Friday, November 3, 2017

Friday Feature Book Review: Jardine Matheson, Traders of the Far East: Robert Blake ジャーディンマセソン, 極東のトレーダーたち:ロバート・ブレイク

A long time ago I read, "When Jardine Matheson does well, Hong Kong does well". This was a quote from over 100 years ago. What kind of legendary trading firm was this? I had no idea until I went to Hong Kong, for the first time in 1989. I saw its dominant head office building with its famous round windows. Impressive for sure as I grew up reading James Clavell's Taipan, Noble House, even Shogun. To later learn that Jardine Matheson, was the original inspiration for these great stories attracted me instantly. I kept on reading into it and digging for more.

This book is in fact, a history of the firm over time. It covers the origins(started in 1832 officially), its growth story, and historical background(first visit to Canton, China in 1802). It explains how after almost 200 years, it still thrives in the economies of Hong Kong and beyond. China trade with the UK really began with the importation of tea from China, but it was so popular, silver became scarce in the treasury of the UK. Another trade had to be found to help the imbalance and the first to fill this gap was opium. Due to the British Empire, India had great farms of opium at its disposal. This could be the perfect source to trade with China for the highly valued tea, and not deplete the UK treasury. 

Great trading houses were formed at the time, and Jardine Matheson, became one of the most dominant of all time. Opium was a morally difficult good, but did the job, so had to be considered a means to an end. When looking back at the trading volume into China over those early years, over 95% of trade was due to opium, not much else really mattered in global UK trade. By the 1880s, competition by many smaller rivals and the steamship made the business less profitable. It was then that a wide expansion took place across many new businesses now run actively today.

In the present day, Jardine Matheson runs many diverse businesses with over 50,000 employees around the world in  many countries generating over US$42 Billion in revenue annually. To say that this huge company has grown and been successful, is real classic British understatement. Hongkong Land was started in 1889, and is a key property developer that was an early spin off business for the group. It now runs over 5 million square feet of land (450,000 sqm) in the Central business and shopping district. Sir Paul Chater was the original founder in the business, along with William Keswick, a later Taipan. Chater House, Chater Road and many other buildings in the Central district of Hong Kong were named after him and are still used today. Within property, the Mandarin Hotel opened in Hong Kong as the first 5 star hotel in 1961 is also a key success for the company. Insurance, automotive, dairy and many other additional industries have all sprouted and flourished from this core company over time.

The Top 3 Takeaways from this book that really impact any reader are:

1) Surprisingly, both William Jardine and James Matheson did not spend much of their lives in Asia or Hong Kong. They made their mark there, but both soon moved back to the UK, and grew the company from there.

2) The firm was a pioneer for trading and helped establish Hong Kong itself. However Dent & Company and later John Swire & Butterfield were fierce trading rivals at the time. Drama in business dealings of dubious natures was never in short supply.

3) The International Treaty of Nanking, and the two Opium wars left China in defeat. It left the UK with a strong Asian foothold in Hong Kong & Kowloon. All of these events were fully supported by the local head of Jardines, the "Taipan" as he was locally known.

It is curious to note that the Scottish roots to many of the top UK trading firms also influenced Japan. Jardines and Swires certainly are current today, but competitors have risen. Japanese trading houses like Marubeni, Itochu, Mitsui and of course Mitsubishi Trading all had strong Scottish influences during their global transformations. Mitsubishi Trading was driven in large part by the Scottish Samurai, Thomas Blake Glover. He originally joined Jardine Matheson in 1857 and went to Shanghai, China. He then went on to Nagasaki, Japan in 1859. After establishing Jardine Matheson in Japan, he went on to help Mitsubishi. His actions created JR Trains, Kirin Beer, and Mitsubishi Heavy Industries. He helped the founder of Mitsubishi group Yataro Iwasaki begin the company along with his brother Yanosuke Iwasaki, and all three were lifelong friends. Glover was in fact, the same person used as inspiration for Madame Butterfly. Glover was also the inspiration for James McFay, the core character of Gai-Jin by James Clavell. This book is highly recommended and very easy to read. It can be a bit dry in parts, so better taken in spurts for a few hours over a weekend or on a commute.

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