Reasons Of The Insolvency Of Chinese Hong Merchants,1760-1842

Canton Thirteen Hongs is also known as "the Hongs". The release of theimperial edict in1757makes "the Hongs" the only one that can trade with foreigners.The tax here is not only a considerable income source of government, but also thesupply and transit points of a large number of luxury, exotic goods and Westerntalent. Hong merchants become one of the three major business groups of QingDynasty, and Howqua I (one of the Hong Merchants) was referred to “the richestman at his time”by an American scholar. However, it does not mean that the overalloperation of the hongs is successful. In fact, from1760to1843, there are forty-sevenhongs in business, while thirty-seven ones are out of business from1771to1839.Therefore, the fact that the hongs are not in good condition should not be ignored.Then what are the reasons for the insolvency of the hongs?The question can be considered from two perspectives. On the one hand, thehong merchants are generally trapped by “bao shang” and “monopoly” systems, onthe other hand, the profits can be deeply influenced by the behavior of competitors.In addition, they need to meet the external environmental pressures brought fromQing government and the foreign businessmen. In this situation, the hongsmerchants’ bankruptcy becomes inevitable. Further explore the reasons for theinsolvency of Chinese hong merchants, you can finger out three importantfactors,which are “the egocentrism of the Qing government”,“hong merchants’misconduct” and “the challenges posed by the dramatic changes in the operatingenvironment”.