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by placing with them agencies for aniline dyes. It is understood that no accounts were issued by the 12 big dyeworks in Germany, and that profits were distributed under Government control. The agencies for these works were held by 10 German houses in Shanghai and by houses in Tientsin, Hankow, and Hong Kong. The value of dyes imported into China in 1913 amounted to Tls. 15,000,000; the average commission amounted to 5 per cent, and it follows that the sum of Tls. 750,000 (say 100,000) a year was divided among the German houses; this was doubtless of great assistance in the conduct of their general business.
There appears to be no evidence of any direct State aid to German firms. It is, indeed, practically certain that some of the most successful of them received no assistance or subsidy from their Government, and that their success was due entirely to hard work and sound business.
The balance of opinion in the Chamber is to the effect that it would be impossible to afford State aid to British firms without grave risk of partiality and injustice. It is generally held that any house which is unable to conduct its business on profitable lines is superfluous, and that it is not in the general interest to support it. So far as shipping subsidies are concerned, the subsidy is recognised as a weapon which may be usefully employed when a national combine is endeavouring to enter a trade previously It must necessarily contemplate monopolised by members of other nations. some form of Government control. There is not, for the present, any specific undertaking in the Far East in regard to which such a system could be usefully introduced in the general interest of British trade.
3. An opinion as to whether the ports of Shanghai, Tientsin, Hankou, and Canton are likely to maintain their position as the great distributing centres in China, or whether there are signs of increased decentralisation in the future, which will entail the extension of the British merchants' activities to the smaller ports and the up-country districts.
The evidence from all these ports is to the effect that, so far from showing any signs of becoming decentralised, they are all growing in importance, and not only maintaining, but strengthening their position. Thus, the Shanghai Chamber writes:-
There is no likelihood that the present predominant position of Shanghai will be lost. The port, with the surrounding district, is a large market in itself; the neighbouring province of Chekiang is also an important market. The Yangtse ports, as far as Wuhu, are more easily served from Shanghai than from Hankow. It is the headquarters of the banking system, both native and foreign, and, owing to its geographical position, it is easily protected, thus affording security to life and property. It is also well situated as an industrial centre.
Whilst Shanghai is likely to remain the commercial metropolis of China for an indefinite period, it is probable that other centres will become increasingly important. The other Treaty Ports, and even the larger up-country cities, are demanding increasing attention as trade spreads into the country. Hankow and Tientsin are becoming more important as shipping centres; Tientsin, Pukow (Nanking), and other places are collecting centres with good railway facilities. Ocean-going vessels can load at Pukow at all seasons, and, as soon as storing and loading, banking and insuring facilities are available there, it will no doubt become a port of considerable importance. There is every reason, however, to believe that Shanghai will gain rather than lose by the increasing commerial importance of other centres. Tientsin has no smaller ports depending on it, or to which British merchants' activities could be extended, and the opinion expressed is that provided—
(a) the river is maintained in a navigable condition; and (b) the capital remains at Peking,
the port will maintain its position and increase in importance.
As regards Hankow, there need be no fears for the future. With the completion of the railway systems now under construction, and the exploiting of the mineral wealth of the surrounding provinces, this port would appear destined ultimately to become the most important railway centre and commercial entrepôt of inland China.
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While distributing over a wide area, however, Hankow has but few ports depending upon it, and of these the principal are Changsha, Shasi, and Ichang. These ports could with advantage receive a greater share of British attention without in any way detracting from the trade of Hankow, and will, no doubt, be developed when the present scarcity of young men for pioneer work has been removed,
The Canton Chamber are of opinion that the city will actually strengthen its position as a great transhipping centre. They consider that in time merchants will be compelled to deal more directly with the native producer or consumer, but think that this will merely tend to increase the volume of trade passing through the port. Canton will be the junction of all new railways built in Kuangtung, and the probable centre from which to control all new depôts that may be opened up-country.
I am in accord with all the views expressed under this beading
4. Suggestions with regard to any improvements which might be effected in our marketing organisation in view of the changing conditions in China and the activities of our competitors, together with an opinion as to how far the extensive methods of direct distribution employed by such concerns as the oil and tobacco companies might be applied to stapte articles of trade, such as piece goods, hardware, sundries, &c.
This is a highly controversial question, but the replies from the Chambers of Commerce reveal a unanimity which can only be accounted for by the fact that their members are, in the main, merchants whose business has been built up on existing methods, and that it is therefore too much to expect that they should advocate new systems which would involve a complete reorganisation of selling conditions. The Tientsin and Hankow Chambers report that they do not consider that the staple articles, such as piece goods, hardware and sundries, lend themselves to methods of direct distribution, which would appear only to be successful where firms are dealing in a large way with a single commodity. The Canton Chamber is very dubious about the adoption of such a system for the distribution of products over the supply of which they have no control. They admit, however, that it is a controversial point, and prefer not to give a definite expression of opinion. The Shanghai Chamber submits the following reply:-
It is believed that the methods of distribution employed by British firms are not inferior to those of their competitors. They tend to become militant as trade increases and as the zone of commerce is broadened in China. Within the last few years the activities of such companies as the Asiatic Petroleum Company and the British-American Tobacco Company have secured many new privileges for trade, by penetrating the interior and breaking down the Chinese prejudice against foreign traders, thus ensuring the practical application of the commercial privileges enjoyed under treaty. They have been able to establish their machinery for distribution in the interior as their business is in the nature of a monopoly with an annual turnover sufficient to justify the employment of large staffs and an extended organisation. Members of merchant houses have followed in their tracks, and it is now generally realised that it is essential to go and seek trade, not to wait until inquiries filter down to the Treaty Ports. It is not believed that the methods employed by the two above-named institutions are suitable for the distribution of piece goods, sundries, hardware, &c. There are certain staple or standard articles, even in piece goods, to which they might be and are actually being applied; various other products, such as machinery, drugs and sugar, also tend to be carried more directly to the consumer, but the methods employed are regulated in each case by the special requirements of the trade and of the country. While this statement is largely true, it must be admitted that the British merchant in the past has been intensely averse from any activity beyond the limits of the principal ports, and has been, in this respect, far behind his German and Japanese competitors. The Germans have, for years, conducted a profitable engineering and trading business in provinces like Hunan and Yunnan where there was no British competition whatever, while the Japanese have the whole of China surveyed politically and commercially, and are far ahead of anyone else. There has been some quickening of interest in up-country work on the part of British merchants since the war began, and signs are not wanting of a more prevalent spirit of enterprise in order to meet the more intensified competition after the war.
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