Cross-border payment by overseas Chinese merchants: A Case Study of Eu Yan Sang

This study investigates the cross-border payment systems utilized by overseas Chinese merchants from the late imperial period to the early 20th century, focusing on their role in facilitating international trade and economic integration. Operating across diverse regions such as Southeast Asia, the Americas, and Europe, overseas Chinese merchants established extensive networks that relied on innovative payment mechanisms to overcome challenges posed by distance, currency variability, and regulatory differences.

The research draws on the account books of Chinese merchants, particularly the Eu Yan Sang (余仁生) records housed in the Hong Kong University Library, to uncover the mechanisms and practices underlying their cross-border payment systems. Eu Yan Sang, a prominent Chinese herbal medicine company founded in 1879 in Singapore by Eu Tong Sen, played a significant role in the trade and distribution of traditional Chinese medicine (TCM) across Southeast Asia and beyond. As one of the oldest and most established businesses in its field, Eu Yan Sang maintained detailed financial records, offering valuable insights into the financial and trade activities of Chinese merchants during this period. These sources illuminate:

How Chinese businesses managed international payments prior to the widespread adoption of modern banking systems.

The role of Chinese merchant networks in facilitating cross-border trade.

The integration of traditional financial tools with evolving global financial systems.

The account books, meticulously maintained, provide detailed transaction records, profit margins, and insights into the use of various currencies, including silver, copper cash, and foreign coins. Through this analysis, the study reveals how Chinese merchants navigated the complexities of international trade, including currency exchange, credit arrangements, and remittance flows. It also highlights the critical role of trust, kinship, and clan networks in ensuring the reliability of these payment mechanisms in the absence of standardized financial infrastructure.

In addition to traditional practices, the research underscores the adaptability of overseas Chinese merchants in adopting and integrating Western banking practices. The Eu Yan Sang account books, for instance, reveal the incorporation of Western financial tools such as letters of credit, bills of exchange, and promissory notes alongside traditional Chinese merchant practices. This hybrid approach allowed merchants to maintain their economic dominance and expand their influence in the global marketplace, blending local financial practices with international standards.

The study further emphasizes the centrality of these cross-border payment systems to the development of transnational trade networks. Overseas Chinese merchants not only acted as intermediaries between East and West but also played a pivotal role in shaping the global financial landscape. Their extensive networks and innovative financial systems contributed to the integration of disparate economies, laying the groundwork for modern global commerce.

By examining the financial practices of overseas Chinese merchants, this research provides critical insights into the historical evolution of global trade and finance. It highlights the integral role of diaspora communities in creating cross-border financial systems and demonstrates their adaptability to regional and global economic shifts. Through this exploration, the study contributes to a deeper understanding of the historical intersections between culture, finance, and global commerce, while underscoring the enduring legacy of these merchant networks in shaping contemporary financial systems.

Zhang Wen is an Assistant Professor at the Center for Economic Research, Shandong University in China and an Associated Researcher of the 'Global Correspondent Banking 1870-2000' project. Prior to this she was a Post-Doctoral Researcher in Southern University of Science and Technology(SUSTech) in Shenzhen and Research Fellow in China Accounting Museum in Shanghai.

Zhang Wen holds her PhD in Economics from the Academy of Korean Studies. Her doctoral thesis explored the traditional accounting history, account books and merchants’ role in international business of China and Korea. She currently involves in several projects related to collection of historical materials on traditional Chinese industrial and commercial account books, research of Korean ginseng trade between 1876-1945 and changes in modern banking operations. Her research interests include East Asian economic history between 1840-1949 and the history of accounting transition, commercial network, and trade relations.