KyotoKyotoUniversity University Elowtheast Asian Studles, Vel. 27, No, 2, September 1989 Oei Tiong Ham Concern: The First Business Empire of SoutheastAsia Introduction YosHIHARA Kunio* Oei Tiong Ham Concern was a sugar-based Tiong Ham started tapioca production by set- conglomerate in the Netherlands Indies (or In- ting up a plantation and a fiour mill. In addi- donesia in the postwar period), founded by a tion, he went into property development and peranakan Chinese named Oei Tiong Ham management (mainly to provide housing for <1866-1924). N.V. Handel Maatschappij the workers on the plantations).i} Kian Gwan was a sugar-centered international A in Java was different plantation quite trading company, and N.V. Algemeene from what we usually know of as a 'Tiong plantation. Maatschappij tot Exploitatie der Oei For example, Oei Tiong Ham Concerp did not Ham Suikerfabrieken was a sugar production own the land it used to grow sugar cane. company which operated five sugar planta- Agricultural land belonged te indigenous tions and mills in Java. From sugar, Oei peasants, and no corporation was allowed to Tiong Ham diversified into other products. buy it. Thus, it had to be leased from Kian Gwan became over time a general peasants. Furthermore, no manual labor trading company with oMces abroad. In the could be brought frorn outside. It had to early 1930s, it had Kian Gwan Western Agency, come from the peasants in the area where the Ltd., in London, Kian Gwan (Malaya), plantation was located. A corporation could Ltd., in Singapore and Kian Gwan Company, invest in land improvement and infrastruc- India, Ltd., which covered British India and ture, and organize and manage agricultural China, with oMces in Calcutta, Bombay, production on the land it leased. So, in this Karachi, Shanghai, Hong Kong and Amoy. respect, it was not a sub-contract system, but And to facilitate trading as well as to expand it differed from a typical plantation-an ex- business interests, the warehousing cornpany panse of contiguous land over which the N.V. Midden Java Veem, the regional ship- owner had complete control. ping company N.V. Heap Eng Moh Steamship In the prewar period, Oei Tiong Ham Con- Co., and the bank N.V. Bank Vereeniging 1) For an overview of Oei Tiong Ham Concern in the OeiTiongHamweresetup. Furthermore,in "The early 1930s, see Story of Krebet," Krebet, Malang in East where a sugar Java, [Semara.ng], Handel Maatschappij Kian Gwan, `The 1932 and Oei Tieng Harn Concern: A Short plantation and a sugar mill were operated, Oei and Survey of its Development Progress," " "tnAt:ft, The Center for Southeast Asian [Semarang], Handel Maatschappij Kian Gwan, Studies, Kyoto University 1934, 137 NII-Electronic Library Service KyotoKyotoUniversity University fiM7Y7-za 27S2e cern was the first as well as largest Chinese- later).Z) owned business empire in the region we call The trading company Kian Gwan was today the ASEAN. It started growing rap- founded by Oei Tiong Ham's father, Oei Tjie idly in the 1890s, and had become a diversified Sien (1835-1900>, an immigrant from Tong-an business group by the early 1910s. In the in Ch'uanchou District, Fukien Province. prewar peried, Thailand was the backwater of Unlike most of the Chinese who came to Southeast Asia, and it was not until the 1930s Southeast Asia in the 19th century, Tjie Sien that a modern business conglomerate began seems to have had a basic Chinese classical appearing there in its embryo form (for exam- education in his youth. For some reason, he ple, the Wang Lee group>. In the Philippines, became involved in the Taiping Rebellion, a modern business appeared earlier than in and had to flee the ceuntry. Around 1858 he Thailand, but it was confined largely to a came to Semarang in Central Java, where he single industry (for example, China Banlcing started petty trading. His granddaughter, Corporation), and no modern business con- Oei Hui Lan, describes his position at this glomerate appeared there in the prewar stage as follows: period. In British Malaya, since it became an important supply source for the West and the With his small hoardings he purchased Chinese were given a great deal of freedom in cheap porcelain saucers and bowls which he the economy, as in the Netherlands East In- peddled from door to door in baskets hung dies, modern business conglomerates ap- from a bamboo yoke. He bargained dog- peared relatively early, but none equaled the gedly, haggled shrewdly over each copper size of Oei Tiong Ham Concern. The coin, then re-invested infinitesimal profits in business fortunes of such successful tin more bowls and saucers and smal1 packets miners as Eu Tong Sen and Loke Yew were of rice. Slowly, painstakingly, Tjie Sien more limited in size as well in scope, and also managed to save [Koo 1943: 6]. they were short-lived. The Ho Hong group built by Lim Peng Siang in the 1910s was the Semarang was a good place for a Chinese to most diversined group in Malaya at that time, settle. It being the major harbor for Central but it could not have been larger than Oei Java, such native produce as sugar and gam- Tiong Ham Concern (which, after all, man- bir were brought there to be shipped outside, aged five sugar plantations and owned five sugar and Chinese wares and other foreign products mills, ameng others), and, since it started to passed through there for distribution in the decline after the First World War, its life was city and its hinterland. In fact, at the time Tjie short. Tan Kah Kee's business empire, Sien arrived, Semarang was the largest com- which reached its peak a little later than the mercial city in all Java. Batavia did not have Ho Hong group, was also 1imited in scope and, much hinterland trade, and in the case of as in the case of the Ho Hong group, short- Surabaya, it was after the advent of corporate lived began facing financial trouble in the (it 2> For fumher discussion on Chinese capitalism in this late 1920s and went bankrupt several years period, see [Yoshihara 1988: Ch, M]. 138 NII-Electronic Library Service KyotoKyotoUniversity University YosmHARA K.: Introduction capitalism and the age of steamships that it claims, but it is diMcult to take what they say became the premier city of Java [Onghokham at face value since they may be unconsciously 1989: 160]. exaggerating the modernness of Kian Gwan In the mid-19th century, when Tjie Sien at that time, projecting into it the modern em- arrived in Semarang, the production of export bryo of what later came to be known as Oei crops was still under the government-super- Tiong Ham Concern. Undoubtedly, visedculturesystem. Thus,despiteitspremier however, with Kian Gwan, Oei Tjie Sien position in trading, Semarang did not have became a wholesale trader (a considerable im- such vitality as it would enjoy in the late 19th prevement of his fortune from a peddler), and century. It was with the passage of the in the next few decades, with hard work and Agrarian Law in 1870 that Dutch private business acumen, he made it a respectable capital began pouring into Java to set up plan- trading company. tations and processing facilities (sugar planta- It is most natural to think that Kian Gwan tions and mills in panicular). As a result of formed the basis for Oei Tieng Ham's such large inflow of capital from the business career. In fact, Tjoa Soe Tjong and Netherlands, the commercial landscape of Liem Thian Joe expect us to believe that [Tjoa Java (as well as Sumatra later on) went 1963: 604-6e5 ; Ceppel 1989: 184]. But Liem through a dramatic transformation. In par- Tjwan Ling and Oei Hui Lan, though they do ticular, Central and East Java emerged as the not deny this interpretation, tell us, in pass- major center of sugar production in the ing, a legend which can throw a different light world. As the port of Central Java, on it. This is about a retired German consul Semarang began experiencing a rapid in- who decided to spend the rest of his life in crease in business activities, especially in Java. He leased a house from Tjie Sien and sugar and sugar-related trading, in the 1870s. came to know his son, Oei Tiong Ham, who Oei Tjie Sien was well prepared to take ad- oftenvisitedhimtocollectrent. TheGerman･ vantage of this expansion [Liem 1979: 8-18]. subsequently became quite impressed with After several years of hard work, he set up the his ability, and offered a substantial sum of trading company Kian Gwan in 1863. At this money (Oei Hui Lan says it was 300,OOO stage, it may have been an ordinary trading guilders, whereas Liem Tjwan Ling says it company, but Tjoa Soe Tjong and Liem was 300,OOO dollars) for Oei Tiong Ham to Tjwan Ling tend to give us the impression start a business. Oei Tiong Ham used this that at that time, Kian Gwan was already a money to buy sugar mills in the 1890s [Koo large, modern company. Liem Tjwan Ling 1943: 12; Liem 1979: 48]. says that Oei Tjie Sien had saved three million This may be regarded as sheer legend, but guilders by that time [Liem 1979: 10], Oei Tiong Ham may have first gone into whereas Tjoa Soe T;jong says that it was formed business on his own, become fairly successful as a limited liability company and managed in this way, and taken over his father's by an outsider named Ang Tai Lion [Tjoa business,KianGwan.