On the Return of Chinese Australians and Its Impacts on Home Development
Published in: Asia Pacific Humanities Volume 1, Issue 2, July 2021 (2021, Issue 2)
Authors: ,
Published: July 1, 2021
Cite this article
Xiaohan, H., Zhi, N.. On the Return of Chinese Australians and Its Impacts on Home Development. Asia-Pac. Humanit. 1, 004 (2021). Available at: https://asiapacifichumanities.org/articles/aphj-2021-02-0004.
Abstract
The paper mainly focuses on Chinese Australians in early 20th century. It adopts the mixed embeddedness theory and explains how this small group of entrepreneurs achieved great success first in Australia and then back home to establish the leading department stores. It also analyzes their impact on home development by looking at their retailing business in old Shanghai and the implications for the globalization and integration to the modern economies.
1 Introduction
The scholarly interest in migration study on Chinese immigrants to Australia tends to focus in particular on cultural assimilation, acculturation, ethnicity, and identity issues. However, the history of early Chinese Australians, their business and entrepreneurship have received scant attention. Therefore, this article will shed some new light by focusing on economic aspects of Chinese returnees from Australia in early 20th century and empirically examine to what extent the early-arrived Chinese, who have established themselves in a business post-arrival, are embedded in broader networks. Finally, it discusses their impact on home development.
2 The Mixed Embeddedness Rationale
To explain why this small group of people could achieve economic self-betterment first in Australia and then back home to establish the leading department stores, the mixed embeddedness approach is the most helpful theoretical basis. It was first introduced by Granovetter (1973), who argued that social relationships is an embedded factor which always constrains economic activities and that in most of sociological analysis, this insight is often overlooked. This approach is expanded and fully fleshed out by Kloosterman stressing the mixed embeddedness of immigrant businesses. The theory includes two main factors: relational embeddedness and structural embeddedness. Relational embeddedness refers to ethicized networks, which act as a source of social capital to the migrant (Kloosterman, van der Leun& Rath 1999; Kloosterman 2010), while structural embeddedness encompasses the role and impacts of the political-economic environment of the market and the legal structure which regulates it.
The ethicized network is identified by the shared cultural values, language and other forms of solidarity and plays a significant role in supporting and guiding newly arrived migrants. However, the ethnic ties would confine the business development. In view of this, the influence of structural embeddedness should be taken into account. In order to grow, the migrant business is exposed to competition both from large corporations and from established smaller firms. As Kloosterman’s (2010) adopts the term “opportunity structure”, it demonstrates immigrant newcomers have to insert themselves into available markets. Typical representatives of such sectors are retailing, clothing, catering and personal services. These are poorly rewarded market sectors offering meager returns on long and unsocial hours of work (Kloosterman 2010). He argues that escape from the low-level sector trap is possible if the entrepreneur is able to acquire improved stocks of human capital– formally accredited educational qualifications and expertise to unlock access to ‘post industrial/high skill openings’ with ‘very good chances of upward mobility’. Finally, regulatory and policy environment may have direct influence over immigrant entrepreneurs about what is legally permitted to entrepreneurs – or even who may become a business owner. According to Kloosterman, favorable policy works as a positive factor in promoting business friendliness and new migrant enterprises, whereas, highly regulated policy would impose restrictive controls on immigrant entrepreneurs.
The essence of Kloosterman’ theory is the business/firm is grounded within broader structures and subjects to three concentric spheres of influence instead of solely in its own ethnic network. Therefore, the mixed embeddedness model by Kloosterman has displayed closely similar performance patterns of immigrant businesses.
3 Methodology
This article draws on the data through document analysis about Chinese Australians in early 20th century. Among them, four outstanding entrepreneurs would be mentioned. By gathering comprehensive information about them from Shanghai Municipal Archive and a variety of literature both from Chinese and Australian scholars, this paper aims to analyze their success from starting retailing business in Australia to growing into retailing empires and explores their potential impacts on the home development after they have returned to China.
4 Early Chinese Australian Entrepreneurs and Their Businesses
4.1 China’s Social Situation and Aspects of Culture in 1840s-1930s
The late nineteenth and early twentieth centuries have witnessed a series of social problems and political instability. One of the most typical event is China lost the first Opium War and was forced to sign the Treaty of Nanking in 1842. As Social and political unrest continued, tens of thousands of people suffered poverty, land shortage, natural climatic disaster and left to seek their fortunes in the gold rush countries.
The kinship system and family loyalty are two integral parts of Chinese culture, which bonds Chinese migrants in that period and thus, constitutes Chinese social organization in Australia. Between 1840 and 1900, an estimated 60,000 to 80,000 entered Australia during the colonial period. Under-resourced, inexperienced, estranged and radicalized, the newcomers heavily rely on the ethicized network--the kinship system. In particular, Chinese men were responsible for the survival and future wealth of their clan. Family loyalty is an integral part of Chinese culture, and emigration was managed within the bounds of such kinship obligations.
Another code is guanxi, which refers to inter-personal connections tinged with loyalty. It is also a variety of “social exchange” based on sentiments and reciprocity. Guanxi networks are varied, ranging from shared social attributes of kinship ties to mere chance encounters. Guanxi put enormous stress on unwritten codes of conduct to guard against opportunistic behavior. Business networks are an excellent example of “moral communities”(Wang 2003) .
In addition, xinyong or “trustworthiness” plays an important part in Chinese context. It can be loosely defined as trust. In the West, Fukuyama defined trust as “the expectation that arises within a community of regular, honest and cooperative behavior based on commonly shared ‘norms.”’ Fukuyama saw trust not simply as a component or indicator of social capital, but as its precondition: “social capital is a capability that arises from the prevalence of trust in a society or in certain parts of it”(Fukuyama 1995). Increasing one’s social capital means increasing one’s trust in the community, hence enhancing solidarity. To preserve that solidarity, community members ought to observe their own set of codes of behavior, and keep their contractual obligations, even though most of these contracts are non-binding in the legal sense (Chan 1998).
These codes certainly enhance the public image of business people as successful individuals, thus further expanding commercial activities and promoting personal development. The quality of being trusted by one’s business associates is certainly an asset a trader cannot do without in the world of business. It is social capital that transcends its immediate economic implications.
4.2 Chinese Australians Involvement in Business in 1840s-1930s
To achieve the economic status in Australian, significant populations of Chinese migrants in this period work as miners, market gardeners, vegetables hawkers and shop keepers. The presence of Asian diggers on the goldfields has promoted the flow of goods from China such as rice, tea, silk, eggs, porcelain and ginger. Successful hawkers opened general stores and Chinese shops became a common feature of mining town existence.
They are highly dependent on their existing familial and community networks to make up for their lack of access to political power. To consolidate internally, the employment of clan-like trust becomes a vital asset, although trust is built on economic expedience and social convenience because ethnic Chinese do not trust government institutions any more than they trust their own kind by instinct. Thus, they are forced to cultivate personal trust and guanxi as a hedge measure against political abuse (Loy-Wilson 2014). Stores such as Wing On & Co and Wing Sang & Co opened warehouses and shop fronts in urban centres like Sydney and Melbourne and purchased plantations in Fiji and other parts of the Pacific (Bowen 2011).
Their knowledge of Asian geographies and the networks they formed when working in low-level sectors helped many Chinese shopkeepers survive and flourish in Australia.
4.3 Early Chinese Entrepreneurs
By starting their careers in Australia, Ma Yin Piao, Kwok Brothers, Liu Shik-Chi and Cai Cang are the most outstanding ones, who then grew into entrepreneurs. All of them were from uneducated, poor, rural farming backgrounds in Guangdong Province (Canton). Like many other Chinese, they became economic migrants, moving to Sydney, Australia in the 1880s and 1890s. There they struggled to make a living working as laborers at farms, miners, store clerk and partner in a Sydney wholesale and import firm.
When running his wholesale business, Ma employed shop workers and assistants through his communities or social connections, often as a matter of honoring promises of support for the younger members of other Chinese families. He once ran a fruit and vegetable wholesaling store in Sydney, Australia. The Kwok brothers worked in his fruit and vegetable business and then opened their Wing on fruit store, which focused mainly on the banana trade between Queensland and Fiji, with a total investment of 1400 Australian dollars. Similar to the Kwok brothers, Liu originally worked for Ma’s wholesaling business in Australia and Cai co-worked with Ma and the Kwok brothers. Moreover, the wife of the Kwok’s other younger brother- Kwok Kui and the wife of Ma were sisters (Chan 1995). Another example is that Arthur Lock Change, one of the Chinese migrants, once worked in Kwok brothers’ Wing On Fruit Empire. He was introduced by an important figure in their community. There he worked long hours and did heavy physical labor. These multi-layered connections—neighboring ancestral homes, one-time employer-employee relationship, and kinship through a brother's marriage have promoted their success overseas.
By using these existing cultural norms, the early Chinese merchants create a functional and self-sufficient social system in an overseas environment. Such cultural codes have furnished the Chinese merchant class with a willing and cheap labor source that enabled Chinese people in colonial Australia to operate as a self-sufficient minority and turn local economic opportunities into capital.
Besides, the structural embeddedness: opportunity structure and political environment impose a direct impact on Chinese businesses in Australia. As the White Australia policy gradually restricted Asian investment, trade and travel, Chinese storekeepers were forced to do all business in English. By then, enhancing language skills has become vital to the store’s survival and was one of the ways in which the lives of Chinese shopkeepers were incorporated into the homogenizing mechanisms of imperial regimes (Bowen 2011). As most retail custom was conducted in English, the Kwok brothers improved their English and so were able to better their economic situation. The children of Chinese shop keeping families—who literally grew up in the Chinese shops run by their parents—quickly lost their ability to speak their native dialect. By the time she returned to Shanghai from Sydney in 1919, Daisy Kwok, the daughter of Kwok Biao, spoke only English (Guo 2008).
Businesses like Wing On & Co began as Chinese corner stores in Innisfail, Tingha and Inverell but grew into companies with outlets, emporiums and department store chains stretching from Fiji to Singapore, Sydney, Macau, Shanghai, Perth, Jakarta, London and Hong Kong (Fitzgerald 2007).
4.4 The Big Four Department Stores
With their greatest exposure to western influence, they have established the four big department stores and all became dominant in China’s leading commercial centre, Shanghai. The Big Four are Sincere department Store founded by Ma Yin Piao , Wing on by the Kwok Brothers (Kwok Lock and Kwok Chin); the Sun Sun department store by Liu Shik-Chi; dah Sun department store by Cai Cang (Godley&Hang 2016).
Venturing back to China in 1894, Ma tried to adopt the Western department store format to China. At the very beginning, Ma’s new ideas were challenged by several of his earlier partners who remained skeptical of his adventure. They suggested him following traditional way of doing business under a partnership called the Yongchang Zhuang. It served as an import and export agency as well as a remittance shop for fellow Cantonese living abroad. But Ma persevered until his partners eventually relented.
Once launched, the Sincere department store combined Western retailing techniques with Ma’s own ideas, rooted in older Chinese traditions. First, wares were presented in elaborate window settings (using up most of the capital). Second, he did away with bargaining by insisting that there would be only one fixed price for each item. Third, he carefully selected and trained a sales team of some twenty-five young men and young women, all of them recruited from his home county of Zhongshan in Guangdong province. Ma provided them with the rudiments of commercial learning, and drilled into them to be unfailingly courteous to customers. Customers, so the new maxim went, were always right. They were to beat work on time and to maintain clean personal appearance. On Sunday mornings they were to attend Christian religious service conducted by him on company premises in order to ensure they would lead moral and upright lives (Sincere n.d.).
Almost all new funds came from shareholders’ reinvestment of dividends, bonuses, the company’s undistributed reserves, as well as from other Chinese who had resided at one point or another in Australia and North America. Meanwhile, new branches were opened with the first one in Guangzhou in 1912 followed by those in Shanghai and Singapore in 1917, and finally two buying offices in Kobe in 1917 and in London 1922. Among the branches, the Shanghai operation, with a separate HK$2 million of paid-up capital and a totally new building providing over 10,000 square meters of sales space on four floors, was by far the largest (Sincere n.d.).
Very similarly, the Wing On was established in Hong Kong in 1907 by the Kwok (Guo) brothers, who had learned about Western-style retailing in Australia. They closely followed the business model of Ma Yingbiao, In 1909, as its capital jumped to HK$600,000, it followed Sincere's example of changing its partnership into a privately owned limited liability corporation. Rapid expansion continued. The next several years saw Wing On expanding into branches, subsidiary production facilities, related lines of businesses like hotels (Great Eastern Hotels) and roof-top gardens—all in a manner very similar to Sincere’s. Wing On also organized several affiliates (lianhuo), each with its own independent capital that included, like Sincere's, two insurance companies: Wing On Marine and Fire Insurance Company, Ltd. (1915), and the Wing On Life Assurance Company, Ltd. in 1925. In 1921, ahead of Sincere, it also launched a modern textile mill in Shanghai, the Wing On Textile Company (Guo 1960).
4.5 Discussion on Entrepreneurial Success in Big Four
Having overcome hardship and deprivation to become successful entrepreneurs in Australia, the ‘Big Four’ became dominant in Chinese department store retailing. Their success attributed to three factors.
First of all, the ethicized structure paves the way for success. As mentioned earlier, it refers to cultural values such as preferences for loyalty, mutual trust, or keeping up one’s good name &etc. The Big Four are family firms, of which, the ownership and effective control is held by a single family, a single lineage, or several families or lineages joined as partners (Chan 1992). Therefore, they relied on highly personal ties and networking. This could be reflected from the aspect of financing. Sincere (Shanghai) and Wing on (Shanghai) had the largest paid-up capital among all commercial retail businesses in China (Wu 1955). But these investment funds did not come from the personal sources of the entrepreneurs. Rather they overwhelmingly came from outside investors, with about 80% of the total funds raised by the Big Four in Shanghai from several thousands of overseas Chinese. This funding was raised privately and was the key factor leading to the Big Four’s competitive success.
Secondly, opportunity structure and political environment have led to the spreading of modern department stores in China. The emergence of modern department stores in China could be attributed to the social, economic and technological forces which transformed the nature of urban life in the West and consequently gave rise to modern department stores. After the Opium Wars, 17 treaty ports (including Shanghai and where Nanjing) were opened to commerce, Hong Kong was colonised and foreign ships were allowed entry to the Yangzi River. From that point, the country witnessed a huge influx of imported goods ranging from cottons, clocks, lamps, buttons and glassware, all of which became the key items distributed through the earliest department stores in China. By the early 1900s, there were at least four thriving department stores owned and operated by the English in Shanghai’s International Settlement: Whiteaway Laidlow, opened in 1904, probably the latest and largest, Hall & Holtz, Lane Crawford & Company, and Weeks & Company (Clifford 1991). These western establishments on the China coast served primarily the growing number of foreign residents; they had little or no direct impact on the evolution of the Chinese retail business. However, people in coastal cities had the greatest exposure to western influence. As some of them who stayed home were being affected by western ways, others decided to go abroad and brought home western models of doing business, adjusting them to China.
In such social context, the first novel retail format was imported into China by overseas retailers. While a large number of small shops staffed by family members usually sold essential items for life, some better capitalized shop stores were badly needed to cater to an upscale clients with the rapid urbanization of the cities, together with the improvement in city transportation infrastructure. All these factors have contributed to the new department store format to spread.
Thirdly, western-style management strategies and traditional Chinese business practices and cultural values are blended. The founders of the Big Four were bold visionaries who fought conventional wisdom because they see the world ahead in terms of what it can be. Therefore, they are able to use new ideas in building western-style management system, which focuses on efficiency and power. Even though they had no experience of actually running large department stores before returning home, they evaluate western and Chinese practices in the retail business and find out how the western ways were far stronger because of their systematic organization and careful attention to market trends and to employees’ education and training. On the other hand, the Chinese ways were a great deal weaker because so much of the retail business was carried out by peddlers or by small operators who lacked organization and paid no attention to service (Guo 1960).
Ma Yingbiao, in particular, had a vision of how to make these new ways of marketing work in China. He and the Kwoks also modified the western model in at least two ways--by taking a holistic approach to the treatment of staff, and by promoting the rapid growth and financial stability through wide-ranging diversification of business enterprises even as their main line of business in department store retailing had been barely established.
The principles that these returnees had absorbed in Australia included selling only high-quality goods, displayed openly and tastefully in well-decorated buildings, by trained staff and officers at fixed prices (no haggling, as was the Chinese custom). The new-style department stores even issued receipts for every transaction. Their concerns and empathy for their staff might have derived from their deeply-held Christian faith and their own early struggle in Australia. But the principal impulse was embedded in Chinese cultural values and traditions that taught that a good and strong leader is not simply paternalistic or benevolently authoritarian, but also loyal and personal to his staff and junior partners. These qualities required of effective leaders and expected by subordinates, allowed networking based on a proper sense of hierarchy, kinship, and regional loyalties. Networking, in turn, created trust and assured a smooth and effective running of operations, especially in the absence of well established legal, governmental, and institutional structures.
The Big Four underwent a similar evolution of corporate structure moving from traditional partnerships to incorporated private companies and finally to public companies raising new capital through public subscription. Each had a board of directors at the top, which seldom met except for the annual meeting. Its chairman had little power, while the managing director served as the all-powerful chief executive, with the chief manager and deputy manager reporting directly to him and carrying out his orders. Under the manager were several divisions that were divided somewhat differently at Sincere and at Wing On. But they covered the same critical areas of general administration (including personnel), secretarial, accounting, sales, and merchandising (Chan 1995; Sincere n.d.).
Each company had elaborate rules governing every aspect of their employees’ professional activities, and these regulations were strictly enforced by fines. To engage them outside of their long working hours, each company ran an evening school that later on expanded to include a drama troupe, as well as organized group sports and calisthenics. In addition, there was also a trust fund to help support themedical needs and burial costs of indigent staff and their families (Sincere n.d.).
Their immediate expansion into several lines of businesses--hotels, entertainment roof-top gardens, crafts, manufacturing, and insurance originated from the founders’ own entrepreneurial background. Their fruit wholesale business in Sydney had also engaged in several lines of business. In addition to fruit, it operated as an export and import trader, ran a remittance department, and shared another partnership with the Guo brothers which set up collecting stations on the Fiji Island to collect bananas and later owned and managed several plantations on that island as well as in Queensland (Chan 1995).
5 Early Chinese Australians’ Impact on Home Development
Early Chinese Australians and their businesses have played the role of sustaining Asian-Australian connections and their success was also changing the social and physical geography in south China and the Pacific. Moreover, these networks resulted in cultural as well as commercial reverberations in Australia and in China.
For instance, Zhongshan District in Guangdong province, South China has been closely connected to cities in Australia through commercial and personal ties. By the early twentieth century these companies created commercial networks between Australia and China and facilitated the movement of people and goods along these networks even after the establishment of the White Australia policy in 1901. By the early 1900s storekeepers had enough capital to build houses and ancestral shrines in their home villages. Houses combined European and Chinese architectural styles through the use of white Grecian-style columns on balconies and Chinese dragon motifs embossed above doorways. Many villages in Zhongshan district in Guangdong province were connected to remote Australian towns through letters, goods and money. These webs of communication and capital, although fragile and vulnerable to damage and misadventure, held families together, even when fathers spent long periods away from their wives and children in Australia. Chinese shops in Australia became meeting and greeting places for Chinese from the same district, and for sending letters and money between home villages and Australia, working their way through stores in Sydney all the way back to China (Bowen 2011).
Early Chinese retailing business in Australia has promoted the economic growth in both Australia and China and provided a catalyst for globalization. Innovative work combining close historical readings of Chinese archaeological sites in Cairns and Cooktown, carried out by Cathie May, Ian Jack and others, has exposed some of these links between regional Australia and metropolitan China (May 1984). By using historical geography to read the ‘actions of, rather than the reactions to’ Chinese migrants, these studies show how Chinese Australian retail chains became integrated into the economies of rural Australia and metropolitan China. Examining these retail empires and the itineraries of the individuals and goods within them can reveal what Frank Trentmann has called ‘globalization at the margins’(Trentmann 2009).
As early Chinese Australians have established the Big Four in Shanghai, Nanjing Lu was first won the reputation as ‘China’s Fifth Avenue’, acknowledged throughout the country as the premier icon of high-end retail shopping and serving as a beacon to shoppers throughout the city.
The founders of Big Four have revolutionized the retail industry in China with bold visionaries and a series of Western business techniques. It has changed the way the consumers esp. affluent shoppers buy things and created brand new shopping experiences for them. Big Four’s concept in management and their success served as a powerful symbol of Shanghai’s modernity. Retailing has nevertheless experienced sustained and significant levels of internationalization since Big Four have established. Finally, the Big Four ushered in a new type of marketing to consumers living in the urban areas of coastal China.
Conclusions
The mixed embeddedness theory has provided a model to analyze performance patterns of immigrant businesses, in particular, of Chinese Australian entrepreneurs in early 20th century. Grounded in broader structures (e.g. the ethicized structure, opportunity structure, political environment) and by blending western-style management strategies and traditional cultural values in their businesses, early Chinese Australians have achieved significant impact on the social, economic and cultural development for both China and Australia and also paved the way for the internalization and globalization of modern China.
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