Marketing of Pontian Smallholders’ Rubber: Mutual Aid Arrangements Among Hokkien Dealers

Abstract

This chapter will describe the marketing of Pontian smallholder’s rubber through the various levels of middlemen, and the mutual aid arrangements among Hokkien dealers to facilitate them in their middleman roles. Section 1 will provide the background for understanding the Chinese middleman system involved in the marketing of smallholders rubber in Singapore and West Malaysia.¹ Section 2 will describe the organization of the marketing of Pontian smallholders’ rubber, paying special attention to the functional specialization and division of labor among the various levels of middlemen. Section 3 will describe the various forms of mutual aid arrangement Hokkien dealers make among themselves for the organization of: (a) contract-protection; (b) acquisition and transmission of price and non-price information; (c) credit; and (d) debt settlement. Section 4 will provide a summary of ten case studies of successful rubber dealing firms that began as small firms and expanded into large firms. The case studies provide insights into the dynamics of Chinese firm expansion, the patterns of integration, as well as further insights into forms of Chinese mutual aid. My concluding remarks are contained in Section 5.

This chapter is from chapter three of my Ph.D. dissertation (Landa 1978) entitled The economics of the ethnically homogeneous Chinese middleman group: A property rights-public choice approach. Virginia Polytechnic Institute and State University.

Appendices

Appendix A

Table 1 Number of dealers in West Malaysia, December 1967 by trade level

• Number of Dealers by Ethnicity. There were about 800 Malay dealers in West Malaysia in 1967. This figure was obtained from the Department of Statistics, Kuala Lumpur (private communication). The Malay dealers were concentrated especially in four states: Kedah, Perak, Kelantan and Terengganu. All 800 Malay dealers were assumed to be village dealers. This assumption is based on Lim Sow Ching’s (1968, p. 17) findings that Malay dealers in Selangor in 1964 had monthly average purchases of only 122.3 piculs per dealer. The majority of second level dealers and packers in Malaysia in 1967 were Chinese. This information was obtained from Mr Ng Choong Leong, Statistician of the Rubber and Oil Palm Statistics Section, Department of Statistics, Kuala Lumpur, Malaysia.

Appendix B

2.1 Hokkien-Chinese Dominance of the Smallholders’ Rubber Trade, 1969

Evidence that a specific Chinese ethnic group, the Hokkiens, dominate the trade in smallholders’ rubber in 1969 can be seen from the following facts:

1. There were 221 dealers operating in Selangor in 1965. According to Lim Sow Ching (1968, p. 14), “Except at the exporter level, about 80 per cent of the dealers were Chinese and nearly all of these belonged to the Hokkien clan. The export trade was handled by both Chinese and European dealers, however, mainly the former.”

2. The sample questionnaire survey of 19 Pontian dealers in 1969 revealed that 17 of the 19 dealers were Hokkiens. The remaining two, a Teochew and a Hakka, were village dealers.

3. All seven rubber dealers—rubber tycoons in Singapore and Malaysia, including the three largest rubber packing-exporting firms, listed in Sung Chek Mei (1969) (Ed.) Who’s Who in Singapore and Malaysia for 1969 were Hokkiens. See Table 1.

4. The smallholders’ rubber trade in Singapore and Malaysia in 1950 was dominated by six clans: Tan, Lee, Ng, Teh Lim and Gan. See Table 2.

5. Six clans dominated Hokkien middleman group was confirmed in my 1969 interviews with Mr Tan Yeok Seong,¹ Dr Ho Pao Jin² and Professor HsuYun Ts’iao.³

Table 1 Rubber dealers included in “Who’s Who in Singapore and Malaysia, 1969”

Table 2 Dominance of Six Clans in the Committees of Rubber Associations in Singapore and Malaysia, 1950

Appendix C

3.1 Notes on aspects of my fieldwork, 1969

Our procedure for securing primary data included:

• A. A questionnaire survey of 19 dealers in Pontian district, and 8 dealers in Singapore;

• B. Depth interviews with 13 dealers in Singapore and Selangor.

• C. A questionnaire survey of 50 Malay smallholders in Pontian district.

The fieldwork was undertaken in Singapore and Malaysia during the six months period, July-December, 1969, and was supported by a grant from the Agricultural Development Council, Inc., U.S.A.

3.1.1 A. Questionnaire Survey of 19 Pontian Dealers and 8 Singapore Dealers

Pontian district is one of 8 districts in Johore; Johore being the southern-most state of Malaysia.

• Basis for Selecting Pontian District. The main reasons for choosing Pontian District for our interviews with village and town dealers were:

• (a) its proximity to Singapore, the writer’s home base;

• (b) its importance as a smallholder rubber producing district. Its importance can be seen from the fact that it was one of the 11 districts, out of a total of 72 districts in Malaysia, that produced over 10,000 tons of smallholder rubber in 1967; Pontian’s production being 10,399 tons.⁴

• (c) the sizable number of dealers operating in Pontian district: it was one of the 32 districts, out of 72 districts, which had 40 or more licensed dealers operating in the district; Pontian had 48 dealers operating in the district in 1967.⁵

• How sample dealers were chosen. Information from the Pontian Rubber Dealers Association revealed that there were about 49 licensed dealers in Pontian in 1969, of whom about 40 were village dealers and 9 were town dealers. All nine town dealers were Chinese, while at least thirty of the forty village dealers were Chinese. All Chinese dealers were members of the Pontian Rubber Dealers Association. A sample of about 19 to 20 dealers to be drawn from the members of the trade association were decided upon.

The procedure for selecting Pontian village dealers for interview was as follows. A list of the firm members of the PRDA was obtained. The list of members were classified according to the specific areas in Pontian in which they were operating; the firms were also identified as to their trade level. The population from which the sample was to be drawn was therefore clearly defined. Roughly, every fourth firm on the list was selected to be interviewed. If the fourth firm so selected turned out to be a second level dealing firm, the firm was dropped and the next village dealing firm that appeared on the list was then chosen. Thus there was some sort of random sampling of the Chinese village dealers chosen for interviews. Twelve village dealers and seven town dealers were interviewed.

Since the bulk of Pontian smallholders rubber flowed south to Singapore dealers, the latter also had to be interviewed. Six packers and two commission agents in Singapore were interviewed. Since very large packing firms dominate the packing level, a study of the activities of packing firms should, whenever possible, include these dominant firms. The larger of the packing firms were therefore chosen for interviews. Clearly the six packers chosen for interviews were not randomly selected.

• The questionnaire schedule. The questionnaire schedule is shown in Exhibit I below.

• How the Survey was conducted. The questionnaire survey of nineteen Pontian dealers was mainly carried out by the writer’s research assistant, Mr. Goh Choo Keng—a graduate of Nanyang University—who is fluent in the Hokkien and Malay languages. The survey of eight Singapore dealers was carried out by myself together with the writer’s research assistant, Miss Gan See Khem, a graduate of University of British Columbia.

3.1.2 EXHIBIT I--Dealer Questionnaire Schedule

• (1) Volume of rubber purchased in 1969?

• (2) How do you purchase your rubber?

  • (a) at the farm

  • (b) send lorry to farm to fetch rubber

  • (c) at your own premise

  • (d) others

• (3) How many customers regularly sell rubber to you?

• (4) What proportion of transactions are conducted:

  • (a) on credit

  • (b) cash

  • (c) others

• (5) How much cash did you advance, and at what rate of interest?

• (6) What is the total amount of “bad debt”?

• (7) How do you deal with bad debt:

  • (a) composition

  • (b) more time

  • (c) sue in court

  • (d) break off relations

  • (e) no more cash in future

  • (f) others

• (8) Who do you sell your rubber to? How many buyers?

  • (a) small town dealer

  • (b) city-town dealer

  • (c) direct to Johore Bahru? Kuala Lumpur? Singapore?

  • (d) export directly overseas

  • (e) others

• (9) Where do you store your rubber?

  • (a) warehouse

  • (b) rented premises

  • (c) others

• (10) What facilities do you own? How much investment?

  • (a) smoke house

  • (b) lorry

  • (c) boat

  • (d) others

• (11) How do you transport rubber to your buyers? How much transportation cost?

  • (a) railroad

  • (b) road

  • (c) boat

  • (d) others

• (12) What other line of business are you in?

• (13) How do you obtain price information from: Johore Bahru? Kuala Lumpur? Singapore?

  • (a) newspaper

  • (b) telephone

  • (c) direct contact

  • (d) others

• (14) What proportion of small holders’ rubber do you access as:

  • (a) Grade: 1 2 3 4 5

• (15) Personal data of dealer:

  • (a) name

  • (b) ethnicity

  • (c) age

  • (d) how many years in business

3.1.3 B. Depth Interviews with Thirteen Dealers in Singapore and Kuala Lumpur

The purpose of these depth interviews was to secure as much information as possible from those interviewed regarding the following aspects: (a) horizontal and vertical integration arrangements of the firm; (b) the history and growth of the firm; (c) the economic and social connections between the dealer interviewed and the dealers (and the number) he traded with; (d) financing the trade in smallholders’ rubber; (e) the types of contract uncertainty, and how dealer cope with it; and (f) how dealer obtained information; (g) how dealer settled debts; (h) why the Chinese emerged to dominate packer roles; (i) roles of Chinese associations, including the Chinese Chamber of Commerce and Industry in Singapore and Malaysia.

Miss Gan See Khem and myself usually went together during these intensive interviews, so that one of us could take extensive notes during the interviews. Whenever permission was granted, depth interviews were also tape recorded.

3.1.4 C. Questionnaire Survey of Fifty Malay Smallholders in Pontian District

Only two questions from the questionnaire survey of fifty Malay smallholders in Pontian District have been used in this chapter. My assistant, Mr. Goh Choo Keng interviewed the Malay smallholders (This questionnaire survey was designed for a larger project “The Impact of Chinese Middleman on Peasant Supply Response.”) The relevant questions are as follows:

• 1. Tanah di-gunakan untok chochok tanam(Land farmed)

  Tahun (Year)	Jumlah Ekar (No. of Acres)
  1969
  1968
  1967

• 2. Bahan Penghasilan: Tanah di-gunakan untok sa-suatu tanaman, hasil tanaman, dan harga-nya(Production data: Land used for certain crops, output, selling price)

  Jenis tanaman	Tanah di-gunakan (jumlah ekar)	Hasil Tanaman	Harga yang diterima	Bila di-jual
  (Name of crop)	Land used in (acres) -	(Output)	Price received	When sold
  Getah
  (Rubber)
  1969

Appendix D

4.1 Trading Networks of 16 Rubber Dealing Firms

Fig. 1

Chuan-chow Hokkien packer 1 in Singapore

Fig. 2

Chuan-chow Hokkien packer 2 in Singapore

Fig. 3

Chuan-chow Hokkien packer 3 in Singapore

Fig. 4

Chuan-chow Hokkien packer 4 in Singapore

Fig. 5

Yung-chung Hokkien packer 5 in Kuala Lumpur

Fig. 6

Yung-chun second-level dealer 6 in Kuala Lumpur

Fig. 7

Chuan-chow Hokkien second-level dealer 7 in Kuala Lumpur

Fig. 8

Yung-chun Hokkien second-level dealer 8 in Kuala Lumpur

Fig. 9

Chuan-chow Hokkien second-level dealer 9 in Pontian district

Fig. 10

Hokkien second-level dealer 10 in Pontian district

Fig. 11

Hokkien village dealer 11 in Pontian district

Fig. 12

Hokkien village dealer 12 in Pontian district

Fig. 13

Hokkien village dealer 13 in Pontian district

Fig. 14

Hokkien village dealer 14 in Pontian district

Fig. 15

Teochew commission agent 15 in Singapore

Fig. 16

Foochow commission agent 16 in Singapore