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Sunday, 15 May 2011

Chinese past experiences building up an enterprise in Malaya – Case studies in the state of Kedah and Penang, 1882-1941

Writer in Jalan Tuanku Abdul Rahman (heart of Kuala Lumpur old business districts)

By: Ahmad Syah Ejaz bin Hj. Ismail

1. The Chinese community in Malaysia is very well known for their business shrewdness and avid skills in business dealings and running of enterprises. Their past experiences are well worth to study as we can determine clearly the main factor that drives these immigrants to be the main business players in Malaysia.

2. The question that need to be asked is how did many of the Chinese individuals (mostly were singkeh), end up to build a very powerful economic empire in Malaya. This is the land where Malays comprised more than 90% of the population in the late 19th century and the Chinese community did not enjoy the same advantage of the business activities such as tin mining and cash crop planting activities as did the colonial Englishman or even the Malay elites back up by the Malay’s Sultans?

3. First let us examine the reason for the massive Chinese exodus from the mainland China to foreign places such as Malaya. According to Wu Xiao An, the four main rebellions or political disruptions in China were the main factors of the forced exiles of the Chinese peoples to Malaya seeking new future. The rebellions are Huang Chao rebellion (878-84) during the Tang dynasty (618-907); the Mongolian invasion of Central China (1279-1368); the Manchurian takeover of the Ming regime (1644-1911); and the Taiping rebellion (1851-64).

4. With the exodus to Southeast Asia, the Chinese brought with them three typical institutions forming their main social organizations and leadership namely the kapitan system, the secret societies and the kongsi system.
[iii] With these three main informal institutions the Chinese community begins to build up their wealth accumulations in the foreign land and its influence were later made legitimate by the colonial power in dealing with Chinese communities problems arising in Malaya.

5. For an example, the kapitan system was considered an official and legitimate institution representing the Chinese community to the colonial and local government. While the secret societies were hidden autonomous government to guide immigrants within their own community and were based on different kinship, clan, and dialect brotherhood ties.
[iv] The kongsi system created a public office, open government, and economic entities founded on extended partnerships and brotherhoods. In overall, the kapitan could also be the headman of a secret society or of a kongsi. But the headmen of the secret societies or kongsi would not necessarily be the kapitans.[v]

6. The headmen of all three institutions were closely involved in their social groups and were actually the key actors in economic and commercial life. Through these three main institutional frameworks, the Chinese communities were offered protections, market scales, distribution channels, capital jump-start and indirect association support to start a business and enterprises in Malaya.

7. The Chinese community those days also acts such as trading Banks providing capitals and loans mostly to the Malays farmers. These financial ties can be observed through practice of paddy kunca system, where it is very common the Malays planters would advance sale of their paddy harvest for loans. The Chinese community would hold dearly as intermediary over the Malay peasantry, and although the government realize such practice were exploitative in nature and the Malays continue to be manipulated and marginalized, the British were solely concerned with their strategic interest rather than solving the problems of the Malays people becoming poorer.

8. Through one of this practice, the immigrant Chinese peasants were transformed into laborers and capitalist (most of the business activities run by the Chinese capitalist were gambling, opium farms, spirits and toddy farms – please read Wu Xiao An for more details). The point is that the immigrant Chinese actively participated, and in fact played a pioneering role in this transformation.
[vii] However, there can be observed that the rise and fall of the Chinese business family in the state of Kedah and Penang are best explained by Braudel:[viii]

"In a departure from the traditional Western proverbial three-generation cycle – from rags to riches to ruin – the Chinese family firm’s evolution is even projected by four stages of development: emergent, centralized, segmented, and disintegrative."


[i] Chinese Business in The Making of A Malay State, 1882-1941: Kedah and Penang by Wu Xiao An. National University of Singapore, 2010. p. 54.
[ii] Ibid. p. 20.
[iii] Ibid. p. 22.
[iv] Ibid. p. 24.
[v] Ibid.
[vi] Ibdi. p. 180.
[vii] Ibid. p. 210.
[viii] Ibid. p. 162.

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