The Chinese in the Philippine economy, 1898-1941 : a study of their business achievements and limitations

Abstract

The Philippines during the early 20th century had an environment that was conducive to economic growth. The introduction of the rule of law, free competition, economic reforms, infrastructure projects and free trade with the United States provided opportunities to all players in the growing economy. An evolving ethnic Chinese minority was both a product of and contributor to the growth process. Across the community, there was a general pattern of upward mobility, achieved mainly during the 1910s and 1920s when many were able to exploit niches emerging especially from the domestic economic sector. A majority of those who succeeded in creating businesses for themselves moved from newly-arrived immigrants into salaried employees, storekeepers, and big or small businessmen of all kinds, and they assumed the roles of middlemen and to a lesser extent manufacturers in the production of goods and services for Filipino consumers. Only a small group of the Chinese were able to become eminent business leaders through exercising their entrepreneurial abilities. In the process of economic pursuits, the business achievements and limitations of the Philippine Chinese were largely attributable to their sojourning mentality and ethnic-cultural background. Such factors as motivation to succeed in a host country, personal efforts and business skills, as well as ethnically-based xinyong relationships, distribution networks and trade organizations gave Chinese important advantages over Filipino competitors to seize economic opportunities emerging during these years. Over time, they achieved predominance in various domestic-market-oriented commercial activities, were well represented in financial and light industrial sectors, and increased their aggregate investments in the local economy. But these same factors contributing to their success also imposed some limitations on the Philippine Chinese. Few of them were able to exploit opportunities arising from the Philippine export sector partly because of the constraints of a sojourning Chinese investment attitude. Most of them created small family firms which were a source of both strengths and weaknesses. Not only did these family businesses have internal problems like sibling rivalry and succession, they tended to compete fiercely among themselves in price term in over-crowded lines of commerce. All of them, as members of a comparatively economically successful but politically powerless alien minority community, became scapegoats and targets of discrimination by the insular government. Meanwhile, a younger generation of Chinese leaders who were better educated and more ready to participate in the affairs of Philippine society began to arise after 1919. They became the principal business and community leaders to try to protect the Chinese stakes amid the upsurge of Filipino (economic) nationalism and the Filipinization movement. Together with the impact of the Depression on the Philippine economy as well as the inroads made by Japanese and Filipino business competitors, the Chinese community found that the period from 1930 to 1941 was one of relative economic stagnation and uncertainty over their future in the archipelago.