Juanjuan Peng's new study of the Yudahua business group is a welcome addition to a growing body of academic works on the history of business enterprises in Republican era China. Following in the wake of a revival of interest in business history in China itself, these academic studies are fueled by two developments. The first is the opening of archives in China which makes this research possible. In Peng's case, although her major source is the Wuhan Municipal Archives, she is an indefatigable researcher who has combed archives, printed sources, and arranged interviews in her efforts to present as comprehensive a study as possible. Indeed one of the most interesting aspects of this book is found in the introduction and footnotes as you follow her quest for sources. The second factor involves China's explosive economic growth in recent decades. Business enterprises are no longer viewed as a relic of a capitalist past but now a vital part of the world's second largest economy.
This study is welcome for another reason—Yudahua has been overlooked far too long even though it was the third largest textile enterprise in Republican China after the Rong brothers group and the Guo (Kwok) Yong'an (Wing On) mills. But virtually all previous academic studies of Republican business enterprises have been focused on Shanghai or in a few cases Tianjin which were the major centers of industrial activity. Unusually Yudahua had factories in the interior in Wuhan, Shijiazhuang, Xi'an, Chongqing, and elsewhere. Indeed the name Yudahua came from three of the component parts—Yuhua in Wuhan, Daxing in Shijiazhuang, and Dahua in Xi'an. In her study, Peng focuses on the particular geographic setting of the mills which provided advantages such as access to cotton producing areas as well as disadvantages such as having less access to technology and skilled workers.
The most unusual feature of Yudahua, however, was its organizational form. Virtually all business enterprises in the Republican era were family firms totally controlled by the founding patriarch. Many family members were employed so that control stayed within the group, and the death of the patriarch often posed a major challenge to the firm. By contrast the Yudahua group was a partnership among five major families who were stockholders. A central management office in Wuhan served to coordinate the branches of the company. And instead of large numbers of family members, much of the management was recruited with college graduates having technical training. Although the five groups were not connected by family ties, most had personal ties which bound them together. The unusual features of Yudahua in terms of location of the mills and the form of business organization make this study a particularly valuable contribution. It suggests a wider variety of business forms were possible in the Republican era.
Peng follows a largely chronological approach. She traces the origins of the firm to Zhang Zhidong's Self-Strengthening enterprises in Hubei. Zhang supervised the purchase of advanced textile equipment overseas to establish a large textile firm in Wuhan. Eventually the firm was privatized and flourished in the World War I boom. But political interference and failure to update equipment led to the failure of the old firm. But out of the remains for that earlier enterprise some officials acted to set up a new company in 1921, Yuhua in Wuhan and Daxing in Shijiazhuang. They were unable to get outside bank loans being away from the banking centers in the east, but invested profits made during the “golden age” of textiles in World War I. Wuhan was the home base, but the investors chose the then small town of Shijiazhuang for a second mill because it had suddenly becoming a railway hub and was close to sources of cotton and coal. Much of the management migrated from Wuhan but there was difficulty finding a work force from the local farmers. Extensive training was necessary. But Daxing discovered a local market, producing cotton yarn for local weavers.
The mills flourished during the 1920s but began to suffer hard times following the Manchurian Incident of September 1931 and the impact of the economic depression. To save costs the two mills began to share more agents including sales representatives and agents who purchased raw cotton. The company made a decision to open a third facility in Xi'an after the Longhai Railroad was extended to the city.
The war with Japan created new problems and opportunities for the Yudahua group. Daxing in Shijiazhuang was the most vulnerable and was first bombed and then occupied shortly after the war with Japan began. Eventually Yuhua in Wuhan migrated with most of its equipment to Chongqing. The firm was generally profitable during the war but built a small plant outside of the wartime capital to escape Japanese bombing. When the war ended suddenly the firm seemed poised to flourish. But problems surfaced almost immediately. The plant in Wuhan lacked equipment and only resumed production on a small scale in September 1948. The mill in Shijiazhuang had been under Japanese occupation and much of the equipment removed for scrap iron. The communists seized the mill in November 1947. The final straw was the gold yuan reform of 1948 which virtually destroyed the support for the Nationalists by private businessmen. Peng addresses the existing scholarship about the relationship between the communists and capitalists after the founding of the People's Republic. Surprisingly many of the capitalists seemed to have supported the new regime. Facing multiple financial problems, the leadership of Yudahua willingly joined a public–private joint venture after the revolution. All of the key leadership of the enterprise remained in China except for one individual who was a relative by marriage to Chiang Kai-shek, whom he followed to Taiwan.
Peng adds a stand-alone chapter at the end on workers and welfare reform before and after 1949. Building on the scholarship of Morris Bian and Joshua Howard, Peng notes how increasingly during the war years, the firm implemented welfare policies for workers so that by 1949 the factories had much in common with the danwei organization of the People's Republic. Peng traces how this pattern developed. At the Shijiazhuang mill, for instance, the small town had few services to attract skilled workers from Wuhan or Shanghai. So the factory set up a primary school for children of the workers or the workers themselves, dormitories, a medical clinic, a library, and a sports field. This was deemed necessary to reduce worker turnover. When the Wuhan plant relocated to Chongqing it found few skilled local workers and did likewise. As hyperinflation worsened the mills began operating consumer cooperatives which offered workers the right to purchase food and daily necessities at below market prices. Increasingly workers were bound to a factory by the benefits—housing, food, entertainment, schools—that made worker mobility unattractive. The transition after 1949 was then already well underway.
Peng's study will be welcome by those with an interest in the history of business enterprises in Republican China. It advances our understanding of some alternate possibilities given the location of the Yudahua mills in the interior and the form of organization. Family firms were not the only possibility.
