The Business of Survival: Competition and Cooperation in the Shanghai Flour Milling Industry

At the turn of the twentieth century, American and Chinese millerswere locked in a fiercely contested battle for control of China’sflour market. Imported American flour had dominated Chineseurban markets since the early 1880s, but the founding of a modernnative milling industry in 1900 had initiated a commercial warthat pitted the great flour corporations of the Pacific Coastagainst the independent mill owners near Shanghai. Althoughthe anti-American boycott of 1905 had boosted sales for Chinesemills and sparked growth in the native industry, the periodbetween 1905 and 1909 severely tested the ability of the youngindustry to survive foreign competition. A high silver/goldrate, low transpacific shipping rates, and bumper wheat harvestsin the Pacific Northwest lowered the relative cost and enhancedthe market appeal of American flour to Chinese brokers. Conversely,severe flooding in China’s wheat-producing regions forcedcurtailment or even cessation of production for some nativemills. Facing catastrophic reductions in their wheat suppliesand markets saturated with American flour, Chinese millers devisedalternative business strategies and implemented collaborativemeasures to ensure the solvency of their mills. This study examinesthe details and dynamics of the competition between native andimported flour and highlights the decisive measures Chinese mill ownersemployed to assure the survivability of the modern milling industryin China.

If there were any question . . . or doubt about the Chinesebecoming a flour-eating people to a considerable extent, thebuilding of a mill by the Fou Foong Flour Mills Co. at Shanghaiwould dispel it. It is not in the nature of things for Chinesebusinessmen to act hastily, so that the erection of this millmay be regarded as an index of the future. E. S. Rollins, 1901¹