The Landscape of Enterprise in Colonial Vietnam



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Gerard Sasges, “The Landscape of Enterprise in Colonial Vietnam”


  1. Introduction

In 2001, the French scholars Pierre Brocheux and Daniel Hémery observed that “the economic history of Indochina has yet to be written.”1 A decade later, that statement holds largely true. Martin Murray’s 1980 The Development of Capitalism in Colonial Indochina remains the most authoritative work in a European language on the topic.2 However, its focus on how the Vietnamese economy was restructured to fit the needs of global capital can obscure the degree to which the processes at work were also local. Works in Vietnamese, such as Nguyễn Văn Khánh’s Cơ cấu kinh tế xã hội Việt Nam thời thuộc địa feature a similar focus on how Vietnam was integrated within a global and colonial political economy and the resulting legacy of underdevelopment.3 This sort of analysis flows in equal measure from the sort of meta-level sources that are most accessible to scholars and from a certain kind of post-colonial politics.4 This paper is intended to help us shift focus from these sorts of debates by going from the global to the local, investigating the political economy in Vietnam itself and how it promoted the accumulation of local capital and the development of local enterprises. To do that, it examines what I’ve called “Colonial Conglomerates”: French-owned enterprises with capital over $1 million francs whose operations were largely but not exclusively based in Vietnam.5 I hope that by examining these local enterprises, this paper will contribute to the writing of an indigenous history of the economy of colonial Vietnam.


This paper has two main parts. The first is a description of the Vietnamese political economy, from its pre-colonial roots to the end of the colonial era in 1945. The second is a case study of a typical Colonial Conglomerate, the Fontaine Group. The two parts of the article correspond roughly to two different types of sources. The first is the Annuals of Enterprises (Annuaires des entreprises) published beginning in 1912. Compiled by a colonial lobby group – the French Colonial Union – and based on information supplied by the enterprises themselves, these Annuals are far from perfect. However, for revealing officially invested capital, patterns of ownership and investment, and general developments over time, they are a fascinating and important source. The second type of sources is state and other records related to the French Corporation of Distilleries of Indochina (Société française des distilleries de l’Indochine, or SFDIC) and the other components of the Fontaine Group. As the main supplier of the state’s alcohol monopoly, the SFDIC generated a huge amount of official documents, not to mention public scrutiny. As a result, it is one of the easiest Colonial Conglomerates to follow, providing important details that fill out the larger story of the accumulation of capital and the development of locally-based enterprise in the colonial era.
The shift in perspective from the global to the local reveals surprising things. First is the remarkable continuity between the pre-colonial and the colonial economy. Second is the interventionist policies of a colonial state conventionally portrayed as laissez-faire. State intervention in the colonial period took the form of what I’ve called “state-related accumulation,” namely state-created or state-enforced monopolies that provided highly profitable revenue bases for subsequent diversification. The interpenetration of state and enterprise, whether in terms of personnel or a shared interest in revenue generation, was both a symptom and a cause of this sort of state intervention. As for smuggling, contraband, and other illegal activities, they were simply inevitable effects. The last element is the remarkable size and profitability of the diversified enterprises that grew from these monopoly bases. These enterprises remind us that an economy conventionally described as chronically and purposively underdeveloped could simultaneously feature highly “developed” enterprises that would not be out of place among today’s globalized multinationals.6


  1. The Vietnamese political economy




    1. To 1858: state-related accumulation and the Chinese consortiums

For most of the seventeenth and eighteenth centuries, the present-day territory of Vietnam was administered by two separate polities: the Le-Trinh state in Northern Vietnam and the Nguyễn state that after 1558 gradually extended its control southward and then westward from its base in Central Vietnam. Despite the shared cultural and historical roots of their elites, these two regions – referred to by contemporaries as Đàng Ngoài and Đàng Trong, or the “Outer” and “Inner” regions, respectively – featured quite different attitudes towards commerce and enterprise. Nevertheless, in each region of precolonial Vietnam we can see threads that will continue to run through the supposed ruptures of 1858 and 1945. The first is the central role of the state in creating opportunities for accumulation, primarily through the creation of monopolies. From this basic feature of the local political economy flow other features, most notably the interpenetration of state and enterprise, and endemic smuggling and off-plan activities. A final thread in the history of enterprise in Vietnam – and one which underlines the importance of attention to regional particularities – is the importance of regional Chinese commercial and financial networks operating through Gia Định/Saigon.


In Đàng Ngoài, the agrarian-Confucian worldview of its ruling elites saw commerce and enterprise as a sort of necessary evil. Perhaps the clearest evidence of this is found in language: for example, the official term for businessman or trader, “mạt nghiệp” translates literally as “lowliest occupation.” Analyzing the proliferation of copper and silver mines in Đàng Ngoài’s northern periphery after 1700, Alexander Woodside wrote how “the central core of the Le-Trinh state, with an anachronistic agrarian ideology which revolved around scholars and farmers, survived in a sense only because it was not made to confront and incorporate in any normal or normative way a periphery whose ideology contradicted with it.” Instead, the state “allowed private entrepreneurs and tax farmers to subdivide the mining frontier into their own long-term apanages.”7 By the latter half of the 1700s, the copper mines of Thái Nguyên province were among the largest in Southeast Asia, providing the bulk of the Lê-Trịnh state’s revenue, and huge fortunes for the lucky holders of the state’s mining licenses.8
As this example makes clear, trade and commerce in Đàng Ngoài were purposely kept at arms length even at the risk of the loss of territorial control. For not only were the holders of the mining licenses the virtual lords of local fiefs, but also they and their tens of thousands of employees were of Chinese origin. Subcontracting certain commercial activities to the ethnic Chinese community was, of course, a common technique for modernizing states throughout the region. Yet the Lê-Trịnh state was distinguished from its contemporaries – including the Nguyễn state in Đàng Trong – by the degree to which the state and its elites consciously insulated themselves from the world of commerce. This absence of even minimal linkages to the world of commerce was no doubt at the root of the failure of the state’s attempt to expel the Chinese mining consortiums and reassert control over its Northern periphery after 1767.9 Yet even in a story of state-enterprise relations that differs, as we shall see, so radically from that in Đàng Trong, three common threads stand out: state-related accumulation, the crucial, if ambiguous role played by ethnic Chinese enterprise, and the attempt by a centralizing state to assert control over Chinese entrepreneurs and their revenue streams.
By contrast, the ideology of the Nguyễn Lords who ruled Đàng Trong was characterized less by agrarian-Confucianism and more by the pragmatism that flowed from administering an expanding multi-ethnic polity facing powerful rivals to the North (Dai Viet) and the West (Siam).10 One result was an openness to trade and commerce: Đàng Trong centers like Hội An, Huế, Qui Nhơn, Mỹ Tho, and Hà Tiên were important part of regional and extra-regional trading networks that flourished in the 1700s and 1800s.11 According to Li Tana, “Đàng Trong’s existence as a separate Vietnamese state rested directly on its successful commercial and economic development.”12
Overseas trade was accompanied by the growth of more or less permanent communities of expatriate merchants and settlers. This included Japanese, Southeast Asians, Europeans, and above all, Chinese. Already by the mid-1600s, there was a sizeable community of Chinese in Hoi An. Migration accelerated in 1679 after the fall of the Ming Dynasty and continued after the Qing Dynasty relaxed its controls on immigration in the mid-1700s. These Chinese immigrants played a crucial role in expanding and developing Nguyễn Cochinchina’s Southern and Western frontiers, Mạc Cửu and his successors in Hà Tiên being the most obvious example. 13 They were also responsible for much if not most of Đàng Trong’s internal commerce. Writing in the early 1820s, John White described the Chinese presence in Đàng Trong.

These industrious and enterprising people are the butchers, the tailors, the confectioners, and the peddlers of Cochin China: they are met with in every bazaar, and in every street… they are also the bankers, and money-changers… Many of the cooking utensils, and a principal part of the clothing of the Onamese [Annamese, Vietnamese] are brought from China, from whence they also have their porcelain, tea, many of their drugs and medicines, cabinet-work, and, in short, almost every article of convenience which they possess.14


As White’s example suggests, the itinerant peddlers of Đàng Trong/Cochinchina were ultimately linked to regional trading and financial networks through the intermediary of the Chinese consortiums that dominated the economies of nineteenth-century Southeast Asia. From initial bases producing and trading local commodities like rice, salt, dried fish, sugar, or pepper for manufactured goods from China, Singapore, or India, these consortiums might expand to take advantage of the tin mining boom, compete for state revenue farms, or both. As Carl Trocki describes, by the 1800s, Chinese consortiums controlled the farms and mines throughout Southeast Asia that “produced marketable commodities and employed large numbers of Chinese laborers. The laborers, in turn, consumed provisions, clothing and tools, as well as opium, spirits, and other taxable products. They were also users of pawnbroking, gambling, and prostitution farms, all of which were controlled by the same group of merchants who financed and exported their products.”15 This sort of diversification required flexible, if not opaque forms of ownership and management. Trocki describes how even today, Chinese enterprises tend to operate through relatively autonomous local companies who benefit from external infusions of capital and management expertise.16 This was a sort of diversification that looked for synergies as much as profits, accepted few if any limitations to its depth or breadth, and resulted in complex webs of cross-ownership, cooperation, and competition.
One of the reasons for the rapid growth of trade in Đàng Trong after 1600 was the Nguyễn Lords’ policy of encouraging the mutual interpenetration of enterprise and state. The first Nguyễn Lord, Nguyễn Hoàng, adopted as his son Hunamoto Yabeiji, a prominent Japanese merchant and state envoy. Nguyễn Hoàng’s son, Nguyễn Phúc Nguyên, married one of his daughters to another Japanese merchant, Araki Sotaao.17 As China replaced Japan as Đàng Trong’s major trading partner in the 1700s, so in turn did ethnic Chinese traders and officials – many of them resident in Cochinchina for generations – assume positions at the highest levels of the Nguyễn state. Trịnh Hoài Đức was both a longstanding official in the Gia Định administration – often serving as the acting governor of Gia Định – and at the same time an active petty trader.18 General and governor of Gia Định Lê Văn Duyệt’s adopted son, the Hội An-born Chinese Lưu Tín, was both a successful merchant and the head of the office that administered Gia Định’s foreign trade.19
This interpenetration of state and enterprise was, needless to say, mutually beneficial. Trade benefited the Nguyễn state both directly through taxes and duties, and indirectly by promoting economic growth in its territories. Even more important, Nguyễn Ánh’s ability to mobilize support in the Chinese business community of Gia Định was crucial to his ability to resist and defeat the Tây Sơn movement. In return, the Chinese traders and consortiums were the beneficiaries of preferential rates of taxation, government contracts, tax farms, and monopolies. Examples of Chinese-held monopolies in Cochinchina include the “Wax Taxpayers Association,” with exclusive rights to exploit the wax in the forests of Kiến Giang, salt production, and the trade in areca nut. 20 State-related accumulation was thus an important feature of the Đàng Trong economy.
This was not to say that Đàng Trong’s business class was the pliant creature of the Nguyễn state. Far from it. Counterfeiting, smuggling, and other off-plan activities were endemic to Đàng Trong’s economy. Li Tana argues that inflation caused by the widespread counterfeiting of the state’s new zinc currency in the late 1700s helped spark the Tay Son movement. Choi Byung Wook has shown how illegal trading in rice and opium was the pretext for emperor Minh Mạng’s assertion of direct control over Gia Định/Saigon after 1832. Whether or not one accepts Minh Mạng’s contention that Chinese traders were exclusively to blame, the evidence is clear that local businessmen and officials were participating in a flourishing illegal trade in rice, opium, and other goods. The techniques traders used to circumvent Minh Mạng’s new controls sound eerily familiar to anyone familiar with business practices in Vietnam today. Chinese traders excluded from the rice trade after 1827 would register their ships under the names of Vietnamese colleagues, wives or concubines. Others might carry on activities for years using forged official documents.21 These sorts of illegal activities would have been impossible without the collusion, if not participation, of local officials. Indeed, in his response to Minh Mang’s analysis of the problem, Governor Lê Văn Duyệt pointed to the participation of government-hired rice ships in the illegal trade. Thus in 1820s Cochinchina, even off-plan activity was, in its own way, a form of state-related accumulation.
Minh Mạng’s policies towards Gia Định/Saigon and its Chinese business community after 1827 point to a final thread, namely how newly-consolidated regimes in Vietnam inevitably move to attenuate the dominant position of the ethnic Chinese in Southern Vietnam’s economy. The first emperor of the newly-united state, Nguyễn Ánh/Gia Long continued the pattern of close cooperation with the Chinese community in Gia Định. His successor Minh Mạng, however, moved not only to assert central control over the previously semi-autonomous Gia Định region, but also to limit the role of Chinese in trade and enterprise. After 1827, the Minh Mạng administration pursued policies intended to reduce Chinese participation in trade and commerce, for example effectively banning both Minh Hương and Thanh Nhân Chinese from participating in maritime trade.22 In 1832, he dissolved the Gia Định Thành Tổng Trấn (Gia Định General Government), replacing it with six provinces under the direct control of the central administration.
These policies were of dubious effectiveness and a serious source of discontent among the Gia Định Chinese. Chinese were prominent not only in Lê Văn Khôi’s uprising against the Huế government in 1833, but also in the various anti-dynastic and anti-Vietnamese movements that swept Cochinchina and Cambodia in the 1840s. Moreover, the Huế government’s repression of the various movements provoked waves of migration that saw large numbers of Chinese entrepreneurs and artisans relocate to Cambodia and Siam.23 Last, discontentment with Huế rule was a key factor in the ability of the French to gain and then consolidate control over Gia Định after 1858.
Despite this dubious precedent, upon establishing control over the entire country, successor regimes in Vietnam have in their own way all followed Minh Mạng’s lead and moved to weaken the control of Chinese over trade and enterprise in Southern Vietnam: the French after 1882, the Socialist Republic after 1975. This pattern is not an accident. Rather, it points to continuity in the underlying features of Vietnam’s political economy. This article argues that the basic feature of this political economy is state-related accumulation. Related features are the interpenetration of state and enterprise, endemic smuggling and off-plan activities, regionalism and the importance of Chinese enterprise. While these features have played out in different ways in time and space, they nonetheless constituted the underlying realities that have faced and continue to face governments in Vietnam.
This paper now turns to the ways in which these features interacted with French attempts to impose new administrative, economic, and ideological forms upon the political economy they inherited in 1858. Orthodox Vietnamese historiography divides French economic activity in Indochina into two periods, the first and second plans of economic exploitation, distinguishing between the two primarily on the basis of the increased capital flows and rapid expansion of economic activity after the end of the First World War. This article takes the focus off of the global economy and instead focuses on changes to the local political economy. 24 As a result, it divides the colonial period in four: an initial period before 1897 where the ability of French state and empire to compete in the local economy remained limited; a period from 1897 which saw the creation and early diversification of local enterprises based on monopoly revenue bases; the period after 1919 when access to capital drastically increased the scope and scale of diversification; and the period of consolidation brought on by the economic crisis after 1929.


    1. 1858-1897: same tune, but with French lyrics

Although French missionaries had been active in the region since the 1600s, a durable French economic presence in Indochina only dates from 1858 and the creation of the first French colony in the provinces of Gia Định, Mỹ Tho, and Biền Hoa. The early years of the French presence were far from conducive to rapid economic development. The various campaigns of conquest and pacification, first of Cochinchina, then of Tonkin and Annam, were disastrous for the local economy. Even in relatively quiescent Cochinchina, local enterprise was victim of a lack of coherent direction – Hémery labels this period “la longue incertitude du modèle politique et administratif” – and rule by a rapid succession of administrator-Admirals more intent on consolidating and extending French territory than promoting its industry or enterprise.25 In the main, economic policy consisted of reinstating earlier Nguyễn patents and monopolies, or inventing new ones such as opium or alcohol as the French administration scrambled to increase revenue. European enterprise in this period was confined largely to a handful of trading and shipping houses with pre-existing operations in the region’s trading hubs (Singapore, Hong Kong, Manila, and Yokohama) that allowed them to move quickly and easily into the reopened port of Saigon.26 Once installed, their operations focused on two main activities, capturing a part of the existing overseas trade previously monopolized by Chinese trading houses, and two, winning contracts to supply goods and services to the colonial state.


In this early period, the one major area of state economic intervention was the development of the agricultural potential of Cochinchina’s hinterlands. The expansion of the land under rice cultivation predated the arrival of the French, facilitated by Nguyễn canal projects that simultaneously drained land in Western Cochinchina and provided transportation links to My Tho and Gia Định. The French took up the project after 1866, and the addition of power dredges and higher levels of state investment after 1893 drastically increased the rate at which new land was opened to cultivation. Already by the 1880s, Cochinchinese rice was once again playing a major role in markets in the Dutch East Indies, Singapore and the Malay states, Southern China and Japan; by 1928 Indochina was the second-largest rice exporter in the world. While a handful of French trading houses like Denis Frères, Maison Rauzy et Ville, or Société Allantini et Compagnie were able to carve out a position in this trade, the bulk of the rice trade remained firmly in the hands of the Chinese consortiums.
In fact, this situation of expanding rice production combined with multiplying state monopolies was ideally suited to the business practices of the Chinese consortiums. From traders in the countryside providing financing and exchanging basic consumer products for paddy, through wholesaling, transportation and warehousing, to processing and export, the rice industry in Indochina was effectively controlled by a series of Chinese syndicates that set the terms of exchange at every level.27 In return for rice exports, the Chinese imported basic consumer goods from the markets of Hong Kong or Singapore: kerosene, lamps, cloth, votive products. They also sold goods made in their own Cochinchinese factories, alcohol being the most obvious example.
These integrated systems of transportation, distribution, and sales combined with access to regional circuits of trade and capital made it almost inevitable that the French administration would turn to the Chinese consortiums to administer their monopolies and tax farms. By the 1860s, a consortium of Fujian traders led by a certain Ban Hap had won control of the opium farms for Gia Định, and by 1871 another consortium of Chinese distillers had won the contract for the new monopoly over the production and sale of alcohol.28 In a similar vein, the operations of every Bank of Indochina branch – and indeed all European banks operating in Indochina – were managed by a Chinese comprador, normally the head of a prominent trading family, who provided the bank with a caution of hundreds of thousands of piastres for the privilege.29 This practice points to the way in which the early development of the Bank of Indochina, and thus of French enterprise in Indochina was based on leveraging Chinese, rather than metropolitan, sources of capital. This view is reinforced by the importance of the Bank’s operations outside of Indochina, most notably Shanghai but also Hong Kong and Singapore. In this view, the source of capital for Indochina’s development, at least before the massive inflows of French capital after 1919, in fact remained the same: the only difference was that it was now available to French entrepreneurs rather than Chinese.
This was where and how the French learned to do business in Indochina: in Gia Định/Saigon, and in close cooperation with highly capitalized, diversified Chinese consortiums with operations throughout the region. French enterprises that were able to survive in this early period did so by relying on their own access to regional trading networks, supplemented by capital from China as much as from France, and, crucially, privileged access to their compatriots in the new administration. Yet the number of French enterprises remained small, and their ability to diversify strictly limited by the dominant position of Chinese commerce. The key to the expansion and diversification of the Colonial Conglomerates after 1897 was the state’s newfound willingness to use monopolies as a tool to promote the development of French enterprise. In other words, French administrations after 1897 took the existing pattern of state-related accumulation, and ran with it.


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