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By Issam K. H. Halayqa

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The lineage or village provided political and financial patronage and gave the family firms leeway in the management of contractual relationships. The merchant working on his own or in partnership backed by a series of holding operations within a patronage structure is essentially what gives the image that “networking” is particularly invoked in Chinese business. The company When Western merchants traded in China in the eighteenth and nineteenth centuries, the Chinese recognized that they were organized in the form of the “company” by applying a special term to their corporate presence, gongsi (Lee, 1996).

In 1885, a law suit on the responsibility of the company in the event that a compradore defaulted went as far as the British Privy Council. The question of the legality of Chinese investment arose in 1898 when Chinese investors were called upon to honor their unpaid share capital upon the collapse of the Bank of China and Japan. Their responsibility for the payment was abrogated by the Chinese judge in the Shanghai court who ruled that Chinese share holding in Western companies was illegal as it had not been provided for by treaty.

In two recent works, Elisabeth Koll and Kai-yiu Chan, working precisely on company records, show in considerable detail the essential features of this history from approximately 1900 to the 1930s. A Historical View of Chinese Entrepreneurship 27 Koll studied the very well-known spinning and weaving business of Zhang Jian in Nantong county. Nantong, located on the coast to the north of Shanghai, was, until the last years of the Qing dynasty, saltproducing country. Zhang Jian’s contribution rested in his converting the salt fields to cotton cultivation, a feat which was only accomplished because he had both official backing and strong local contacts.

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