The Rise of Shanghai

When it comes to compradors, Shanghai is an inevitable topic.

Shanghai is very young and was once a large fishing village. What we now know as the Bund in Shanghai was once a vast wasteland.

Before 1840, compared to its neighbors Suzhou and Hangzhou, and the slightly farther Yangzhou, Shanghai was nothing special. However, Shanghai's location was incredibly advantageous. It faced the sea and had a vast expanse of flat land behind it. Moreover, Shanghai is located at the mouth of the Yangtze River, making the entire river basin an extension of Shanghai. However, China did not focus on maritime trade in the past, so Shanghai's advantages were not discovered. After the powers arrived in China, they quickly found this land and realized that as China interacted with maritime civilizations, Shanghai would soon become a top-tier super city in China.

This is also why, after the end of the First Opium War, the powers proposed the "Five Ports Open for Trade," which included Shanghai, a place that the Qing court's high-level officials had little impression of. Many officials in the Qing court had never heard of Shanghai before. When they heard that the British demanded the opening of Shanghai, they thought Shanghai was in Xinjiang.

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After Shanghai was opened to foreign trade, foreigners entered Shanghai for business, and many Chinese merchants engaged in foreign trade also moved there, such as the well-known "Hui merchants," who later became less heard of, but in fact, they moved to Shanghai. Gradually, the area of Shanghai became prosperous. However, the decisive influence came from the Taiping Rebellion.

The Taiping Rebellion broke out in Guangxi and later fought repeatedly in the middle and lower reaches of the Yangtze River, ravaging the areas of Nanjing, Hangzhou, and Suzhou. Wherever the Taiping Army went, they would forcibly collect food, and the displaced people who were involved in the Taiping Army would follow them everywhere. The Qing court was even more excessive, often allowing soldiers to massacre the city after capturing a city occupied by the Taiping Army. As a result, the Jiangnan region, the richest region in China, was in a mess after a few years.

Those wealthy families, in order to avoid the war, flocked to Shanghai in large numbers. Shanghai was guarded by foreign troops. The Taiping Army once wanted to attack Shanghai, but later did not succeed. The wealthy families in Jiangnan further confirmed that Shanghai was very safe. After the end of the Taiping Rebellion, even more wealthy families moved in, and gradually that place became the stronghold of capital from Jiangsu and Zhejiang.

This city of Shanghai is really strange. It is a pure commercial city, but it was born in the flames of war (the First Opium War) and prospered in a greater disaster, that is, the Taiping Rebellion.

Of course, not everyone was running away. For example, when the Taiping Army attacked Hangzhou, everyone ran away. Hu Xueyan, who was born in the Hui merchants, ran to sell food and ammunition to the Qing army, and from then on, he became the Qing court's arms dealer and business representative, and quickly became very rich.It is precisely because Shanghai was the stronghold of capital from Jiangsu and Zhejiang that the revolution later erupted in Guangzhou. When the Northern Expeditionary Army reached Shanghai, they were taken over by the capital of the Jiangsu and Zhejiang regions, reviving the situation at once. Chiang Kai-shek and the Jiangsu and Zhejiang tycoons joined hands to cleanse the internal revolutionary forces, and the Nationalist government became a joint entity of warlords and tycoons.

Back in the early days of the port opening, Shanghai was similar to Shenzhen, both originally being fishing villages. The people there were also filled in from the surrounding areas, including a large number of people from Guangdong. Previously, China had only one trading port in Guangzhou, right? Later, Guangzhou was ruined in the Opium War, so the merchants all moved to Shanghai to continue their development, coupled with countless Western adventurers, and Shanghai gradually developed.

Before Shanghai, China's largest trading port was in Guangzhou, the Thirteen Factories of Guangzhou, so Guangzhou used to be the most prosperous area of China's maritime trade. However, Guangzhou had a problem: it was too far from China's foreign trade production areas. At that time, the center of China's silk industry was Hangzhou, the center of the textile industry was Suzhou, and the Huizhou people were dealing with tea, all of which were too far from Guangdong but extremely close to Shanghai, with waterways connecting them. The cost of water transport is one-twentieth of the cost of land transport. With the opening of Shanghai, the foreign trade products from Suzhou and Hangzhou no longer needed to be sent to Guangdong, and soon most of Guangzhou's business moved to Shanghai, and the merchants of Guangzhou followed suit.

2 The rise of compradors

Compradors emerged early with the rise of China's overseas trade. Foreigners came to the coastal areas of China but were not familiar with the situation in China, making it inconvenient to do business. So a group of keen-eyed people spotted the business opportunity, learned foreign languages, and started to do intermediary business. For example, when foreign ships arrived at the shore, they went to the foreign ships to act as intermediaries to sell those necessary things, such as food, water, and dockworkers, etc. Over time, their relationship with foreigners became closer and closer. Foreigners would consult them on all issues related to China, and they would also use their local identity to help foreigners handle affairs, which is the comprador.

Please note that at this time, the comprador was still neutral because doing business itself is neutral, otherwise, people in foreign enterprises now would become traitors.

At that time, the place that produced the most compradors was a place called "Xiangshan." Xiangshan is not the Xiangshan in Beijing where people watch red leaves, but Xiangshan County in Guangdong. It was very large at that time, including what is now Zhongshan City, Zhuhai, and Macao, which no longer exists. Yes, Mr. Sun Yat-sen was from Xiangshan.

The Macao part of Xiangshan was occupied by the Portuguese very early and was not reclaimed until 1999. Xiangshan's land was barren, so the local people had to find their own way out, so a large number of Xiangshan people went to work for the Portuguese, which is also why Mr. Sun Yat-sen's thinking was so open, because their Xiangshan County had been dealing with foreigners all the time.

Due to the Xiangshan people following the foreigners everywhere, there were Xiangshan people all over the world, such as Rong Hong, the first Chinese student at Yale, who was also from Xiangshan. It is hard to imagine that the first student was from Shanxi, right? There are even more in Hong Kong, so after the reform and opening up, the people from the original Xiangshan County's territory already had a broad vision and wild thinking, and they received a large amount of investment from overseas Chinese, so the development was particularly good.

When Shanghai opened its port, Western foreign firms opened one after another in Shanghai, which required a large number of compradors to help. They thought of the Xiangshan people who had been cooperating with them for a long time, so a large number of Xiangshan people were sent to Shanghai to help the foreigners in Shanghai carry out their business, and these Xiangshan people called more of their fellow villagers to go there.Compared to Guangdong, the business of foreigners in Shanghai was much larger, so since modern times, the so-called "four major compradors" (Xi Zhengfu, Tang Tingzhu, Xu Run, Zheng Guanying) all worked in Shanghai. However, among these Shanghai compradors, three out of the four came from Xiangshan, and the remaining one came from Suzhou.

Of course, the compradors in Shanghai belonged to the "giant compradors." There were also many distributed in Hong Kong, such as the recently deceased Stanley Ho, the gambling king of Macau. His family started with a person named "He Dong," who was originally a comprador of Jardine Matheson. Later, he became a super tycoon, and then brought his entire family into the business, making all of them compradors, and elevating the status of the entire family. Other comprador families were similar; at that time, there was a saying, "He, Luo, Shi, Xian, Cai, women do not worry about marrying outside." These families not only did similar work, helping foreigners manage affairs, but also intermarried, and even practiced close relative marriages.

So, what were these people usually busy with?

Mainly the three major specialties of China at that time, cotton, silk, and tea, etc., they would purchase these items and then sell them abroad, while also importing opium from abroad. China was defeated in the Opium War, and was forced to agree to the sale of opium by the powers in China. However, later on, Chinese warlords also planted opium, not only planting it but also exporting it, which led to the United States being very distressed by the imported opium from China for a long time.

Overall, most compradors were neutral, similar to employees working in foreign companies now. Some even had a strong sense of patriotism, such as Tang Tingzhu, who used to be a comprador of Jardine Matheson and later, at the invitation of Li Hongzhang, participated in the establishment of the very famous China Merchants Steam Navigation Company in modern Chinese history. This company was also one of the few Chinese enterprises that could compete with foreign companies in the late Qing Dynasty.

In fact, the Westernization Movement initiated by the Qing court later mainly relied on these people, which was called "official supervision and merchant management" at the time. How could the bureaucrats know how to organize modern enterprises? Therefore, Li Hongzhang and others extensively employed those compradors with experience in foreign firms, as well as Zheng Guanying, who should be very familiar to everyone. He not only participated in the Westernization Movement but was also a famous modern thinker, and he wrote "Dangerous Words in Prosperous Times."

However, some compradors, determined by their positions, did a lot of bad things. For example, China had little industrial capacity at the time, and the Qing court and many private entrepreneurs wanted to develop modern industries. But if China developed, those compradors responsible for selling foreign-produced goods to China would be unemployed, so they tried every means to obstruct it, even using dumping methods to crush the domestic industrial sprouts.

However, most compradors were on both sides, on the one hand, they had a very good relationship with the Qing court officials, and on the other hand, they were compradors for foreigners, which is very reminiscent of some current enterprises.

For example, the famous "Dongting Gang" boss Xi Zhengfu, back in the late Qing Dynasty, this person was basically well-known because he was in charge of the Hongkong and Shanghai Banking Corporation. In fact, when we talk about the HSBC now, there were not many foreigners at the time, all were a group of Chinese working inside, and the Xi family occupied the position of the head of HSBC for as long as 55 years, the father finished and the son took over, and after the son died, the grandson took over.

Their family also had another identity, which was a member of Li Hongzhang's Huai faction. Later, when Li Hongzhang's Huai faction and Zuo Zongtang's Chu faction had conflicts, as agents of both parties in the business world, Hu Xueyan was the agent of Zuo Zongtang, and Xi Zhengfu was the agent of Li Hongzhang, and they also had a huge conflict.With the support of Li Hongzhang, Xi Zhengfu completely defeated Hu Xueyan, and Hu Xueyan and the Huizhou merchants were completely out of the historical stage. Many people regard this conflict as a confrontation between national businessmen and comprador businessmen, but in essence, it is a conflict between agents of the Qing court. The key blow that eventually killed Hu Xueyan was made by Sheng Xuanhuai. We can't say that Sheng Xuanhuai is a foreign comprador, but both Sheng Xuanhuai and Xi Zhengfu are people of Li Hongzhang.

In general, the foundation of the comprador class lies in the "information gap" or "economic gap". Only when the foreign economy is much stronger than the domestic economy, and China needs to import a large number of foreign products, is there a need for the existence of compradors.

Furthermore, the difficulty of the comprador's profit is inversely proportional to the technical gap between China and foreign countries. The stronger the domestic technology, the more likely it will form an export situation to foreign countries, and the comprador class will have no significance. So they can't stand the rise of national industries, unless they change their camp and change their positions. They are the archenemy of national industries, and there is a state of mutual annihilation and mutual exclusion.

3 The decline of the comprador

The entire Republic of China is actually a comprador government.

The Xi family mentioned above, their family's power basically runs through the late Qing Dynasty and the Republic of China. In the Republic of China, not only did they not weaken, but they became stronger through marriage alliances, such as the Song family, which is related to the Xi family. If you carefully check the upper class of the Republic of China, you can find that those comprador families not only did not die out, but this time they went further, entered the government, and became "comprador bureaucratic bourgeoisie".

And Chairman Chiang Kai-shek is a short-sighted person. In November 1928, the Nanjing National Government issued the "Standard Case for Dividing National Income and Local Income", which is the tax-sharing system of the Republic of China. After this reform, the easy-to-collect customs and salt taxes were attributed to the government, and other difficult-to-collect taxes were attributed to the localities.

This has had a significant impact on the Republic of China, because only by importing a large amount of foreign goods can taxes be collected, and Chiang Kai-shek's government has the financial resources to ensure.

But this game is like smoking opium. If you import a large amount of industrial products from foreign countries, they are mass-produced by machines, while China is still a small peasant economy. Japanese and American goods are much cheaper than domestic goods, and those companies sell at very low prices in China, which makes it impossible for domestic industries to rise. In this case, the only way is to increase tariffs to support domestic industries. However, Chairman Chiang Kai-shek is still looking forward to tariffs. Once the tariffs are increased, foreign products cannot be sold in China, and the financial situation of the national government will be problematic. Therefore, the national government has always allowed this kind of dumping.

Soon, China's national industries collapsed, and they could not produce the basic industrial products needed by the people, so they needed to import more, and the vicious cycle continued. This is also the reason why, during the so-called "Golden Decade" of the national government, the economic growth rate was more than 10% per year, but the industrial level was still regressing.In this process, the comprador class, responsible for smuggling goods into China, thrived and gained momentum. After their strength grew, they further lobbied the Republic of China government, and even entered the upper echelons of the national government to become executives or power holders. For example, Yu Qiqing, a close friend of Chairman Chiang Kai-shek, was one of the largest compradors in Shanghai. He once connected Chiang Kai-shek and the Jiangsu-Zhejiang business group before the "April 12th Incident." After the outbreak of the Anti-Japanese War, he hoarded and profited from the national disaster. Such a character has always been at the core of the national government.

Why did Chairman Chiang Kai-shek launch the Battle of Shanghai? It's simple, Shanghai was the stronghold of the compradors and also the base of foreign capital in China. Chairman Chiang Kai-shek hoped that the compradors would go to their masters, that is, American and British capital. However, Japan saw through it and did not offend the United States and Britain, and these two countries did not want to get involved in the matter.

In the end, foreign capital and their compradors basically controlled all the industries related to China's mining, heavy industry, and cotton spinning. Not only that, due to the deep involvement of the upper echelons, the interest of the Republic of China government in basic industries was even less than that of the Qing Dynasty.

For example, the famous national entrepreneur Fan Xudong borrowed 16 million US dollars from the United States to prepare for the production of soda ash, which is also an important basic industrial raw material. It should be supported by the state, but the Republic of China government not only did not support it but even refused to guarantee the loan, resulting in the factory not being established.

Despite the fierce activities of the comprador class, after 1949, they quickly collapsed like locusts in autumn. After the end of the Huaihai Campaign, the comprador groups in the south saw the trend and began to move to Hong Kong or the United States. From this period to 1978, it was a period of the retreat of the compradors.

But this is not the end of the story.

After the reform and opening up, China basically lacked everything. As long as it could be smuggled from overseas to China, it could make a fortune. At that time, smuggling was rampant, cars, color TVs, cameras, and even video recorders were smuggled. It may be hard for everyone to imagine that in the 1990s, when China was so poor, these things were sold at much higher prices in China than abroad. Now it seems absurd. The most obvious example is the Santana.

In the 1990s, the wages of Chinese workers were not more than a hundred, and that thing was sold for 200,000 yuan. An ordinary family would have to go without food and drink for two hundred years of income. Why do many old gangsters like to brag that they used to drive a Santana? Because driving a Santana at that time was almost equivalent to driving a six or seven million yuan Cullinan now. In fact, many of China's wealthy people now started with the business of color TVs and cars at that time.

What's more exaggerated is that the cultural relics in the cultural relics stores still seem very expensive to us, but to foreigners, they are as cheap as giving away. So many people started the business of smuggling Chinese cultural relics abroad, and too many cultural relics were inexplicably lost overseas.

It can even be understood that the 1990s was an era of rampant smugglers and compradors everywhere.Why was the United States not concerned about China at that time? It's clear when you think about it. On one hand, we were indeed relatively weak, lacking in resources and capabilities. On the other hand, the marketization in China has created a huge new comprador class, as mentioned above. Compradores and national entrepreneurs are natural enemies. Before the United States could take action, these compradores would spontaneously clean up those who want to be independent for their own interests.

Everyone remembers the conflict between a certain tycoon and Ni Guangnan, right? In fact, that incident was very clear. One wanted to resell foreign technology, and the other wanted to go the independent research and development route. At that time, independent research and development was indeed a difficult and foggy path. Choosing to be a reseller was not wrong, and it was not too late to develop research and development in the future with money. However, after so many years, they still did not go the independent research and development route, preferring to give all the money to executives' salaries instead of research and development. This is purely a case of one's position determining one's thinking, and one will not oppose oneself.

In addition, it is more obvious in the automotive industry. The country initially wanted to exchange technology for the market. After various joint ventures obtained technology, their mentality changed. They suddenly found that they could make money by lying down, so why bother competing with international giants? Besides, who competes with their own parent company? This is also why I am so enthusiastic about new energy, because new energy companies in China are basically doing it by themselves, and the comprador forces have almost no room for survival.

Speaking of this, everyone also understands that it is far from the time when the comprador forces have completely declined in China. However, as more and more domestic brands emerge and the quality becomes higher, it naturally enters a state of mutual cancellation. Moreover, a good phenomenon is that in recent years, national brands have less and less to play the "national card". The status and users are won by the brand side with strength and service. Hard power is the only way to expel compradors.

At present, our country is catching up well in the mid-low-end field, but it is still average in the high-end field. The automotive field is very obvious. Similar to glass and hardware accessories, China has basically occupied all, but car chips and engines and gearboxes are still in the hands of the West.

Now, this semi-blocked state is actually a good thing. If we completely open up to free competition, we will bear the huge price advantage of the West. This is also why the compradors love the free market most, because there are no tariffs, and the products of developed countries will form a dumping situation against developing countries, and developing countries can't develop anything.

This is also why our country has been reluctant to reduce tariffs before. Now, the shortage of chips and blockade is another kind of "protective tariff". As long as development time is given, results can be achieved. At that time, we can go to the free market competition. When it is fully developed, the compradors will naturally gradually disappear.