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himself of the advantages and facilities he has had in the past.
The function of a merchant is to find outlets for and facilitate the sale of the products of his country's manufacturers, the scope of whose activities lies in utilising all their capital, labour and energy in the manufacture of those goods which are wanted at the lowest possible price. In a perfect economic system any overlapping of these two functions is productive of waste, and I hold that the ideal system in China to-day is for the large merchant houses to develop their marketing system with the close co-operation and assistance of the manufacturers they represent. The British houses in China who are in a position to handle engineering and machinery on an extensive scale can almost be counted on the fingers of one hand, but they are mainly firms of good financial standing with branches in many ports, admirable financial and shipping facilities, a wide and old-established native clientèle, and long experience of the needs of the market.
What is required is an active forward policy, the development of the smaller branches in the up-country ports, the installation of a wide system of Chinese correspondents, and the realisation of the fact that engineering business has to be sought, and may be secured in the country itself where the field of competition is restricted, and good margins may be obtained, rather than waiting until an enquiry reaches Shanghai, by which time every firm on the coast is aware of it, and free competition has rendered it of no value. In great provinces like Szechuan, Hunan and Yunnan the Germans have had no competition whatever, except among themselves, and consequently have been able to secure full margins of profit. Such a system as has been suggested entails considerable expense and additions to the staffs of highly trained, specially qualified salesmen and engineers, but this is exactly where co-operation with the manufacturer is needed. The extension of their engineering departments should be effected by the merchants with the active assistance of the British manufacturers they represent, whose interests would be served by such extension. This assistance may be rendered by sharing the cost, or,
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incurred in a well-managed distribution scheme through default of native agents are negligible, as everyone is guaranteed, and the closest check is kept on each individual account. In my opinion, this is the most perfect method of marketing foreign imports in China, and the trade returns clearly demonstrate the enormous influence such applied method and organization has had in the trade.
Between the years 1900 and 1913, the imports into China of--
Cigarettes increased in value by 1,200 per cent. Aniline dyes
by over 300 Soap
Kerosene oil
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and sugar increased in value by as much as 600
There are no exact statistics available of the total value of the goods distributed by these various systems, but after careful examination I would compute it at a minimum of £8,000,000 sterling, which is over 11 per cent. of the total imports into China. A demand has been created for entirely new articles simply by the fact that these articles have been rendered accessible to the consumers by a supply on the spot, and an active, resourceful advertising campaign, the main feature of which has been the display of the actual goods in the large shops throughout the towns and villages of the country. The standard of native living throughout China is being rapidly raised, wages and prices have advanced enormously during the past decade, and there has grown up an ever-increasing demand for better quality and articles of comparative luxury. This has been most marked in the import of cotton piece goods. A few years ago this trade was confined to certain staple lines of greys, whites, and the lower grades of dyed and printed goods. To-day there is an increasing demand for best quality dyes, sateens, venetians, and poplins, high-grade cotton prints, and a miscel- laneous assortment of woven fancy goods. I have been surprised to find in remote cities of the interior a demand for such articles as figured poplins at prices
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