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History Matters

Trading with China

Canton (today’s Guangzhou) was formerly the only place that western merchants could do business with China. Richard Garrett looks back at how that trade operated.  


(Feature photo caption: The Anchorage at Whampoa )


The first Westerners to trade with China directly were the Portuguese. They had discovered the sea route to the Orient, sailing round the south of Africa and across the seas to India and then on to the Spice Islands. When they reached China they encountered wariness of the new foreigners, but eventually the Chinese allowed them to set up a base at Macau. From there they were allowed to trade with merchants in Canton. When other nationalities arrived they too were confined to trading at Canton in an arrangement that became known as the Canton System.
A view of the Factories at Canton
The traders were confined to a limited area just south of the walled city of Canton, adjacent to the river. Here they were allowed to build premises known as factories; there were thirteen of them. The name derived from the term “factor”, for the person who carried out the trading. The factories combined living accommodation, offices and warehouse. The frontage facing the river was relatively narrow but they extended quite a distance back, as can be seen in the Chinnery painting of the central corridor of one of them.
The firms were also known as Hongs and the westerners had to deal with one of the Hong Merchants. These were the Chinese middlemen who were approved by the Chinese authorities. Together they were known as the Cohong. They were held personally responsible for the behaviour of the westerners and for their payment of taxes and duties. If all went well they could become very wealthy and indeed that is the popular image of them. However, if a westerner went bankrupt then so could the Hong merchant. One of the most famous was Howqua. His residence was on Honam Island, across the river from the factories, and on certain days the westerners could visit his garden to relax away from the office.
The central walkway inside one of the Factories
For most western ships the river was too shallow to travel all the way up Canton so they moored at Whampoa. Here on the adjacent islands simple buildings were allowed for the merchants to make repairs and unwind from shipboard life. Nearby were a number of Flower Boats which were floating pleasure palaces for the crews. On one of the islands was a cemetery for those who succumbed to the tropical diseases that were prevalent – mainly malaria.
The traders were only allowed to stay in the factories during the trading season, which was determined by the onset of the regular monsoon winds, and generally lasted from May through to December. The ships departed as soon as the tea had been loaded and they then raced back so as to be first home with the latest crop and so fetch the highest price. Out of the season the traders had to leave and that usually meant decamping to Macau. The Portuguese had lost their monopoly of trade with China in the seventeenth century but they managed to get some benefit from renting out property to other westerners. Ladies were not allowed in Canton so Macau was also a haven for any wives who were intrepid enough to brave the East.
Portrait of Howqua
The East did have an aura of the exotic and although the main goods traded were tea, silk and porcelain, there was also a busy trade in souvenirs. These China Trade goods were usually made by the Chinese to sell to westerners. They had their shops in Canton in three alleyways that split up the Factories. They were New China Street, Old China Street and Hog Lane. Here were the studios where the artists painted the scenes that are illustrated here. In addition there were all sorts of items in lacquer, embroidered silk, silverware, ivory etc. Tradesmen also had studios in Macau and later Hong Kong so that the ladies could also have the pleasure of shopping. The local craftsmen could also provide clothing at reasonable prices, just as today suits in Hong Kong are considered to be bargains.
The Canton System had been set up to control the foreigners, but nobody likes to be under too much control. As the opium trade flourished the Chinese sought to end it. However the merchants were a tough bunch with influence in London and the First Opium War erupted in 1839. By this time the strength of the Chinese Empire was on the decline and the war was over quite quickly. This led to the opening up of more ports for trade and although Canton continued as the main focus this marked the beginning of the end of the old system.
Howqua's Garden on Nonam
After the Second World War, China again closed her borders to foreigners but left a small gap for trade to continue at Canton. The Canton Trade Fair flourished and still does good business, despite stiff competition from many more cities that vie for the trade. 
Richard Garrett has lived in Hong Kong for more than forty years and is the author of numerous articles on people and places in Hong Kong, Macau and China.


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