How Could Shanxi Merchants Thrive for Hundreds of Years?

( chinadaily.com.cn)

How could Shanxi merchants stay at the top of China's business world throughout the Ming (1368-1644) and Qing (1644-1911) dynasties? And why did so many Shanxi people take to business? In a sense, this was determined by both geographical and historical factors.

At the same time, the spirit of Shanxi merchants was another important reason for their prosperity. They showed no fear towards any kinds of difficulties, which were described by Western scholars as "the Spirit of Shanxi," or more precisely, "the Spirit of Shanxi Merchants."

The Barren Soil

Shanxi is not a good place for crop production. So throughout the ages people had to earn their living through business. The earliest record of this can be found in History Record. According to other historical literature, the southern part of Shanxi was not able to provide enough food for residents, so people had to do business in other areas. Yet few people in north Shanxi needed to do so.

Beginning in the Ming Dynasty, the arable soil became more precious due to the increasing population. Therefore, more and more Shanxi people began to leave their home to do business.

Most Shanxi merchants were originally miserable farmers with little property. They were forced to start their business from scratch. When they obtained some profits, they became models for neighborhood, which gradually led to the creation of merchant groups.

A Place of Strategic Importance

Bordering the northern section of the Great Wall, Shanxi lay next to the nomads of Inner and Outer Mongolia. South Shanxi contained plains for agriculture. Therefore, Shanxi lied in the junction of the stock raising, agriculture, and handicraft industries.

Shanxi merchants' business route

The geographical position made Shanxi into the communication center for the production of the abovementioned industries. The nomads bartered horses for tea, fabric, and crops with Shanxi merchants. Meanwhile, the merchants also carved out trade with the Russians. Since 1768, Kiakhta has been the trade center for Russia and China.

Shanxi's geographical importance has given many advantages to its people. Starting from the Yuan Dynasty(1271-1368), the transport channels were gradually developed by Shanxi merchants, who organized camel teams to deliver goods. The merchants also purchased silk, sugar, fabric, and other groceries from different cities, and sold them in Xinjiang, Mongolia, and so on, thus completing their primary accumulation of wealth.

The Recognition of Business

Until recently, in the long history of Chinese society, agriculture has always been put at the top in social development, while business has been given little importance.

However, in Shanxi, especially in its middle part, it has been a tradition for people to learn to do business since the Song Dynasty (960-1279). Shanxi people long believed that it was a good way to obtain wealth by trade, and then to purchase arable soil, or to invest in the finance and bank industry to generate more wealth.

Faithfulness and Honesty

Shanxi merchants believed that to be faithful and honest were the best ways to expand markets. According to business ethic principals, merchants are driven by profits, yet cheating and fraud is not allowed. Actually, faithfulness and honesty have long been at the core of Shanxi merchants' value view. This is also the reason why Shanxi merchants enjoyed their good reputation for such a long period. A Guanyu temple, which symbolizes honesty and justice, could be found in almost every town in Shanxi.

The Entrepreneurship

As has been mentioned above, the natural environment in Shanxi is rather harsh. So in the past, people had to leave their hometown to gain their living. They traveled throughout China to purchase commodities and then organized camel teams to trade with Mongolia, Russia, and even Japan. In this process the merchants had to overcome various obstacles such as different languages and, habits of life. Hence persistence and entrepreneurship was also critical for the success of Shanxi merchants.

Cooperation with fellows

Shanxi merchants believed that "harmony brings wealth." They competed with each other, while helping and looking after each other when needed as well. Since most of the Shanxi merchants had good faithfulness and honesty, they would believe in each other even in the most difficult times.