Competition and Cooperation between a Chinese-owned Cotton Mill and the Japanese Mills in Tsingtao

Abstract

This paper, based on primary sources concerning the cotton industry in Tsingtao(Qingdao) from the 1920s to the 1930s, deals with one of the representative cases of the relationships between Chinese and foreign enterprises in China. In that city, when Japanese cotton industrialists rushed to Tsingtao after World War I, the famous bureaucratic enterpreneur Zhou Xuexi also built the Huaxin cotton mill. It is easy to document that competition between Huaxin and the Japanese cotton mills was keen. But the relationship was not one of competition alone. Huaxin and the Japanese cotton mills followed different strategies in both production and marketing. Huaxin produced higher count yarns which went mainly to the other treaty ports, while most of the Japanese mills produced coarser yarns sold in the rural textile centers in Shandong. Sometimes the Japanese mills and Huaxin cooperated with each other. For example, the Japanese mills supplied new cotton seeds to the Chinese side led by Huaxin in the first phase of the movement to improve the quality of the cotton grown in China. This cooperation, however, did not continue because the Chinese side eventually decided to use a different kind of cotton seed promoted by the Nationalist Government. This paper joins the on-going discussions on the role of foreign capital in Chinese economic development. Some of the findings of this study coincide with the conclusions of Sherman Cochran's stydy of the Chinese tobacco industry. Another question considered concerns factors allowing Huaxin to compete with the Japanese mills and to enlarge its business during the 1920s and 1930s. This paper concludes that (1) Huaxin could get good cotton by direct purchase, (2) it actively introduced new technology, and (3) that the managerial skills of Huaxin's operators, including marketing techniques, were important factors.