I began reading The Tea Road by Martha Avery or how China and Russia meet across the steppe (the original subtitle). As could be expected from it, it is far more than a book on tea and contains a lot on Russian-Chinese relations and how the steppe influenced both of them (at least where I am in the book right now).
However, what I found really interesting was the chapter on Da Sheng Kui or “Great Prosperous Chief” an unknown (to me) Chinese conglomerate that came to dominate the trade with Mongolia and the tea trade with it and this post is written thanks to elements from the book as I couldn’t find elsewhere information on this company.
So I would first like to thank the author Martha Avery for her work on this unknown (to me) topic.
Why focus on this company? I will give you some figures taken from the book to explain my choice. 9 Chinese firms were dealing with Mongolia but the largest was Da Sheng Kui.
It was active in business from 1700 to 1929 and at its height, it employed 7,000 people and had a turnover of 10,000,000 silver dollars (19th century currency unit).
After the Quing took the power, China recovered from the difficult economical conditions of the late Ming period (mostly caused by the Little Ice Age and several natural catastrophes, which in China produce quite often a change of dynasty).
An increase in general welfare, population and less taxation created the right conditions for the merchants to flourish, even if the Quing limited the contact with outsiders and wary of the power of wealthy merchants limited their trading licences to better control them.
The history of Da sheng Kui is closely linked to the Quing dynasty and to their conquest of Mongolia.
His founder Wang Xiangqing sold his services to Manchu forces guarding a passage in the Great Wall before going with them in Mongolia to supply them with local and Chinese products (mostly tobacco, food, tea, livestock…) and at the same time, making useful contacts with the Mongolian tribes.
When they had taken control of most of their nomad neighbours, the Manchu established new trading rules abolishing the previous horse markets and issuing licences for lü meng shang or “travelling Mongolia companies”.
These companies could not have fixed places of residence in Mongolia, could only follow a predetermined route, could not pay for goods with silver (the metal more sought after by the Chinese) and could not stay in Mongolia for more than one year.
However, Wang Xiangqing first followed its “tradition” by providing the military and administrative base close to the Western parts of Mongolia (as some tribes still fought up to the mid-1750s) with the logistical network to bring them supply.
What really gave Da sheng Kui its competitive edge came in line a little bit later as under Jiaqing reign (1796-1820), the company was one of the two issued a long piao or Dragon Ticket, a ticket that was not only a licence to commerce but also one to become a kind of bank.
This was a very effective syphoning tool as the Mongolian nobility that wanted to buy good either for themselves or to sell to their “banners” (the area under their rule) would ask for a loan to the agent of Da Sheng Kui making their “banners” accountable for these loans that were paid back mostly in livestock.
When combining high pricing (for selling), low pricing (for buying), high interests and monopoly, it is no wonder that the company made huge profits.
This banking office was really important in their trading process as it gave them the money to caery their other businesses.
And the loaning office became even more important as after 1789, the Mongolian princes had to make regular visits to Beijing to pay tribute and attend at the Manchu court. Without the money to travel or unwilling to keep so much silver on them (as the travel, “proper face” and tribute expenses were quite high), they had to request the bank to loan them an amount of money determined according to the number of adult males in their “banners”. The bank personnel travelled with the princes and paid for everything.
But let’s get back to tea, somewhere in the 18th century with enough resources and in order to maximise profits, the company developed many specialised subsidiaries specialising in selling and buying different products from the whole China.
For tea, the company was San Yu Chuan or Three Jade Rivers, which mainly sourced its tea from selected locations in Hubei and Hunan.
In the early years of the 20th century, it bought between 6 and 8,000 cases per year for Mongolia (something between 380,000 and 510,000 kilos), with more being bought to be sold to the Russians.
San Yu Chuan mixed the origins and supply sources to adapt to the demand both in terms of quantity (just in case one area could not produce enough tea) and quality (through improvements in terms of process).
Without the right to settle, Da Sheng Kui had to use caravans to go and distribute its products to its customers and back to China with a maximum of 15 caravans on the road at one time, each of these including 14 smaller ones (nearly 3,000 camels).
The cases containing tea were filled with bricks of different size and the number in one case was the name of the product sold to the Mongolians (which preferred certain products of certain origins to others).
This successful company disappeared in 1929 for an unknown reason but probably because of the political turmoil in China.
What I find interesting in this history is how the political, financial and trade systems were combined together to create a monopolistic system that supplied tea (among other things) and took away all the resources from an area.
Tea as an instrument of power? Who would have thought that?
I find however that the amount of information on this company and on the others is not really big. Perhaps in Chinese? Do you know anything about these trade companies? About this trading-political system?
Without the answer to these questions, I will stop and resume my reading of this interesting book and see if I can find more information on this tea road between East and West.
I live on the other side of the pond but you had probably found this out thanks to my “strange” English.
I am a tea addict and I studied several (and I do mean several) years ago marketing, hence this blog, which will try to combine both worlds.