32
the danger of making any compact with China when there is loft any loophole for evasion.
If the Chinese Government were really de- sirous of putting a stop to this preferential treatment of junks the obvious course would be to place junks and steamers under the control of the foreign customs. It is only where these junks and steamers come into competition that the preferential tariff concerns us, and it is an open question whether the favoured treatment accorded to juuks is injurious to trade in general.
CHANGES IN THE CHINA TRADE.
CHINESE MONOPOLISING THE IMPORT TRADE.
MERCHANT VERSUS COMMISSION AGENT.
We take the following interesting review of the changes taking place in the China trade from Mr. Byron Brenan's recently published report:-
Although eighteen ports are open to the com- merce of the world, the importation of goods into China from Europe, the United States, and India, almost entirely takes place through the British colony of Hongkong in the south, and through the treaty port of Shanghai. From these two great entrepôts of the China trade all the other ports are supplied. Hong koug supplies Foochow, Amoy, Swatow, Can- ton, Hoihow, and Pakhoi; while Shanghai satisfies the wants of the six Yangtze ports, and the three northern ports. It is at Hong- kong and Shanghai that are established the British firms that supply the China market.
At the other ports, or the "outports" as they are known in the China trade, the British mer. ohant, and the foreign merchant generally, is ceasing to exist. At only twelve out of the eighteen ports are found British subjects en- gaged in any sort of trade, and at only three or four are any British subjects interested in the import trade. As already explained, the Chi- nese trader finds himself in the enjoyment of all the commercial privileges conferred on for- eigners by the treaties. According as he lives in the north or in the south he can proceed to Shanghai or Hongkong to lay in his supplies. He prefers the larger choice which he finds in these places; he has all the financial facilities which the well organised Chinese banking sys- tem affords him; he can travel more cheaply than his foreign rival, and his establishment at the treaty port costs him much less to keep пр. He can thus lay down his stocks at any of the outports on cheaper terms than the foreigner, and can easily undersell him. But the native has still further advantages in dis posing of his goods at the treaty ports. He is in touch with the up-country dealers, and knows the standing of the people he is dealing with; he is able to obtain information about markets which the foreigner cannot; and the power of combination in matters of trade in which Chinese are so strong enable them to control the market and to render the business of their foreign competitors unprofitable. It may therefore be stated that, with a few insignificant exceptions, the business of the British import merchant is confined to Hongkong and Shanghai, and that from these entrepôts the further distribution of merchandise throughout China is entirely in the hands of Chinese. Once the goods have left his warehouse in Hongkong or Shanghai the British importer has no longer a direct in- terest in their fate. He doubtless wishes them well, because the greater the consumption the better for his business, but such remote inter- ests do not incite him to spend much time or money in clearing the way for British mann. factures which have ceased to be his property. And yet this is a service to our British indus- tries which he alone can render. Chinese traders are powerless to remove obstructions which the rapacity of their rulers may put in their way. To lodge a complaint against his own officials is fraught with so much danger that recourse to such a step is never attempted; and to bring a case of extortion to the notice of a British official on the ground that the goods concerned are of British origin would mean the ruin of the ill-advised Chinaman,
THE HONGKONG WEEKLY PRESS AND
The import business at Shanghai is also undergoing a change, not exactly in the same direction as that which has taken place at all the other treaty ports. At these, as already explained, the Chinese dealers have displaced the foreign merchant; and dispensing with the services of any foreign go-between they obtain their stocks at Shanghai or Hongkong. In Shanghai the tendency is also for Chinese to import on their own account, but the business is still done through the agency of foreign merchants residing at the port, who in their Shanghai offices make contracts with Chi- nese for goods that are still lying in Man- chester or other Europeau centres of trade. The local foreign merchants are more and more ceasing to be merchants in the true sense of the word; and rather than take their chance of the market in China prefer to settle their terms before the merchandise leaves Europe.
Of the textiles imported from England and America as much as one-half is specially in dented for under instructions from Chinese dealers and the foreign firm through whom the order has been sent abroad has no interest in them on arrival, except as security for the pay- ment by the Chinese principal. The China. man gives his order in Shanghai, takes his risk of the exchange and of the market, and awaits the arrival of his goods. It was customary, not long ago, to settle the exchange with the banks as soon as the order was booked, but of late, since the fluctuations in exchange hare ceased to be so great, Chinese have shown a disposition to take their chance of the exchange as part of the risk which a merchant has to run. The gambling element in this has some attraction for the Chinaman, but it has also been found that the silver price of the goods that the risk is more apparent than real. follows marked rise or fall in exchange, so
any
Of Lancashire goods imported into Shanghai one-half arrive in this way already contracted for to the Chinese, and one-half are received by three or four large importing firms for their own risk; but in other goods the proportion coming entirely for the account of the Chinese is much larger. Cotton and woollen goods apart, about 75 per cent. of Shanghai foreign imports arrive wholly on Chinese account.
[July 7, 1897,
In taking a broad view of commerce it may at first sight seem immaterial whether the dis- tribution of our manufactures throughout Chins is in the hands of Chinese or of our own merchants; but under existing circumstances it is to be regretted that our merchants have not found it profitable to be themselves the distributors, and thus retain an interest in the goods until they have reached the consumer in the interior. The Chinese distributor has to submit without hope of redress to the extortions. of all the tax offices he may encounter on his journey, whereas the foreign distributor migh, occasionally obtain redress, and our manut factures in his hands would be allowed to oir- culate more freely. But, as explained already. the outport is no place for the foreign import merchant, and he cannot profitably take part in the work of distribution. Were it otherwise then the advantages to us would be far reaching, for the British merchant would become ac- quainted with the difficulties that beset our goods, he would resist illegal taxation and vexatious detention, and he would be keen to discover new markets and to introduce new goods. As things now are, this is all left to the unenterprising Chinaman, who, astute mer- chant as he is in well worn grooves, never thinks of striking out in a new direction.
At the treaty ports where the native and the foreigner are on the same footing it can be understood that the native can than hold his own, but when it more comes to sending goods to inland markets it might be supposed that the question of ownership would tell in favour of the foreigner; for beyond the treaty ports the functions of the honestly managed foreign customis cease, and trade finds itself at the mercy of the rapacious and corrupt native official.
Under our treaties a British merchant may lay down his merchandise at the door of any consumer in the Empire on payment of certain duties. The payment of an import duty of 5 per cent., and an inland duty of 24 per cent., or 7 per cent. in all, should lay down our goods anywhere. It is, however, certain that, except in some favoured localities where the tax- gatherer finds it unprofitable. to establish himself, the law abiding Chinese trader Dover succeeds in putting his goods on the market on these favourable terms. The difference, then, between the amount of duties the Chinaman has actually to pay, and of the duties which the foreigner ought by treaty to pay, should be the margin of profit in favour of the latter, and one sufficiently handsome to en- courage foreign merchants to become dis- tributors. It is true that the treaty clauses bearing upon the inland trade in British goods also confer the same privileges on the Chinese as on our own countrymen, and that the right of commutation of inland taxes appertains to the merchandise. irrespective of ownership. In principle indeed the Chinese Government has conceded this, but there is a vast difference in China between a right conceded to a Chinese and a right conceded to a foreigner. The native is diffident about claiming rights conferred on him by foreign treaties when the exercise of these rights is displeasing to the Chinese officials with whom he The foreigner has
It thus happens that the Chines. . ta er degree than the British merchant feels the in- mediate effect of any infraction of the com- mercial clauses of the British treaty; but the Chinese merchant's voice cannot make itself heard to the same effect as that of the more independent foreigner, and treaty infractions are thus allowed to endure without attracting much attention, or at any rate without any serious effort being made to set matters right. That a certain amount of apathy follows,resulting in stagnation, is natural, for the desire to find new markets and to push sales which would animate the holders of large stock of unsold goods is not to be looked for in men who have already secured a purchaser. The profitable disposal of his own merchandise is to any man a more powerful incentive than the general increase of a trade in which he may not after all become a participator; so the merchant with a warehouse full of unsold goods is more likely to bestir himself and find an outlet for his wares, and to make himself heard if he meets
any rate feels secure in with obstruction, than the man who is already at assured of his profit or his commission, and and property; and if his goods are illegally has no stake in the ultimate disposal of the detained or surcharged his loss can be appraised merchandise that has been contracted for in money, and the intervention of his Consul through him,
should lead to reparation.
Trade, of course, must be conducted on the lines that best suit those engaged in it, but the change in the methods of business that is taking place does not bode well for the expansion of trade, which in China can only be looked for from the activity and energy of foreign mer- chants, supported and stimulated by their own Governments. From the agitation of the Chinese dealer nothing is to be expected, for the simple reason that he dare not agitate. It is even a difficult matter to ascertain from him the amount levied on goods between a port and an inland market; he fears, and with good reason, that his officials will vent their displeasure on him if he supplies information which may jeo- pardise their private gains; and he is also un- willing to take any step which, however sure to result in an extension of trade, may at the same time diminish his own share of it.
comes
in contact. no such fears; he person
How then is it that the wants of the distant Chinese consumers are not supplied by foreign merchants? There are three reasons: One that the trade would combine against the foreigner, and that men of small capital could not carry on the fight; another, a lack of that feeling of enterprise which it is necessary to possess and exercise before the connections in the interior can be formed; and still another, the mis- givings which fill the minds of British merchanta lest they should not receive adequate support and protection from their own anthorities when they are in difficulties. an apprehension that they will be left to shift for themselves, and that the British authorities will allow them to suffer unjust losses. It is this sense of insecurity that has discourged our pioneers at the treaty ports, and caused the British merchant to keep clear of any ventures except such as from his
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