Corporate behaviour and political risk : Dutch companies in China, 1903-1941 Putten, F.P. van der Citation Putten, F. P. van der. (2001, May 23). Corporate behaviour and political risk : Dutch companies in China, 1903-1941. CNWS/LDS Publications. Retrieved from https://hdl.handle.net/1887/15900 Version: Corrected Publisher’s Version Licence agreement concerning inclusion of doctoral thesis in the License: Institutional Repository of the University of Leiden Downloaded from: https://hdl.handle.net/1887/15900 Note: To cite this publication please use the final published version (if applicable). Corporate Behaviour and Political Risk Dutch Companies in China 1903-1941 PROEFSCHRIFT ter verkrijging van de graad van Doctor aan de Universiteit Leiden, op gezag van de Rector Magnificus Dr. D.D. Breimer, hoogleraar in de faculteit der Wiskunde en Natuurwetenschappen en die der Geneeskunde, volgens het besluit van het College voor Promoties te verdedigen op woensdag 23 mei 2001 te klokke 16.15 door Frans-Paul van der Putten geboren te Helmond in 1970 Promotiecommissie Promotores Prof. Dr. J.L. Blussé van Oud-Alblas Prof. Dr. A.E. Kersten Referent Prof. Dr. J.K. Osterhammel (Universität Konstanz) Overige leden Dr. H.W. van den Doel Dr. J.Th. Lindblad Prof. Dr. Joh. de Vries (Katholieke Universiteit Brabant) Het onderzoek voor deze dissertatie werd gefinancierd door de Gratama Stichting en de Onderzoekschool CNWS. Studies in Overseas History, 2 Corporate Behaviour and Political Risk Dutch Companies in China 1903-1941 Frans-Paul van der Putten Research School of Asian, African and Amerindian Studies Leiden University The Netherlands 2001 STUDIES IN OVERSEAS HISTORY This series is produced by the Research Cluster History of European Expansion and Global Interaction of the Research School CNWS. Editorial committee: Leonard Blussé (Leiden University), Chairman Michael Adas (Rutgers University) John Darwin (Oxford University) Wim van den Doel (Leiden University) Felipe Fernández-Armesto (Oxford University) Earlier volumes in this series: Vol. 1. Ernst van Veen, Decay or Defeat? An Inquiry into the Portuguese Decline in Asia, 1580-1645, 2000 (ISBN 90-5789-051-8) Books from this series can be ordered through your bookshop or directly by contacting the Centre for the History of European Expansion and Global Interaction, Doelensteeg 16, PO Box 9515, 2300 RA Leiden, The Netherlands (I.Ooms@ let.leidenuniv.nl), or from CNWS Publications. Corporate Behaviour and Political Risk [colofon CNWS] CONTENTS ACKNOWLEDGMENTS i INTRODUCTION 2 CHAPTER 1. DUTCH INVESTMENT IN CHINA 16 CHAPTER 2. BANKING: NHM AND NIHB 28 CHAPTER 3. SHIPPING: JAVA-CHINA-JAPAN LIJN 44 CHAPTER 4. PETROLEUM: ROYAL DUTCH/SHELL 64 CHAPTER 5. HARBOUR CONSTRUCTION: HAVENWERKEN 152 CHAPTER 6. RAILWAY CONSTRUCTION: NSC 176 CHAPTER 7. ELECTRONICS: PHILIPS 190 CHAPTER 8. SOAP AND MARGARINE: UNILEVER 218 CHAPTER 9. THE RESPONSE OF DUTCH COMPANIES TO 260 POLITICAL RISK IN CHINA CONCLUSION 270 LIST OF PLACE NAMES 272 SOURCES 274 INDEX 283 TABLES AND ILLUSTRATIONS Tables I. Value in millions of guilders and percentage of total exports/imports 22 of the Netherlands Indies and the Netherlands respectively to/from China (including Hong Kong), 1909-1938 II. Western and Japanese companies with large direct investment in 23-24 China (excluding Formosa and post-1931 Manchuria), 1918-1937, and their original main activity III. Net profits of NHM branch offices in Shanghai and Hong Kong, 40 1903-1940 IV. Petroleum products imported into China, 1925 and 1935 92 V. Turnover of lamps sales of Philips China Company, 1928-1938 202 VI. China United Lamp Company profit and dividend, 1933-1935 206 VII. Turnover of radio (valves and sets) sales of Philips China Company, 207 1928-1938 VIII. Trading results of the China Soap Company, 1926-1941 233 IX. Trading results of EP and tonnage of margarine exported to 236 Hongkong from European Unilever factories, 1933-1941 X. Hypothesis of behaviour of Dutch companies towards political risks 260 in China from 1903 until 1941 XI. Large Dutch companies with foreign direct investment in China prior 261 to 1941 and their main overall activities XII. Main local interest and degree of local involvement in China per 261 company XIII. Periodisation of categories of perceived political risks per company 262 XIV. Risks caused by civil war and ultimate response per company, 263 1916-1928 XV. Main risks caused by the rise of Chinese nationalism and ultimate 264 response per company, 1925-1937 XVI. Main risks caused by Japanese imperialist influence in China and 265 ultimate response per company, 1931-1939 XVII. Main risks caused by the possibility of war between Japan and the 267 companies’ home government and ultimate response per company, 1940-1941 XVIII. Main types of strategy related to interest profiles 268 Illustrations Hong Kong branch office of the Nederlandsche Handel-Maatschappij, 1937 37 Shanghai branch office of the Nederlandsch-Indische Handelsbank, 1937 39 JCJL's ship 'Tjikembang' seen from the Bund, Shanghai, June 1937 54 JCJL's ship 'Tjibadak' at the time of its completion, April 1929 60 Passenger counter of the JCJL office in Shanghai, July 1937 61 Ownership structure of Shell in 1907 68 The Asiatic Petroleum Building at No. 1, the Bund, in Shanghai 79 Imports of kerosene into China, 1895-1941 91 Havenwerken engineers on a floating caisson, Yantai, 29 May 1920. 163 Construction of a breakwater, Yantai, circa 1920. 164 Havenwerken engineers and Chinese coolies , Hong Kong, 1920s. 167 Trace of the Longhai railway line 181 Chinese koolies carrying a case of Philips light bulbs, Shanghai, 1929 197 The China Soap Co. factory in Shanghai, 1926 230 The packing of Lux soap at Unilever’s Shanghai factory. 244 Map of present-day China ACKNOWLEDGEMENTS The research for this dissertation was jointly financed by the Gratama Foundation and by the Research School CNWS of Leiden University, and was conducted at CNWS and the Centre for the History of European Expansion (IGEER) during the period 1996 to 2001. In addition, several research trips abroad were co-funded by the Netherlands Organization for Scientific Research (NWO), while one research visit to Shanghai was financed by Unilever and hosted by the Shanghai Academy of Social Sciences. An important part of the source material has been collected from company archives that are privately owned and not generally open to the public. Several companies have made an important contribution to this study by granting access to their archives: Unilever, Hollandsche Beton Groep (HBG), Philips Electronics, Nedlloyd, Royal Dutch/Shell, and Shanghai Soap Factory. In other ways, various other organisations have also supported this investigation: the British Public Record Office, the Center for Chinese Business History of the Shanghai Academy of Social Sciences, ABN Amro Bank, the Rotterdam Maritiem Museum, and the Algemeen Rijksarchief in The Hague. This study is partly based on the unpublished research materials of Frank Dankers, which he collected during the mid-1980s with the aim of writing a dissertation on Sino-Dutch diplomatic relations during 1901-1950. Although he completed his research successfully, he abandoned the project before the dissertation itself was finished. In 1996 Dankers kindly gave permission to incorporate his rich and well-organized materials into the present study on the history of economic relations between China and the Netherlands. Consequently his data relating to Dutch business interests in China have been used throughout this book, especially in the chapters on the Nederlandsche Maatschappij voor Havenwerken, the Nederlandsch Syndicaat voor China, and the Java-China-Japan Lijn. All references to the archives of the Dutch Ministry of Foreign Affairs, the Dutch Ministry of Economic Affairs, the Dutch Ministry of Finance, the Dutch legation in Beijing, the board meetings of the Nederlandsche Maatschappij voor Havenwerken, H. Colijn, the interviews with J.G. Drabbe and J. H. Warning, and the two journals China and De Ingenieur indicate data collected by Dankers. Without Dankers' contribution the scope of the dissertation would necessarily have been far narrower. I am also grateful to Pauline Baart, whose MA thesis on Dutch business in pre-communist China provided me with a starting point from where to begin collecting company data. The following persons, who were not directly involved in the project, have also given important support in one way or another: Josine, Chang J. Ning, Shizuya Nishimura, David Fieldhouse, Ton Bannink, Joseph T.H. Lee, Robert Bickers, Kai- Yiu Chan, Marten Brienen, Olaf Peters, Natalie Everts, Maaike Kuyvenhoven, Ria de Kock, Wilma van der Schrier, Ilonka Ooms, Marco van der Linden, E. Zürcher, S. Gratama, E. van Mourik Broekman, Huang Hanmin, Morris Tabaksblat, Jeannette Strickland, Sophie Clapp, Victoria Rea, J.Y.T. Wu, Irene Jacobs, Cor Herkströter, I.J. Blanken, Rosemary Robson, Nelleke Oosten, Cees Coop, Ton de Graaf, Maarten Roos, Iem Roos, Saskia Roos, Wilma Trommelen, Ilona Beumer-Grill, Willem Vogelsang, Leo Douw, Floribert Baudet, Aron Shai, Arif Dirlik, Jaap Rebel, Duco Hellema, Laura Sole, Achim Mittag, Wigan Slazar, Tian Guopei, Rory Miller, Amy Lin, Jeroen Kakebeeke, Pim Reinders, Hans Ulrich Vogel, Ch. Vos, Gerard Noorlander, Doreen Arnoldus, Ferry de Goey, Dorien Knaap, David Faure, John Darwin, Lindsay Braun, Eric Jones, Geoffrey Jones, Hans Simons, E. Vermeer, J.L. Heldring, R. van der Vlist, R. van Reeken, Jan Paulussen, J. van de Biggelaar, B. van Gansenwinkel, Jaap Winter, A.Q.C. van der Horst, Mr Drenthe of Nedlloyd, Mr Den Heijer of the Shell group archives in The Hague, and the staff of the document collection counter of the Public Record Office in London. The conventions of Leiden University forbid me to thank the members of the academic staff who have been involved directly in this research undertaking. INTRODUCTION Dutch Companies in China, 1903-1941 The well-known image of China as a huge market has tempted many foreign investors, and not only in recent years.