Derailed: Doing Business in Chinaeggplant2019-02-28T17:30:13+00:00
Derailed: Doing Business in China
In 1904, Tjong A Fie, his brother Tjong Yong Hian, and their cousin Cheong Fatt Tze embarked on a journey that would showcase the difficulties of doing business in China for an Overseas Chinese.
Credit: Tropenmuseum at the National Museum of World Cultures.
Tjong A Fie was born in 1860 in ‘Hakka capital’ Meixian when the Taiping Rebellion, the Punti-Hakka Clan Wars, and the Second Opium War were all in full swing. As if the wars and rebellions weren’t enough, Meixian also faced severe population pressure and subsequent food shortages.
Around the age of 17, Tjong A Fie set sail for Sumatra in Indonesia. Basing himself in Medan, he spent the next two decades building extremely successful tobacco, tea, and coconut plantations and mining businesses, bringing him honorary titles from the Dutch as well as the Chinese. Over the years, he and his brother also imported over 10,000 coolies from China to work at their Indonesian businesses.
Investing in the Motherland
At the age of 44, the brothers with their cousin Cheong Fatt Tze, a successful Teochew Hakka businessman from Malaysia, decided to turn to their roots and invest in a project back in China: a railway between Chaozhou and Shantou. If only they had known the challenges awaiting them!
The men invested an initial USD $300,000 into the building of a 24-mile railway between Chaozhou and Shantou – the first project to ever be entirely financed and managed by overseas Chinese businessmen.
The Swatow Railway
Using existing business ties, construction was outsourced to a Japanese company. The locomotives and train carriages were imported from Japan and the United States. The railway’s senior operations staff were all Japanese, including the drivers and guards, with Chinese staff hired for less important functions. It did not take long before the problems started.
Off the Rails
First, conflicts arose over land acquisition rights. Then, after the construction company had started building the line, discontent grew among local villagers over the lack of compensation for their demolished houses. Tensions were raised considerably when ancestral graves of local villagers were removed. To top it off, the Japanese workers were accused of harassing local Chinese women. It was a time when China was already sensitive about being dictated to by foreign powers, but of all the foreigners, the Japanese had a particularly bad reputation. In the ten years to 1904, the Japanese had committed numerous offenses and invasions in China.
As a consequence, the project incurred huge cost overruns, triggered nationalist student protests, and led to the brutal murder of two Japanese workers. While the railway was completed many years later, it continued to run into difficulties and eventually was taken over by Chinese National Railways in the 1920s.