BizAims

Hu Ping, president of the Chinese Business History Committee:

Once in feudal China there was a splendid period for business, though on the whole business was not very well developed in China. This period was critical for economic and cultural development in ancient China. Shanxi merchants, taking up the dominant position in the business sector, could be regarded as the leader of this period.

Fang Xing, a researcher of the Chinese Academy of Social Science's Economy Institute:

The merchants' diverse commodities, investment amount, and staff size were all at the top among all the business groups at that time.

Zhang Limin, a researcher with theTianjinAcademy of Social Science's History Institute:

Shanxi  merchants controlled several industries, such as all of the financial industry and part of the pigment industry. At that time their status was quite high as merchants.

Chao Xiao'ou, associate professor of Xiamen University's History Department:

In the western part of China, we could see that Shanxi merchants traveled to what is nowXinjiang, especially southernXinjiang. In the southwest, they traveled to Guizhou and Sichuan. They also traveled to Southeast China.

Long Denggao, associate professor of the School of Economics at Qinghua University:

Shanxi merchants took advantage of a very critical chance in the history, the emergence of a unified market in China during the Ming (1368-1644) and Qing (1644-1911) dynasties, which allowed them to travel all around China.

The Business Sector at Shanxi (Jin): Before theMing Dynasty

Shanxi enjoyed a long history of business investment. Early, even before theQin Dynasty(221-206BC), the business trade had already emerged in the southern part of Shanxi. According to a description of that time: "The market starts at midday, when people from all directions meet together with all kinds of commodities. People trade with each other until everybody gets what he or she wants."

In the Sui (581-618) and Tang (618-907) dynasties, new commercial towns appeared, such asZhangzhou, Taigu, Pingding, andDatong. After Taiyuan City became the northern capital of theTang Dynasty, Shanxi  saw a business boom.

During the Song Dynasty (960-1279), famous regional merchants included merchants groups from southern Sichuan (Shu Nan) and northern Sichuan (Shu Bei). Shanxi and Hui merchants also became well known. At that time, Shanxi bordered the Song and Liao dynasties. Song needed to import warhorses from Liao, while the latter was also in need of handicrafts from the former. Shanxi hence became an important trade market then.

When it came to theYuan Dynasty(1271-1368), the business activities were inevitably affected by war to some extent. Nevertheless, the separation of Song, Liao, and Jin ended with the unification of Yuan, which actually enlarged the territory of business activities. From theTravel Journal ofMarco Polo we could learn that, "Merchants original from Taiyuan to Pingyang (Linfen) spread all over China, acquiring huge benefits."

The rise of Shanxi merchants could be dated back to the "Kai ZhongPolicy" in Ming Dynasty, in which government officials commissioned merchants to transport food supplies. Besides, Shanxi  had rich mineral resources, while the handicraft and manufacturing industries also achieved considerable scale, which provided a substantial base for the merchants' development.

At the same time, due to the dense population in southern Shanxi, merchants had to travel to other parts of China to gain their living. As a result, Shanxi merchants could be found all over China. Once there was a saying inBeijingthat "Most of the rich merchants inBeijingcome from Shanxi."

The business competition became ever more furious over time. So to strengthen their own power, Shanxi merchants began to organize into merchants group. At first, it was the rich merchants who employed local business people. Later, it developed into "Dong Huo Zhi," which was similar to the current joint stock system. This pioneering work of Shanxi  merchants was the reason why their organization could last for a long time.

Although Shanxi merchants emerged as a regional group in the Ming Dynasty, yet it was in theQing Dynastythat they enjoyed their full bloom, with the set up of the guildhall as a symbol. The guildhall was designed for the communication and connection of Shanxi people at the beginning; later it became an organization of self-protection for the merchants.

The Strongest Merchants Group: InQing Dynasty

Shanxi merchants became one of the, if not the most, successful and powerful merchants groups in China. They were viewed as equals to Italian merchants in world economic history. The development of business not only brought people wealth, but also changed the traditional belief of "He who excels in study can follow in the career of an official."

The saying went that, "It's better to have a connection in ateahousethan to have a large amount of money" and "To be a government official is not as good as to work in a tea house or bank."Teahousesand banks were both hot industries at that time.

In the Qing Dynasty, Shanxi merchants were listed at the top of merchants groups in China, with a good reputation in Asia and even Europe. They excelled especially in three industries: camel teams, ship teams, and draft banks.

Camel Team

Camel teams, one of the important Shanxi  merchants groups, specialized in transportation by camel, and tea was their main product. The merchant's specialty was that they were in charge of every aspect from buying, processing, and transporting fresh tea, to selling the tea in different destinations.

Shanxi merchants purchased several tea mountains along Fujian, Hunan, Hubei, Zheijiang, andJiangsu provinces, acquired fresh tea, and processed into brick tea, and then by road or river delivered the products to their franchise stores. Their tea mainly went to Mongolia and Russia. The transport of tea was quite a dangerous job at that time.

Ship Team

Ship teams emerged in the middle of the Qing Dynasty. With the development of business and commerce, there was an increasing demand for copper, which was used for minting. Shanxi merchants then began to organize ship teams to import cooper from Japan. Jie's and Fan's were all famous "merchants of foreign copper."

Even though camel and ship teams enjoyed a good reputation, the greatest applause went to another industry: Shanxi draft banks. The first draft bank in Chinese history was the "Rishengchang Draft Bank" established by Li's inPingyao, which has now become the China Draft Bank Museum. Later, other draft banks arose inPingyao,Qixian, and Taigu. They all were regarded as the leaders of the nation's financial industry at that time.

Among all the 51 banks nationwide, Shanxi merchants established 43. "Heshengyuan," the first draft bank inQixian, initiated China's international financial institute. It established franchised banks in Tokyo, Osaka, Yokohama, Kobe in Japan, and also in Korea.

Shanxi Merchants in Beijing

By the Ming Dynasty, Shanxi merchants were already very active in Beijing's business sector. In the Qing Dynasty, Shanxi merchants took the most important position. They excelled in selling crops, seasoning,paper, fabric, pigment, fruits, and so on. Some of the trademarks have been passed down even to today, such as "Du Yi Chu," "Liu Bi Ju," and "Le Ren Tang." Shanxi merchants also congregated in certain parts of Beijing, such as Caochang Hutong and Da Zha Lan.

Shanxi Merchants in South China

Shanxi merchants purchased several tea mountains and ran teahouses in thetea productionareas of Hubei, Hunan, Jianxi, andAnhui provinces. Once there were more than 100 teahouses.

Shanxi merchants also took up a street named "Haopan Street" inGuangzhoufor their banks, groceries, and medicines. As well, the merchants established some of the enterprises inGuangzhou, such as "Guang Sheng Yuan," "Guang Mao Xing," and so on. Shanxi  merchants were also very active in the Yangtze Delta area.

Exploitation of International Market

Another symbol for the development of Shanxi merchants was the exploitation of the international market. In the Ming Dynasty, there was tight restriction on international trade; only people from the southeast could travel abroad for trade. Therefore Shanxi merchants traveled to the north to trade with Russians.

Starting from 1689, people from China and Russia were allowed to trade with each other. In 1727, Kiakhta became a trade center for Russia and China. The trade here remained tax-free until 1851. Shanxi  merchants generated huge benefits from the Kiakhta trade.