1
86
trade formerly handled by their German competitors, I would strongly oppose the imposition of any legislation by HM. Government by which British subjects would be forbidden to trade with the subjects of Enemy States domiciled in China after the war, on the grounds that while such legislation would afford protection to British hongs in China for a time, it would operate to the disadvantage of British trading interests in their broadest sense. I would recommend, however, that pressure should be brought to bear on British manufacturers, shipping and insurance companies, and others, to induce them to place their agencies in China in British hands, except in those special cases where the Government may be satisfied that the granting of the agency to a foreign firm would result in the securing of business which would otherwise not be obtained. (In this connection have in mind the case of British shipping and insurance companies,)
(2) I would recommend that the operations of a British trade bank, as recom- mended by Lord Faringdon's Committee, should be extended to China at the earliest possible date, and that a representative of the highest standing with a sound knowledge of finance, and preferably (if possible) some acquaintance with the peculiar conditions of the market, should be placed in charge of the Bank's interests in the country. The representative should be assisted by at least two carefully selected younger men of ability and banking training who would assist in the work and would study the special requirements of the country. The suggested activities of the Bank have already been outlined in the preceding pages.
(3) I would strongly recommend the establishment of an efficient system of commercial intelligence in China, and the appointment of special well- qualified officers to carry it out. Such a commercial service should be in addition to the Consular Service, the commercial functions of which should be revised in order to co-ordinate the two branches of official commercial work. These necessary measures should inaugurate a policy of most active official support for British trade in China during the times of strenuous competition which would appear to be imminent upon the close of the war.
In return for this support I would suggest that the question of levying taxation on British subjects in China might be considered by H.M. Government. Up to the present no Imperial taxation of any kind is contributed by individuals resident in, or firms registered in the Far East, although they enjoy the benefit of the services of H.M. Ministers and Consuls, and also what is more important-the protection of the British Fleet. In point of fact, they are largely dependent upon such protection for their peaceful existence. It is possible that the costs of collection may be considered to be too great.
In any event, the present would appear to be an opportune time for H.M. Government to give the matter its earnest attention.
87
appreciate a reasoned exposition of the views of your Committee on this all-important question of post-bellum trule in China.
The words "foreign competition" are here used in their widest sense, and are intended to include, not only the activities of enemy countries, but also the increasing commercial' rivalry of Japan and the United States in the Chinese markot.
While not wishing to restrict the ambit of your observations, which I trust will be as wide as possible, might I suggest, for your guidance, certain points upon which the carefully considered opinion of your Committee would be of very great value :-
(1) Information with regard to the measures which are being adopted during the war by competing nations (taking advantage of our temporary disabilities) to strengthen their hold on the market under review.
(2) Authentic information with regard to the nature and extent of State aid accorded to our competitors, together with a carefully considered opinion as to the advisability or otherwise, of similar governmental action in the case of British interests,
(3) An opinion as to whether Shanghai is likely to maintain its position as the great distributing centre for mid-China or whether there are signs of increased decentralisation in the future. which will catail the extension of the British merchants' activities to the smaller ports and the up-country districts.
(4) Suggestions with regard to any improvements which might be effected in our marketing organian- tion 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 anch concerns as the oil and tobacco companies might be applied to staple articles of traile, such as piece goods, hardware, sundries, &c.
(5) One remarkable feature of the China trade of late years has been the steadily increasing proportion of British-manufactured goods (notably textiles) which have been distributed by German merchants. An opinion as to the adequacy of the steps at present being taken by British merchants permanently to secure this business after the war, together with suggestions as to any measures which might be adopted by manufacturers and exporters in the United Kingdom in order to facilitate the attainment of this most desirable end, would be of grent value, *(6) Observations with regard to the vexed questions of credit and finance. While it is generally
recognised that a cash system is the soundest one for trade in China, the fact remains that our competitors in many places have successfully competed solely on account of their readiness to grant extended credit to Chinese dealers. An opinion as to how far British merchants adherence to cash terms is likely to prejudice our trade in the future wonkl be of interest.
(7) In the ease of large Government and engineering contracts, valuable orders are frequently lost by British manufacturers on account of the disinclination of British banks to finance contracts involving deferred payments. Any remedy for this state of affairs, which may be suggested, would receive very careful attention.
(8) An opinion as to the efficiency of Britial assistants as compared with their German rivals together with suggestions as to what methods might be adopted, both at home and in China, to improve the education and training of the mercantile assistant in order to provide him with a deeper knowledge of the country, and the market in which he labours,
(9) Observations on such questions as the possible improvement of transport facilities between the United Kingdom and China, the safeguarding of British trade-marks, fraudulent marking of competing goods, &c.
(10) Any special disabilities nader which British trade suffers in competing with that of other nations,
together with suggestions as to how such disabilities might be removed.
Apart from the foregoing special points, I shall welcome any observations or suggestions of a general character which your Committee may choose to make in the interests of British trade in the future.
Inasmuch as I um desirous of collating my information at the earliest possible date, I shall bo greatly obliged if you will kindly let me have your reply as soon as is convenient, if possible, not later than early June.
I may say that any information which your Committee may be good enough to submit is for the private information of His Majesty's Board of Trade, and will be treated in strict confidence.
APPENDIX.
Copy of a Circular letter addressed to the British Chambers of Commerce at Shanghai, Tientsin, Hankow, and Canton.
Board of Trade, 7. Whitehall Gardens, London, S.W.,
April 3rd, 1916.
SJR,
I HAVE to inform you that, at the request of His Majesty's Board of Trade, 1 sm investigating and reporting confidentially upon the probable economic situation in the Far East with which British intereste will be faced at the end of the present war. The inquiry is directed towards ascertaining the nature and extent of the foreigu competition which will be encountered, with a view to the formulation of a sound opinion as to what steps might, with advantage, be taken effectively to meet anch competition, and to maintain our trade on a sound and permanent foundation,
Having regard to the constitution and status of the Shanghai British Chamber of Commerce, which are calculated to lend considerable weight to any expression of its considered opinions, I should greatly
The Secretary,
British Chamber of Commerce.
Shanghai, Tientsin, Hankow, and Canton.
I am. Sir,
Your most obedient servant, (Signed) THOMAS M. AINSCOUGH.
LA
640