracts of Oppel or other Chinese light bulb manufacturers with government agencies is not available. However, from the evidence in this section, we see that Oppel could employ a wide toolkit—ranging from direct petitions to using national products interest groups and the press—to make use of the rising tide of Chinese nationalism and the Nationalist government’s commitment to the support of national products to lobby and persuade Chinese government institutions, which were a major buyer in the light bulb market, to buy large amounts of Oppel-produced lamps. In other words, Oppel managed to translate the support for national products by the Nationalist’s uncertain developmental state into concrete sales. This contributed to the company’s success and helped it win over a share of the market in light bulbs from foreign producers.

Comparing Quality and Price

We have seen that using nationalist marketing in general was an important part of Oppel’s marketing strategy and that it in particular helped the company to win over government institutions as customers. However, we now also need to explore what other factors contributed to the ability of Oppel and other electric lamp manufacturers to compete and win market share from foreign products.

A closer look at Oppel’s advertisements reveals that while they often appealed to nationalist sentiments, they also stressed the quality of Oppel products. For example, the advertisement in Figure 7 emphasizes not only that Oppel products are “national products” but also that they are “durable” and “save electricity.” ⁸¹ Given that “Price and quality . . . challenged the supremacy of product-nationality” in China and that foreign products had the reputation of being of high quality, ⁸² it is not surprising that Oppel would put forward the quality and price of its products to persuade consumers to purchase their products.

However, Hu himself also time and again stressed the importance of providing high-quality products at a low price. In his memoirs, he explained that “if you want to make national products successful, you first have to ensure that they are of good quality and low price. The reason Oppel light bulbs sold well at home and abroad mainly was due to their high quality and low price.” He continued that “signboards and trademarks only are the initial attraction [for products]. Their development and consolidation [in the market] are completely built on them being genuine products at a fair price.” ⁸³ We can also find similar points made in Hu’s writings from the 1930s. In a 1934 newspaper article, Hu explained that the main problem of Chinese products was that manufacturers produced large quantities of goods but did not pay enough attention to quality. ⁸⁴ A year later, in an article on sales strategies he penned for the publication of the Shanghai Association of Mechanized National Products Manufacturing Factories (Shanghai jizhi guohuo gongchang lianhehui), an association whose members will have needed to compete with foreign products, Hu also emphasized that “whether or not a product sells well is mainly decided by the special strength of its intrinsic quality and its low price.” ⁸⁵ Thus, we can see that according to Hu himself, what was key for the success of his light bulbs was producing a high-quality product at a low price.

The importance of a good price–performance ratio as the key determinant for the success of Oppel and other Chinese light bulb manufacturers is also borne out by views from their foreign competitors. Culco was concerned about Chinese manufacturers of light bulbs not because of the nationalist marketing of these manufacturers but because of their growing number, their low price and the fact that “Some of them [including Oppel] were even capable of manufacturing light bulbs with the same quality as those of the Western firms.” ⁸⁶ Further evidence of how crucial the production of high-quality bulbs was for Chinese electric lamp manufacturers is found in a report on the electrical appliances industries produced by the Chinese government in 1936. The report emphasized the importance of producing high-quality bulbs for competing with foreign-made bulbs. Moreover, it explained that a major problem caused by the dumping of low-quality bulbs by certain Chinese light bulb manufacturers was that quality amongst Chinese bulbs varied. Many customers could not differentiate between the bulbs of the various Chinese manufacturers and once they had by mistake bought a Chinese-made bulb of low quality, they lost faith in Chinese products as a whole and went back to buying foreign products. As a result, high-quality light bulbs made by Chinese manufacturers were also negatively influenced by the presence of low-quality Chinese products in the market. ⁸⁷ The problem of many customers not being able to distinguish different Chinese-made bulbs aside, from this also follows that if a Chinese light bulb manufacturer wanted to succeed in competing with foreign products, it needed to provide high-quality products to buyers. The same report also emphasized the strong reputation foreign-made bulbs had with consumers. ⁸⁸ Thus, it is understandable that Hu felt that in order to compete with foreign products, Chinese-made bulbs needed to not only be of high quality but also underbid foreign-made bulbs. ⁸⁹

Having established the importance of producing high-quality, low-price bulbs for Oppel, I now examine whether Oppel lamps exhibited these traits. Besides Culco’s acknowledgment of the quality of Oppel products just mentioned, further indicators of the quality of Oppel bulbs were their life span and luminous efficacy. According to a study published by the research institute of Shanghai’s Jiaotong University in 1935, Oppel lamps had a life span of over one thousand hours and retained at least 80 percent of their candle power after this period. ⁹⁰ In terms of the luminous efficacy of the lamps, if we take Oppel’s 100 watts lamps as an example, two such lamps tested by Jiaotong University achieved 11.4 and 11.1 lumens per watt. ⁹¹ Both of these indicators were comparable with international standards. First, for instance, GE lamps after 1911 showed a “750- to 1,000-hour average life.” ⁹² Indeed, the international Phoebus electric lamp cartel, which united all the major international light bulb manufacturers and of which Culco was a part, aimed to fix the life span of light bulbs at one thousand hours, even though longer life spans were technically possible. ⁹³ Second, in terms of luminous efficacy, 100-Watt American GE light bulbs achieved 15.2 lumens per watt in 1935. ⁹⁴ The difference in the lumens per watt measure might be explained by the different voltages used in China and the United States and the fact that it is unclear whether the lamps manufactured by CGE in Shanghai necessarily achieved the same lumens per watts ratings as those manufactured in the United States. ⁹⁵ The fact that Oppel lamps achieved a luminous efficacy similar to that of Western lamps is also borne out by a study conducted by the Chinese government in August 1930 in Shanghai. As we can see in Table 2, the vacuum bulbs manufactured by Oppel had the same candle power as those of Western lamps sold in China. ⁹⁶ Thus, these comparisons confirm that Oppel bulbs were similar in quality to foreign light bulbs.

Table 2. Shanghai Light Bulb Prices in August 1930

Source: “Choubei diandengpao zhizaochang jingguo baogao” (without date), 96 (143), 23-22-008-02, Archives of the Institute of Modern History, Academia Sinica, Taibei.

Having discussed the performance of Oppel bulbs, I now turn to their price. Drawing again on the government study (see Table 2), we see that Oppel bulbs had a clear advantage over their Western competitors as their normal sales price was around half of that of foreign bulbs. Japanese lamps show a price somewhat more comparable to Oppel lamps. However, Japanese merchants mainly seem to have sold light bulbs in China that were of low quality and low price at least until around 1930. ⁹⁷ Moreover, as mentioned above, subsequently they were negatively impacted by anti-Japanese sentiment and tariffs. What is also noteworthy is the significant mark-up of GE lamps by electrical shops in Shanghai, suggesting that there certainly were buyers willing to pay a premium for foreign-brand lamps. ⁹⁸ Table 3 shows selected prices for high-quality Chinese bulbs and bulbs of Culco published in the government report from 1936 mentioned above. While the table does not provide specific data on Oppel lamps, we still see that Chinese manufacturers in relation to the price of light bulbs managed to maintain their edge over Western manufacturers. These price charts and the foregoing discussion on the quality of Oppel lamps, shows that in terms of the price–performance ratio, Oppel possessed a significant competitive advantage over Western light bulbs sold in China. More broadly, this also explains how Oppel and other Chinese light bulb manufacturers took over market share from foreign producers.

Table 3. Prices of Light Bulbs, Culco and Highest-Quality Chinese Bulbs, in Yuan, 1936

Note: The data represents the average of the prices given for different kinds of vacuum and gas-filled bulbs.

Source: Author’s compilation based on Quanguo jingji weiyuanhui, Dianqi yongjuye baogaoshu, 9–12.

Managing Quality and Price

How did Oppel produce such high-quality lamps at a comparatively low price? Here, China’s specific intellectual property environment regarding patents is of key importance. To appreciate this, it is useful to briefly review the role patents and foreign investment played in the nascent Japanese light bulb industry. Following the introduction of a Western-inspired domestic patent system in the 1880s and the signing of the Paris Convention for the Protection of Industrial Property in 1899, both Japanese citizens and foreigners could register patents and enjoyed patent protection in Japan. Subsequently, GE acquired a majority stake in the Japanese light bulb manufacturer Tokyo Electric and provided it with light bulb technology and the exclusive right to GE patents in Japan. Using Tokyo Electric and its patents (including patent litigation), GE eliminated many Japanese competitors and maintained control over the Japanese light bulb market into the 1930s. ⁹⁹ Following the GE takeover, Tokyo Electric, relying on GE’s patents, expertise, and technical support, including GE personnel and machinery, was able to quickly transfer technology and modernize its factory. At the same time, Uchida has argued that:

Before [the granting of patent protection to foreigners], Japanese manufacturers were free to copy any imported goods; but under the new Patent Law, foreign patent rights became one of the greatest obstacles to development in the electrical equipment and chemical industries, because technological progress was quickest in these sectors, and without a patented Western technology, scarcely any advancement was possible. The entrepreneurs were apt to rely on licensed technology from the Western patentees, thus stunting the development of the home industries. ¹⁰⁰

In early twentieth-century China, the intellectual property environment was markedly different from Japan’s. Before 1937, little effective protection of patents existed in China. In 1903, a Sino-American treaty promised that China would venture to grant some patent protection to American citizens, but without setting a date from which such protection would commence. Subsequently, legislation introduced in 1912 and 1932 even in theory protected only inventions of Chinese citizens but, in any case, was not effectively implemented and enforced. ¹⁰¹ Indeed, in 1924, Norwood F. Allman, an American lawyer who had worked at Shanghai’s Mixed Court, lamented that “there is now widespread unauthorized reproduction in China of foreign patented articles. . . . So far there has been no successful prosecution of Chinese or of other persons subject to Chinese jurisdiction. . . . There is little hope of any successful prosecution under present conditions, since no foreigners have been granted patent rights.” ¹⁰² Similarly, Paul Kops, another American lawyer practicing in Shanghai, explained in 1937 that “up until the present time no adequate legislation has been passed in the matter [of trademarks and patents].” Regarding patents, he added that Chinese law only allowed foreigners to “take out certificates on invention, and yet this offers no protection.” ¹⁰³ However, while this state of affairs might have been problematic for foreign businesses holding patents, it made things much easier for Chinese businesses wanting to cut into markets occupied by foreign products. ¹⁰⁴ It might be argued that technology transfer—which can be defined as “the transfer of knowledge, usually embodied in men or machines” ¹⁰⁵—would have been even more rapid through joint ventures similar to Tokyo Electric. Yet Oppel was able to transfer technology by relying on imported human capital and machinery, and, as we have seen, produce light bulbs that were similar in quality to foreign products. ¹⁰⁶ Importantly, Oppel and other light bulb manufacturers did not need to worry about litigation foreign patentholders might bring against them.

Regarding human capital, Hu relied much on foreign or foreign-trained staff. While Hu himself had not been trained abroad, his earliest collaborators in manufacturing light bulbs, Zhou Zhilian and Zhong Xunzhen, studied in Germany and Japan, respectively. We also saw that it seems to have been his acquaintance and collaboration with Opel, the German engineer and light bulb specialist, that marked an early turning point in Hu’s endeavor to establish a successful light bulb factory. Hu continued to rely on foreign-trained staff. In 1927, Hu hired Feng Jiajing, who had graduated from Jiaotong University in Shanghai with a degree in electrical machinery (dianji zhuanke). Due to his interest in light bulbs, Feng had studied in the United States for a period and had interned at GE. Feng helped improve Oppel’s products and stayed at the company, first as deputy engineer (fugongchengshi) and then as full engineer until 1936. ¹⁰⁷ Hu also employed foreign specialists in his factory. Following some of the difficulties Hu had encountered when first trying to manufacture light bulbs, he “not only hired several Chinese specialists as consultants, but also employed Germans and Japanese as engineers and technicians in the technical department (jishubu).” ¹⁰⁸ We thus can see that foreign knowledge acquired by hiring foreign or foreign-trained staff here played an important role in the transfer of technology. This will have been key in enabling Oppel to produce high-quality lamps.

Second, complementing its foreign and foreign-trained staff, Hu also transferred technology through the extensive use of foreign-made machinery. For example, when Oppel first tried to manufacture gas-filled light bulbs, the firm purchased necessary machinery from abroad. ¹⁰⁹ According to a report from 1929, in that year Oppel purchased new machinery from Germany to improve its production. ¹¹⁰ In 1933, Oppel purchased the newest testing device (yanguangji) from the United States to test and ensure the quality of its light bulbs before they left the factory as the previous one had been insufficient. It was the first of its kind imported into China. ¹¹¹ In October 1933, the complete equipment of Oppel’s light bulb factory was renewed. ¹¹² Given its previous usage of foreign machinery, much of this renewal must have also consisted of foreign machines. In 1936, Oppel purchased from Germany a set of state-of-the-art machinery for manufacturing a specific type of light bulb. ¹¹³ Thus, besides its staff, Hu also transferred technology for manufacturing high-quality light bulbs through the purchase of foreign machines. ¹¹⁴

Turning now to the low price of Oppel bulbs as compared to foreign bulbs, it can be traced mainly to two factors: royalties and distribution. First, a major reason why the price of lamps of the major Western producers was so much higher than those of Oppel were the royalties that Culco had to pay to GE, Osram, and Philips for the use of these companies’ trademarks. For example, in 1933, Culco had to pay 0.05 Yuan per bulb to its parent companies, which came to 5 Yuan per one hundred bulbs. ¹¹⁵ This was a substantial amount when compared to the total price of Culco bulbs in Table 3. As Van der Putten has shown, these high royalties (and correspondingly low-set dividends) were simply a way for the parent companies to evade taxes they would have needed to pay if they had remitted these profits from Culco as dividends and not as royalties. ¹¹⁶ Thus, had the parent companies been willing to reduce their profits from their sales in China, a substantial reduction of the price would have been possible. There is less known about the relationship between CGE and GE before 1932, but it is likely that CGE had to pay GE similar royalties or dividends, which would then partly explain the high prices of GE lamps before 1932 as well.

With regards to possible royalty payments, the absence of an effective Western-style patent system in China also proved helpful to Chinese electric lamp manufacturers. Instead of having to pay royalty fees for patents to foreign patent holders like GE, ¹¹⁷ Oppel and other Chinese light bulb manufacturers could transfer advanced technology cheaply while keeping the price of their bulbs low.

Besides the issue of royalties, weaknesses in the light bulb distribution networks of foreign manufacturers also seem to have increased prices. While some foreign companies in China in the 1920s and 1930s established their own distribution networks in the Chinese interior, ¹¹⁸ foreign light bulb manufacturers mainly distributed their products through foreign firms in China that acted as their agents. ¹¹⁹ This use of foreign agents necessarily added another intermediary and layer of costs to the sales mechanism. For instance, as early as 1927, Osram complained that its agents in the smaller Chinese ports could mark up the price for its light bulbs by up to 17.5 percent. ¹²⁰ As mentioned above, in 1932, Osram, Philips, and CGE established Culco to reduce the prices of their light bulbs. Specifically, they were hoping to accomplish this by “abolishing their respective sales organizations in China and consolidating the sale of all lamps … under a centralized management and control.” ¹²¹ Nevertheless, each brand retained its own network of agents. It was only when this measure proved ineffective in combating the Chinese competition that Culco in the years immediately preceding the outbreak of the Sino-Japanese War drastically reduced the number of its foreign agents, started direct distribution of bulbs in parts of southern China, more directly engaged with Chinese dealers, and invited Chinese investment to be better connected with Chinese sales networks. ¹²²

In contrast, from the start, Hu built a sophisticated network of sales offices and distributers and sought very close relations with Chinese vendors. When he registered Oppel with the government in 1928, the company already operated its own distribution offices in Shanghai and Ningbo. Later, additional distribution offices were established in several other major cities, such as Guangzhou and Tianjin. In addition, from the early 1920s, Hu also entered into special distribution agreements with local Chinese electrical materials vendors in various major cities in Jiangsu, Zhejiang, Anhui, Jiangxi, and other provinces. Altogether, Oppel thus managed to establish a wide distribution network for its products. ¹²³ Compared with Culco, Hu was able to engage with the Chinese market more directly and thus save expenses. ¹²⁴

Conclusion

This article has traced the development of Oppel Electric Manufacturing Co. Ltd. during the 1920s and 1930s, and explained how Oppel managed to successfully adopt a recently introduced technology and grow into a large manufacturing company. More broadly, we have seen how the Chinese electric lamp industry grew rapidly in the pre-war period and managed to win over significant shares of a market formerly occupied by foreign products. Taking Oppel as an example, this article has shown that while nationalist marketing played a role in its overall marketing strategy, the main advantage from branding itself as a Chinese firm was that Oppel was able to engage in nationalist lobbying and win over large government contracts. This was particularly useful in the light bulb market, where the government was a major purchaser of lamps. We have also seen that it were in fact the high quality of its light bulbs and their low price that mainly explain Oppel’s success and ability to compete with foreign manufacturers. In turn, Oppel’s ability to produce high-quality lamps at a low price was helped much by the absence of a functioning Western-style patent system in China. Finally, Oppel’s superior distribution network allowed it to save costs as compared to its main foreign competitor.

The beginnings of China’s light bulb industry presented in this article also furthers our understanding of China’s early industrialization during the early twentieth century more generally. First, overall, the case of the light bulb industry confirms previous research that has argued that pragmatic factors, and not nationalist fervor, were the main determinant of the choices of modern Chinese consumers. Even so, and despite the inconsistencies in Nationalist economic policy that previous literature has noted, in industries where the government was a major purchaser in the market, firms like Oppel could use nationalist lobbying to win government contracts and capture parts of the market. Such nationalist lobbying thus contributed to the overall competitiveness of Chinese industrial businesses vis-à-vis foreign products and firms. This is particularly remarkable given that scholarship on government–business relations in Republican China has typically highlighted the weakness of business elites toward the government. ¹²⁵

Second, while the scholarly literature has noted the importance of global technology flows for China’s early industrialization before, this article highlights how China’s specific intellectual property environment—specifically the absence of a functioning Western-style patent system—made it possible for Chinese entrepreneurs to easily take advantage of global flows of technical knowledge and cheaply transfer Western technology without needing to cooperate with foreign firms or pay high licensing fees. While direct Sino–foreign cooperation under the umbrella of a functioning Western-style patent system might have led to more rapid technology transfer, the case study presented in this article shows that Chinese firms nevertheless were able to transfer technology efficiently and reach Western standards of product quality. Moreover, as the example of GE’s long-term dominance in Japan’s light bulb industry suggests, it is questionable whether under a functioning Western-style patent system domestic Chinese-owned firms could have played the leading role in the rapid industrial growth of early twentieth-century China that scholars have highlighted.

Finally, while there are comparative studies of IPR regimes and their impact on economic development for Europe, ¹²⁶ we still lack such a comparison for East Asian economies. The fact that the Chinese light bulb industry showed significant development during the prewar period although, unlike Japan, it lacked an effective Western-style patent system, combined with scholarship by economic historians that has shown Chinese industrial growth between 1912 and 1936 to exceed that of Japan, ¹²⁷ suggests that more in-depth comparative research on the connection between IPR and economic development would help our understanding of early industrialization in East Asia.

For a bibliography of sources in Chinese and Japanese with Chinese and Japanese characters and English translation of titles, please see the online appendix.