The Merchants of Zigong: Industrial Entrepreneurship in Early Modern China (review)

In this important book, Zelin brings early modern China squarely into the comparative literature on the history of the firm, along lines pioneered by Chandler.¹ This outstanding study, long in the making, is remarkably well-informed on the operational details of the case under study because of its energetic use of rich archives. It offers a comprehensive history of the rise and fall of the salt-refining industry of the southern Sichuan province from the eighteenth to the mid-twentieth centuries.

Technological innovation played a significant but limited role in this industry. The application of natural gas (a by-product of the salt wells themselves) as fuel for the refining process gave a major boost to its fortunes, but well into the twentieth century, the major source of power remained buffalo labor. More critical factors were the political environment—the transition from the benign neglect of the late imperial state to the predations of warlordism and the clumsily aggrandizing bureaucratic capitalism of the Nationalist Party—and the military context. In fact, the disruptions of other salt production and distribution networks downstream on the Yangzi during the Taiping campaigns of the 1850s suddenly promoted Sichuan salt from a regional industry to an interregional one. As a result, the industry's internal structure underwent a change, while Sichuan's own internal disorder of the early Republican era contributed to the escalating costs and indebtedness that spelled the industry's decline.

The real news in this book comes in its first half, charting what Naomi Lamoreaux notes in her jacket blurb as a model-challenging case of industrial development in the absence of either a robust commercial credit market or an established company law. This development was possible, as Zelin and others have amply demonstrated in a recent (highly recommended) companion volume, because of the refined regime of property rights and written contract in late imperial Chinese business culture, which was enforced by the otherwise un-intrusive state.² Building with great creativity upon this situation and upon private capital mobilized via lineage trusts (tang), the merchants of Zigong created, and continually recreated, partnerships of great scale and flexibility; set up professionalized management bureaus (daguan) to oversee diverse operations; and, mostly through interlocking investments, achieved considerable "vertical integration" of supply, various stages of production, and marketing. It is a remarkable story.

Zelin hardly claims Zigong as typical of Chinese business history; she is more apt to stress its uniqueness. Nor does she argue that the salt industry spawned broader regional development: Despite fostering numerous ancillary enterprises, such as buffalo raising and bamboo cultivation (for brine and gas pipes), its larger effect was to reduce the region to something like an industrial "monoculture." From time to time, she offers suggestive comparisons to other cases, such as Lamoreaux's New England textile industry, but these moments are not sustained.³ For better or worse (according to taste), Zelin's real love turns out to be local history.