Industrial Enterprise in Modern China, 1890-1957


A review of Yudahua: The Growth of An Industrial Enterprise in Modern China 1890-1957, by JUANJUAN PENG. 

This dissertation revisits the early industrialization and business history of modern China through a case study. First, by outlining the history of Yudahua, a Wuhan based industrial enterprise, from its inception as a late Qing self-strengthening movement project to its forced incorporation into the communist economic system in the 1950s, the author seeks continuities to challenge the fragmented picture presented in the existing historiography of modern Chinese industrialization. Second, challenging earlier economic/business historians that emphasized the role of state in modern China’s industrial growth, including Albert Feuerwerker and Wellington Chan, the author highlights the importance of indigenous entrepreneurship as a driving force by focusing on the internal institutional and organizational evolution of Yudahua. According to the author, the transformation of a  family firm organized by social networks to large-scale multi-dimensional business group based on impersonal contractual relations indicated a new direction for modern Chinese business development that was thwarted in the early PRC era.

The five chapters of the dissertation are organized both thematically and chronologically. Each chapter deals with a particular period and the corresponding developmental stage of the Yudahua group, thus speaking to a particular set of theoretical and historiographic issues. The first chapter traces the dual origins of the enterprise: Dehourong Trading Firm, a traditional Chinese trader, and the Hubei Textile Company, a product of late Qing self-strengthening initiated by Zhang Zhidong. A 1912 lease contract between the two started the Chuxing textile company that became the parent company of Yudahua. The author analyzes the critical role that the practices and experience of the Hubei Textile Company played in the creation and development of the Chuxing and Yudahua enterprises, thus demonstrating the contribution of the seemingly failed self-strengthening industrial efforts to modern China’s industrial experiences.

Chapter 2 deals with the period between 1921 and 1931, when the lease contract ended and the Chuxing investors and managers built and split their two cotton mills in two distant cities: Wuhan and Shijiazhuang. The former was already a commercial metropole, while the latter was only a newly emerged railway town. By comparing the experiences of the two factories in these radically different geographical and social settings, this chapter shows how an industrial enterprise could have exerted extensive and profound socio-economic impacts on the urban development in modern China, with Shijiazhuang being the best illustration.

Chapter 3 traces official establishment of the Yudahua Business Group. He frames his narrative around the economic and national crisis from 1931-1937, as the two factories were forced to become more integrated to better utilize resources, ultimately leading to a unified business group. Here, the author emphasizes the managerial characteristics of the newly created group as being non-legal and non-corporated, as compared with Western model of corporations, which provides an illuminating case of the indigenous path in company transformation.

Chapter 4 examines the wartime Yudahua and its institutional development between 1937 and 1948, revealing that the war period contributed significant in transforming the business of Yudahua into a so-called “big business.” During the war, in response to the tightened government control of market and other difficulties, the business expanded geographically and incorporated new businesses such as banking and coalmining into their business model. The expansion also creates new managerial problems that provided an imperative for establishing a Central Administrative Office. According to the author, “under the leadership of this Central Office, both inter-firm and inter-employee relationships were gradually redefined from personal to contractual in order to better suit the management structure of the expanding business (p. 159.).” Contradicting the conventional assumption that overlooks wartime economy, through the Yudahua case, the author brings to light the particular business patterns and economic dynamics in Wartime China.

Chapter 5 analyzes continuities and changes in the Yudahua Group as they crossed the 1949 divide. By using the Yudahua experience to examine the respective historical trends in factory, market, and industry prior to and after the liberation, the author contends that early PRC socialist welfare reform, state control of market, and government command in industries in fact had their historical roots in pre-1949 conditions.

This dissertation contributes to our understanding of modern Chinese economic history in significant ways. First, it provides a well-researched and carefully delineated case study of a Chinese enterprise, offering a microscopic perspective to the business history and changing economic patterns in modern China. This approach reveals the institutional dynamics and historical changes within the company and underlines business entrepreneurship as the driving force of Chinese business development. This emphasis on the entrepreneurship and internal institutions differs radically from previous scholarship, which tends to overemphasize the role of state and other external forces. Second, by demonstrating the seminal role of the Hubei Textile Company experience and infrastructure in the formation of the Yudahua companies, this study successfully obliterates the traditional historiographical view that neglects the key legacy of the early industrialization efforts of late Qing self-strengthening movement. Third, by examining the Yudahua’s social impacts on Shijiazhuang, this dissertation brings attention to the industrial town phenomena in 20th century China, thus challenging the existing urban histories that overemphasize politics and commerce in China’s urban development while underestimating the critical role of industrialization (eg. Joseph Esherick, Ed., Remaking the Chinese City: Modernity and National Identity, 1900-1950, Honolulu: University of Hawaii Press, 2000). Fourth, it will be a critical contribution to the understanding of China’s wartime economic dynamics, which regrettably remains an understudied field. As argued in this dissertation, the wartime economy is not only understudied, but also misconceived. Fifth, this dissertation also creates a powerful narrative that crosses the 1949 divide by carefully analyzing continuities and changes before 1949 and thereafter.

Finally, this dissertation speaks to the hotly debated issue regarding the nature of Asian “business group,” arguing against earlier scholarship that emphasizes family ties and social networks in identifying the Asian business group. By showing the Yudahua Group’s transformation from being interpersonal relationship to contractual relationship, this dissertation contends that the difference between Asian business groups and Western multi-divisional corporations might well be scholars’ exaggeration rather than real historical divergence. Therefore, this dissertation will also be of great value for people whose interests lie in comparative business history.

George Zhijian Qiao
PhD Candidate
History Department
Stanford University

Primary Sources

Wuhan Municipal Archives
Compilations of Factory Histories
wenshi ziliao

Dissertation Information

John Hopkins University, 2007. 215 pp. Primary Advisors: William T. Rowe and Tobie Meyer-Fong.

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