Market Approaches to Dealing with Cotton Adulteration in Early Twentieth-Century China

Abstract

Regulations alone are not always effective in preventing dishonest practices in commerce. This chapter examines various methods to ensure quality in international trade through a case study of the trade in cotton fiber in early twentieth-century China. Dishonest practices, such as adulteration , emerged in raw cotton exports from Hubei Province. At the beginning of the twentieth century as demand for cotton increased in response to the growth of the spinning industry in Japan and Shanghai . The demand for cotton suitable for machine spinning was high and merchants stressed the importance of the quality of the cotton they purchased. Moisture content arose as a problem at the time that the Chinese cotton market was undergoing rapid changes in response to the increased demand. As adulterated cotton contributed to the rusting of machinery, this problem was a serious problem for buyers.　The moisture content problem arose because of changes in transaction methods and the surfacing of differences in understanding of the trading methods. This problem was resolved when parties to the trade began to send and respond to clearer price signals. Through the emergence and resolution of the moisture content problem, trust relations were built between Japanese trading firms and Chinese merchants/farmers, based on the understanding that higher-quality goods could be sold for higher prices.

This chapter is the result of research supported by the Japanese Ministry of Education: Keio University/Kyoto University Joint Global Center of Excellence Program on Raising Market Quality and Integrated Design of “Market Infrastructure”. The chapter is based on an article that originally appeared in Shakai Keizai Shigaku 76(3):83–99 (November 2010). The English version has been substantially revised.