Asian countries have recently become major players in the world economy with the emergence of Japan in the 1960s, India in the 1970s, and China in the late 1980s. Asia covers some 29.4 percent of the world’s land mass, and since the 1980s its 4 billion people have made up about 60 percent of the world’s population.
From ancient times, there has been significant trade around Asia and also between Asia and other parts of the world. There was contact between Han Dynasty–China and the Roman Empire, but this was through intermediaries, and there were theories that the Romans may have sourced some of their tin from southeast Asia. Archaeologists working at the port of Oc-Eo in southern Vietnam in the 1930s uncovered two Roman coins in the remains of what was probably the capital of the Empire of Funan, which flourished from about 200 c.e. to 500 c.e. and was a precursor to Cambodia. This shows that there was contact, probably through intermediaries. By this time, Chinese junks sailed around much of the South China Sea, and there were also Arab dhows sailing the Indian Ocean. Trade in spices, other foods, silks, and other precious items took place at sea, and also on land with the emergence of the Silk Road, the land route through central Asia connecting China with Turkey and through Turkey to Europe.
In medieval times, there seems to have been increasing trade around Asia, with most trade with Europe along the Silk Road, although this was reduced with the emergence of the Seljuk and then the Ottoman Turks. Trade continued between China and the Turks, but much of Europe was cut off. There were some intrepid travelers who made the journey, such as Marco Polo (1254–1324). There were also many Christian missionaries, going back to St. Thomas himself, who was said to have gone to India soon after the crucifixion of Jesus.
In early modern times the Chinese were involved in trade with most of Asia, and in the early 15th century the government sponsored a number of massive expeditions under Admiral Cheng Ho. Records of these journeys survive, and it is quite clear from them, as well as from archaeological and other evidence, that there were Chinese communities (and also some Indian and Arab communities) around much of the Indian Ocean, southeast Asia, and the South China Sea. Many of these were trading families. There is also a theory that some ships from Cheng Ho’s expeditions may have gone to the Americas, but this is disputed by some scholars. A changed political climate at home and the high expedition costs resulted in the Chinese discontinuing their explorations of the world.
European Trade And Imperialism
By the 1480s, there were Portuguese ships in the Indian Ocean, and in 1497–99, Vasco da Gama (c.1460–1524) sailed from Portugal to India and back again, leading to trade by ship from Portugal to India. This Portuguese trade was largely conducted by the Portuguese government, which financed the expeditions and reaped the rewards. In 1510 Afonsod’Albuquerque (1453–1515) took Goa for the Portuguese, and in 1511 he took Malacca. It was these successes that encouraged British and Dutch merchants to subscribe money to establish, respectively, the Honorable East India Company, founded in 1600, and Vereenigde Oost-Indische Compagnie (VOC), or the Dutch East India Company, established two years later. Both were chartered companies, operating through a government charter that gave them extraterritorial rights over the lands they captured. The profits they made from their expeditions went to pay their shareholders, which included many important government figures in both countries.
The British East India Company was the main trading company in Asia until the 19th century. It maintained a large army and its own navy, and gradually took over a number of important ports from Aden to many parts of India, Ceylon (now Sri Lanka), and also Penang, Malacca, and Singapore, as well as British Burma. It conducted trade with China, and also later attempted to trade with Japan.
The VOC took over Malacca from the Portuguese in 1642, but swapped it with the British in 1824 for British Bencoolen and other settlements on the west coast of Sumatra. The Dutch had also taken over parts of what was to become the Netherlands East Indies from the 1600s. The British captured them in 1811, but returned them in 1824. Both the British East India Company and the VOC suffered from major political interference and from their servants being involved in private trade. This was to lead to the British East India Company collapsing in 1784 and needing an injection of government money, but being kept afloat until 1858, and then formally dissolving in 1873. For the VOC, their rule over the Netherlands East Indies was replaced by direct rule from the Netherlands in 1801.
Other companies also maintained their own chartered companies in Asia with the Danish East India Company founded in 1616; the Portuguese East India Company founded in 1628; the French East India Company founded in 1664; and the Swedish East India Company founded in 1731. The Danes, at their height, are reported to have imported more tea than the British East India Company, with vast quantities smuggled into Britain. They also managed to establish some settlements in India, but their Danish East India Company had to be refounded in 1732 as Asiatisk Kompagni (“Asiatic Company”), which, in 1779, handed its monopoly to the Danish crown. The Swedish East India Company was actually launched by Scottish merchant Colin Campbell and made a fortune for its investors—paying a 25 percent dividend on the first voyage—but never had any territorial claims in Asia.
By the 19th century, many new companies started to become involved in trade in Asia. Many of these were trading companies that specialized in a particular field of business, although a few of them operated as general merchants. Later still, some of these businesses transformed themselves into agency houses whereby they imported items for which they were the agents, selling them in particular markets.
For the British, one of the oldest of the companies operating in Asia was Guthrie & Company. It had been established in 1821 by Briton Alexander Guthrie, who was living in Singapore, and James Guthrie who lived in London. By the 1850s the two had built up the company to become a large trading house that came to dominate British trade with Singapore. James Guthrie retired from the company in 1876 and he then returned to Britain where he died in 1900. By that time the company owned six banks, five insurance companies, two shipping companies and 23 new “general” agencies. It was reorganized in 1903, and by the 1920s and 1930s was heavily involved in oil palm. The company headquarters was destroyed in the Japanese bombing of Malaya, and after World War II, it expanded into Africa and Australia, moving its headquarters to London. There are now a number of companies in the Guthrie Group, as well as subsidiaries and independent companies using the name Guthrie.
Another early British-founded company that is still operating is the Borneo Company, founded in 1846. It operated throughout Southeast Asia, and had extensive lands in Sarawak and North Borneo (Sabah), hence its name, but also was involved in trade in Singapore, Malaya, and Thailand. During the 1960s, the Borneo Company were agents in Singapore and elsewhere for many major companies including Bosch, Bovril, Johnson & Johnson, Rolex, and the Sheaffer Pen Company. It still owns considerable property in Thailand, where much of its operation is still located.
Probably the most famous of the British trading companies of the period were those that centered on the Jardines. In Hong Kong and Shanghai, Jardine Matheson operated selling opium and other products, an event that led to the Opium Wars in 1839–42. Jardines remained a major company in the International Settlement in Shanghai, and also Hong Kong, and was also a major agency house there and in Singapore and Malaya, where they formed a partnership with the Henry Waugh Trading Company to form Jardine Waugh. Their business was involved in handling exports and imports, insurance, sales of airplanes and aviation accessories, mining, and heavy engineering.
Another British company that operated throughout Asia was the Peninsular & Oriental (P&O) Line, which had the contract for some of the Royal Mail and other mail deliveries as well as taking passengers between Asia and Europe. Of the other British companies that operated in Asia, two others were heavily concerned with trade in Malaya and Singapore—Sime Darby, which began operations in Malacca in 1902 and was established in Singapore in 1910, and William Jacks, which was created in 1919. The former is still important in Malaysia where it controls rubber plantations; the latter specializes in engineering equipment and also in exporting tin, copra, rubber, and pineapples as well as running a general agency.
There was also the firm of Boustead’s, founded in 1828 by Edward Boustead, which was involved in trading in spices, coconuts, tobacco, tin, tea, and silks as well as being agents for the British companies Johnny Walker and Thomas Cook’s. Mention should also be made of Anglo-Thai; Harper Gilfillan (formerly Gilfillan, Wood & Co. founded in 1867); Harrisons, Barker & Co. (founded in 1902); Huttenbach Brothers (founded in 1883); McAlister & Co. (founded in 1857); and H. Wolskel & Co. (founded in 1900). The Danish East Asiatic Company, founded in 1897 in Copenhagen, traded throughout southeast Asia, being particularly involved in trade in Thailand, Malaya, and Singapore. It still retains many interests in Asia, including in shipping. Other European agency houses operating in the region included the German firm Behn Meyer, which had been founded in 1840; the Swiss company Diethelm, founded in 1860; and the French firm Dupire Brothers, founded in 1897.
Mention has already been made of P&O, but there were also many other shipping lines in the region. These included the British companies China Navigation Co., Dominion of Far East Line, and Orient Line; and in Burma, the Irrawaddy Flotilla Company.
Other companies included the U.S. Pacific Far East Line; and the Japanese Nippon Yusen Kaisha, Osaka Shosen Kaisha, and Mitsui-O.S.K. lines. The liners were involved in transporting passengers, mail, and, in times of strife, military supplies and/or soldiers.
Many of the shipping companies had arrangements with local hotels, and this led to extensive tourism— the major hotels in Asia at that time included the Astor (c.1890, Tianjin, China); the Cathay (1931, Shanghai, China); the Eastern and Oriental (1884/1885, Penang, Malaysia); the Grand Hotel de Pekin (1900, Beijing, China); the Grand Oriental Hotel (1837, Colombo, Ceylon/Sri Lanka); the Hotel des Indes (1897, Batavia/Jakarta, Indonesia); the Imperial (1915–22, Tokyo, Japan); the Oriental Hotel (1876, Bangkok, Thailand); the Metropole (1901, Hanoi, Vietnam); the Peninsula Hotel (1928, Hong Kong, China); the Raffles Hotel (1887, Singapore); the Royal (1937, Phnom Penh, Cambodia); the Strand Hotel (1901, Rangoon/ Yangon, Burma/Myanmar); and the Taj Mahal (1904, Bombay/Mumbai, India). Many of these have gone through several different management companies. In addition, since World War II, there has been an expansion with many major hotel chains buying up or building their own hotels in major cities in Asia.
There were also a large number of European banks that operated throughout Asia. For the British, Grindlays in India, the Hongkong and Shanghai Banking Corporation (now HSBC), the Imperial Bank of India, the National Bank of India, the Standard Chartered Bank, and many others operated, and some of these still maintain a presence in the region, although many of the smaller ones have since been absorbed by larger concerns. In Australia, the Orient Bank helped many Chinese miners transfer funds back to China during the Gold Rush of the 1850s. The French ran the Banque de l’Indochine; the Germans operated the Deutsche Asiatische Bank; and for the Japanese, the Yokohama Specie Bank had branches throughout Asia (the singer/artist Yoko Ono’s father managed the Hanoi branch during World War II).
There were also a number of smaller banks such as the Banco Delta Asia located in Macao that gained worldwide attention in 2005 when it had sanctions placed against it by the U.S. government in connection with its dealings with the North Korean government. Later Chinese-owned and Chinese-run banks were established throughout Asia with the Overseas Chinese Banking Corporation, founded in 1932 from an amalgamation of three other banks; and the United Overseas Bank, formed in 1935, both operating heavily in Singapore, British Malaya, and the Netherlands East Indies.
In addition to the trading companies, there were many European-owned plantation or mining companies that focused on individual sites or ran groups of plantations or mines. Of the plantation companies, the most well-known was the British-owned Dunlop, which controlled many rubber plantations in Malaya. The Compagnie du Cambodge, owned by the French nobles the Comtes de Beaumont in Paris, was one of the major rubber companies in French Indochina. The Bombay Burmah Trading Corporation operated in northern Thailand and Burma, mainly in timber. In India, the tea companies such Twining’s and Lipton’s (now a part of Unilever) were important. Other British companies such as the security printers De La Rue and Waterlow’s, and the U.S. firm American Banknote Company, were (and still are) involved in the printing of money and postage stamps. Kelly & Walsh were major publishers of books in English from their offices in Hong Kong and Shanghai.
In addition to the European companies, there have also been large numbers of Chinese trading companies. Many of these were not well known until the 1950s, but some of these included Lee Rubber and Yeo Hap Seng’s foods. The “Tiger Balm brothers,” Aw Boon Haw (1883–1954) and Aw Boon Par (d.1944) were from Burma and developed the ointment Tiger Balm, making a fortune and operating for most of the time from Singapore. Cheong Fatt-tze also ran an extensive business empire in Penang, Sumatra, and some parts of southern China; and Loke Wan Tho (1915–64) ran the Cathay Organization. The Shaw brothers (Runme, Runje, Runde, and Run Run) ran a film company empire in Shanghai, Hong Kong, and Singapore.
Post-Independence
After independence in many of the countries in Asia, business laws were gradually changed to help the local population gain control of many of the businesses. In Malaysia, laws were introduced to promote Malays in business, and these have been successful with many firms in the country now controlled by Malays; Malaysian citizenship is a requirement to become a director of a company in Malaysia.
In Cambodia, laws to establish state-owned corporations in the 1960s did reduce the Chinese domination of the businesses in the country but led to stagnation in the economy, which in turn has been blamed for the events leading up to the civil war that broke out in 1970. Since the late 1980s, the circle around Hun Sen has controlled many of the major businesses in the country. In Vietnam, the French tried to maintain their businesses in the country with some success, although their last plantations in the country were nationalized in 1976, a year after the end of the Vietnam War. A relaxation of communist restrictions has seen many people establish businesses, especially in Ho Chi Minh City. In Brunei, Shell Oil has formed a partnership with the local government to form Royal Brunei Shell, and in Indonesia, the local company Pertamina was established in 1957. In the Philippines, economic power is closely linked to political power, with many examples from the leading families such as the Ayalas, Cojuangcos, and Lopez.
Japan
The main transformations in Asian business since the end of World War II have been in the emergence of Japanese capitalism, in the reemergence of China from the 1980s, and in the development of the Indian economy. Mention should also be made of the “tiger” economies of the Pacific Rim, notably Hong Kong, Singapore, South Korea, and Taiwan (Republic of China), all of which have had high levels of economic growth.
There had been Japanese trading companies in early modern times, but the country was closed to most traders from 1635 until the arrival of Commodore Matthew Perry in 1853–54. This was followed by the Meiji Restoration, where the Japanese government actively sought to build up its own businesses. In many cases it encouraged existing businesses run by local landowners to transform into joint-stock companies. Government grants were provided for many of the companies such as the Yawata Steel Works, to develop with help from the Bank of Japan (Nippon Ginko), which had been formed in 1882.
After World War II, with the Japanese nation shattered, plans were introduced to rebuild the country’s economy. Before the war, Japan had been the source of many cheap goods and toys; it did not have a good reputation for manufactures. As a result, the engineer and statistician Gen’ichi Taguchi sought advice from the U.S. quality control experts W. Edwards Deming, Joseph Moses Juran, and Walter A. Shewhart. The plan was for Japan to develop its business along strict lines that would ensure that the country gained a reputation for inexpensive but good-quality manufactured products. The newest factories, often “staffed” with robots, were developed for what became an economic “miracle.”
In 1945 most of Japan’s industry had been destroyed and during the Allied occupation of Japan, the large conglomerates (zaibatsus) were broken up. This allowed many new companies to form, but owing to the economies of scale, a number of these later merged. It was not long before Hitachi, Kawasaki, Mitsubishi, Mitsui, Nippon Electric Company (NEC), Nissan, Sony, and Toshiba became household names around the world. In the 1960s, Honda managed to make huge inroads into the motorcycle industry in the United States so quickly that the “Honda effect” was taught at many management courses in U.S. universities.
China
Before World War II, the Chinese economy had been dominated by foreign companies, although during the late 19th century Li Hung-chang and other officials had tried to develop Chinese companies such as the Kaiping Mines and the Shanghai Cotton Cloth Mill. After 1949, when the communists won the Chinese civil war, Chinese businesses on the mainland were nationalized. However, from the late 1970s, China started to engage more with the West, and this led to the creation of a capitalist economy alongside a communist political structure. The result has been great economic influence wielded by large Chinese companies that have been involved in low-price manufactures, which in turn has seen them dominate the textile industry and be responsible for many manufactured items sold around the world.
China has become wealthy through exports, and has also seen Western expertise and businesses relocate to China, especially to Shanghai, which has reemerged as the commercial capital of China. The return of Hong Kong in 1997, and the peaceful manner in which that took place, has in turn led to renewed confidence in the Chinese economy that has seen unparalleled rates of economic growth in the 1990s and the 2000s.
India
In India, the economy of the country has also been transformed since independence in 1947. For periods of time, India has been dominated by a socialist government, and under Prime Minister Indira Gandhi, large government corporations played a large part in the economy of India. However, gradually more and more private companies have been established, leading to India also having long periods of high economic growth, and the entrepreneurial spirit has seen the emergence of many new companies, especially in the information technology sector—India being able to take advantage of a large English-speaking population.
Globalization
With increasing prosperity in much of Asia, there have been many multinationals investing heavily in the region. Foreign banks have premises in many of the major cities of the region. Foreign banking institutions are involved in trade throughout the region, with many investment arms of foreign corporations being active in the Tokyo, Hong Kong, Shanghai, Singapore, Seoul, and other stock markets. Indeed, it was in Singapore in 1995 that the British bank Baring’s lost a fortune on the stock market, causing the bank to be sold for £1.
Asia has benefited hugely from globalization with some countries such as China taking advantage of its vast human resources, many others doing so to a lesser extent, and all being able to draw on entrepreneurial skills; this has seen Asian businesses compete in every part of the world. Of the richest people in the world, Indians Lakshmi Mittal, Mukesh Ambani, and Anil Ambani rank, respectively, fourth, fifth, and sixth, with Kushal Pal Singh, also from India, being ninth. Li Ka-shing from Hong Kong is listed as the 12th richest, the Sultan of Brunei is listed as 17th richest, and the Kwok brothers from Hong Kong are the 25th richest.
Bibliography:
- Robert Blake, Jardine Matheson: Traders of the Far East (Weidenfeld & Nicolson, 1999);
- Sjovald Cunyngham-Brown, The Traders: A Story of Britain’s SouthEast Asian Commercial Adventure (Newman Neame, 1970);
- Emil Hellfferich, Behn, Meyer & Co. (Hans Christians Verlag, 1983);
- Hongkong & Shanghai Banking Corporation, A Century in Singapore 1877–1977 (The Corporation, 1978);
- David Howarth and Stephen Howarth, The Story of P&O (Weidenfeld & Nicolson, 1986);
- Frank H. H. King, The Hongkong Bank in the Period of Imperialism and War 1895–1918 (Cambridge University Press, 1988);
- Richard Lim, Building a Singapore Bank: The OUB Story (Overseas Union Bank, 1999);
- Henry Longhurst, The Borneo Story: The First Hundred Years of The Borneo Company Limited (Newman Neame, 1956);
- David Shavit, The United States in Asia: A Historical Dictionary (Greenwood Press, 1990);
- Sime Darby: 75th Anniversary (Sime Darby, 1985);
- Poul Westpoll, The East Asiatic Company Limited (East Asiatic Company, 1972);
- Arnold Wright and H. A. Cartwright, Twentieth Century Impressions of British Malaya (Lloyds Greater England, 1907).
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