CHAPTER 1

A Small Business

Teahouses in Sichuan were unique. Teahouses as a topic ofconversation seem trivial; they can be found everywherein Shanghai, Suzhou, and Beijing.... But none of themcan match those of Sichuan.... I entered Sichuan fromthe north and saw teahouses beginning in Guangyuan, anorthern city. The deeper inside Sichuan I traveled, the moreteahouses I saw. When I arrived in Chengdu, I found moreteahouses than I had ever seen before. There were manystreets in Chengdu, and nearly every one had two or threeteahouses, always full of customers. In the large teahouses,such as those on Warm Spring Road (Chunxi lu) and byJade Belt Bridge (Yudai qiao), which could serve a fewhundred people, waiters carrying kettles—there were a fewdozen kettles of boiled water in each teahouse—quicklyran from one table to another. The teahouse bustled withactivity; the atmosphere in no other place was comparable.

—Huang Shang, "Chaguan" (Teahouses)

HUANG SHANG'S DESCRIPTION from 1943 hints at the importance of theteahouses of Sichuan in general, and of Chengdu in particular, in daily lifeand in commerce. The teahouse in every respect was a small business becauseit operated with little capital, occupied a small space, had few employees,and generated meager profits. Most teahouse proprietors were smalltraders who were precariously balanced on the line between the poor andmiddle class. The term "small business" (xiao shangye) was applied universallyto the teahouse; that term appeared in official documents, local newspapers,and daily conversations. Moreover, teahouse owners identified themselvesas "small business" proprietors. Petitions to the local government for helpoften emphasized teahouses as "small businesses with little capital" (xiaobenshangye). Large teahouses, which had more capital, occupied huge spaces,served hundreds of patrons, and earned more in profits, constituted only asmall percentage of the teahouses in Chengdu. The teahouse as an institutionsucceeded because teahouses found ways to survive and even thrive in theface of severe competition from other teahouses.

Studying the teahouse offers an opportunity to scrutinize small businessesas a whole. Economic historians of China have undertaken significant studiesof the operation of modern factories and big companies, but few haveanalyzed small shops. The few studies of traditional firms focus on large, successfulestablishments. Teahouses were an important part of the small businesstrade in Chengdu and developed unique approaches to managementissues such as accumulating capital and attracting customers. Therefore, astudy of the teahouse trade can shed light on the role of small businessesin general in urban commerce and economic life. This chapter examinesthe business aspects of teahouses, from their number to the size of theiroperations. This chapter identifies the forms of capital and ownership of theteahouse and shows that establishing a teahouse did not require a large financialinvestment; ordinary people could enter the business, and most proprietorswere simple people who struggled to make a living. It also analyzeshow teahouses were taxed and how teahouse owners sought to ease theirtax burden, questions that were closely aligned with the profitability andsurvival of teahouses. Through a close examination of some representativeteahouses, we can see that to survive a teahouse had to be very competitiveand that while teahouses shared some common business experiences, eachalso implemented unique practices.

This chapter reveals how traditional small shops fought to retain theirtrade in the face of new industries and new government regulations.Through the first half of the twentieth century, Chengdu was basically aworld of small shops, of which the teahouse was emblematic, and did nothave many modern factories or large companies until the establishment ofthe People's Republic in 1949. Small shops accounted for the vast majorityof the city's economic activity and could be found on almost every street,from commercial centers to remote alleyways. Handicrafts and items fordaily use—shoes, hardware, textiles, bowls, wooden wares, clothing, and soforth—were made and sold on the spot. On the main streets, row upon rowof small shops sold domestic and imported goods, ranging from food andutensils to medicines. People lived very close to these shops. These smallbusinesses provided a livelihood for many lower-class people and made thecity seem prosperous and vital.

Beginning at the turn of the century, foreign products, new industries, andgrowing state power increasingly influenced Chengdu's economy, resultingin a confrontation between traditional shops on the one hand and modernfactories and companies on the other. Although the wave of modernizationand Westernization failed to dislodge Chengdu's traditional economic structure,the state power that pushed the trend was sufficient to interfere withmany aspects of small business operations. This intervention can be seen inthree stages. The...