Collective financing among Chinese entrepreneurs and department store retailing in China

Abstract

Chinese entrepreneurship in department store retailing differed from that seen in other emerging economies before 1940. Rather than the leading examples of the format being owned by advanced economy firms, in China a small group of Cantonese entrepreneurs established what became known as the ‘Big Four’ department stores in Shanghai. By 1940 the ‘Big Four’ department stores were among the most famous stores in China, and among the biggest businesses in China. None of these Chinese entrepreneurs had any prior experience in department store retailing. Rather this article explains how their success in department store retailing was dependent on a business model that enabled these Chinese entrepreneurs to act as informal investment bankers (or ‘shadow’ banks) for the thousands of overseas Chinese wanting to invest surplus savings in mainland China, so creating large indigenous business groups.

Keywords:

• Retailing
• entrepreneurship
• collective financing
• department store
• China
• business groups
• shadow banking

Notes

1. Hatton and Williamson, The Age of Mass Migration; Landes, The Wealth; O’Rourke and Williamson, Globalization.

2. Mathews, Dragon Multinational; Mathews, “Dragon Multinationals”; Ramamurti, “What have we learned?”

3. Godley, “What Does History Add”; Ramamurti and Cuervo-Cazurro, Understanding Multinationals; Jones, Multinational Strategies; Khanna and Krishna, ”Emerging Giants”.

4. A literature on indigenous entrepreneurs is now emerging. See Roy, “Trading Firms”; for Indian examples, and Lee, “Where Imperialism Could not Reach”; Ma and Yuen, Discovering Economic History, for emerging Chinese innovation and trading systems. Godley and Williams, “Democratizing Luxury”; Tessari and Godley, “Made in Italy”; and Godley, “Agribusiness”, on agricultural entrepreneurs.

5. Dawson, “Internationalization” and “Scoping and Conceptualising”; Khanna and Paleppu, “Group Affiliation.”

6. Casson and Godley, “Revisiting”; Godley, “Selling the Sewing Machine,”“The Global diffusion,” “American Multinationals,” and “entrepreneurial opportunities”; Gordon, “Selling the American Way”. Jones and Wale, “diversifcation,” document similar erosion of initial advantages in emerging market retailing by British trading companies.

7. Godley, “Eliazar Moses”; Mitchell, “Innovation.”

8. Fletcher and Godley, “Foreign Direct investment”; Godley, “What was New”; Godley, “Foreign Multinationals”; Godley and Fletcher, “Foreign Entry”; Godley and Fletcher, “International Retailing”.

9. Alexander, “British Overseas Retailing”; Godley and Hang, “Globalization.”

10. Pott, A Short History; Clifford, Spoilt Children; Bergere, “The Other China”; Shanghai No.1 Department Store, Shanghai jinda.

11. Hang, The Emergence.

12. Pott, A Short History; Clifford, Spoilt Children; Bergere, “The Other China”; Shanghai No.1 Department Store, Shanghai jinda.

13. Clifford, Spoilt Children; Hang, The Emergence; Hang and Godley, “Revisiting”; Wu, Diguo zhuyi.

14. Mitchell, International Historical Statistics; Tan, Shanghai shi.

15. Mitchell, International Historical Statistics.

16. Pott, A Short History; Bergere, “The Other China.”

17. Board of Trade, J. Weeks and Company Ltd; Foreign Office, Shanghai; Ho, “The Development.”

18. Chan, “Personal Styles.”

19. Kupferschmidt, European Department Stores; Reynolds, “Salesclerks.”

20. Chan, “Personal Styles.”; Shanghai No. 1 Commerce Bureau, The Transformation; Shanghai No. 1 Department Store, Shanghai jinda; The Sincere Company, The Sincere Company; The Sincere Ltd, Meeting Minutes.

21. Shanghai Wing On Ltd., Twenty-fifth Anniversary; Yong’an jingshen.

22. Kuo, 2009.

23. Guo, Kwok Chin Autobiography; Yong, Overseas Australian Chinese.

24. Lin, Brief Information; Ho, The development; Chan, “Personal Styles”.

25. Shanghai No. 1 Department Store, Shanghai jinda; Shanghai Social Science Academy, Shanghai ziben.

26. Ho, “The Development”; Shanghai Social Science Academy, Shanghai ziben; Ho, The development; Chan, “Personal Styles”.

27. Shanghai No. 1 Department Store, Shanghai jinda.

28. Chan, “Personal Style”; The Sincere Company, The Sincere Company.

29. Liu, “Ben gongsi”; Ho, The development; Chan, “Personal Styles”.

30. Chan, “Personal Styles.”; Shanghai No. 1 Commerce Bureau, The Transformation; Shanghai No. 1 Department Store, Shanghai jinda; The Sincere Company, The Sincere Company; The Sincere Ltd, Meeting Minutes”.

31. Chan, “Personal Style.”

32. Wu, Diguo zhuyi.

33. Shanghai No.1 Department Store, Shanghai jionda. Chan, “Personal Styles,” made a similar estimate but with a slightly lower figure – 75%.

34. Admati and Hellwig, The Bankers’ New Clothes.

35. Yong, Overseas Australian Chinese.

36. Liu, “Ben gongsi”.

37. Liu, “Ben gongsi”; Wu, Diguo zhuyi.

38. Board of Trade, J. Weeks and Company Ltd; Foreign Office, Shanghai; Ho, “The Development"; Chan, “Personal Styles.”

39. Guo, Kwok Chin Autobiography.

40. Shanghai No. 1 Department Store, Shanghai jinda.

41. Board of Trade, J. Weeks and Company Ltd; Foreign Office, Shanghai; Ho, “The Development”.

42. Guo, Kwok Chin Autobiography; Liu, “Ben gongsi”; Shanghai No. 1 Department Store, Shanghai jinda; Shanghai Wing On Ltd, Twenty-Fifth Anniversary.

43. Wing On Textile Ltd, Meeting Minutes; Ho, The development; Chan, “Personal Styles”.

44. Bergere, “The Other China,” 9, Table 1.4.

45. See note 37 above.

46. Shanghai No. 1 Department Store, Shanghai jinda; The Sincere Company, Twenty-Fifth Anniversary.

47. Shanghai Social Science Academy, Shanghai ziben; see note 39 above.

48. Alvarez, Godley and Wright, “Mark Casson”; Casson and Godley, “Doctor, Doctor”; Casson, The Entrepreneur.

49. Guo, Kwok Chin Autobiography.

50. See note 30 above.

51. Wu, Diguo zhuyi.

52. Hwang, “Wing On.”

53. Board of Trade, J. Weeks and Company Ltd; Foreign Office, Shanghai; Ho, “The Development”.

54. Pettis, The Great Rebalancing.