MARKETING IN PEACE AND WAR
While Huang and other sellers of medicine extended their advertising across all regions and down urban hierarchies in China and Southeast Asia, they also sustained the distribution of their advertising to these far-flung locations over time. They did so despite attempts by governments to introduce official restrictions on medical advertising in the 1930s and 1940s. After being spared any such restrictions prior to 1930, they responded by effectively postponing, deflecting, or evading new policies proposed by each successive government: Chiang Kai-shek's Nationalist government, 1927–37; the Japanese occupying forces and the collaborationist government of Wang Jingwei, 1937–45; and the Nationalists again, 1945–49.
Delaying the Implementation of Nationalist Regulations, 1927–37. When the Nationalist government came to power, it established a Ministry of Health that was receptive to long-standing demands for official regulation of "new medicine" in China. Since the passage of the Pure Food and Drug Act in the United States in 1906, Chinese and Western members of the Chinese Medical Association had been campaigning for this kind of regulation. Of all the leaders of the campaign, the one best positioned to influence official policies was Wu Liande, a Western-trained Chinese physician who first gained fame for leading a campaign against a plague of epidemic proportions in Harbin, 1910–11, and who subsequently held official appointments as a medical administrator in each of China's successive central governments (Qing, Beiyang, and Nationalist) during the first third of the twentieth century. In 1929, Wu summed up the main arguments and expressed the tenor of this campaign when he urged the leaders of the Nationalist government to levy a tax on new-style medicines. These medicines, he said, were "needless and even harmful luxuries" and were sold in "enormous" quantities in China. If they remained untaxed and unregulated, then Chinese would continue to be, according to Wu, even more vulnerable to new-style drug companies' newspaper advertising and other marketing techniques than people were in other countries: "The gullibility of the general public is proverbial in every country, but in China this takes on an extreme form, for both the educated and uneducated readily swallow all the lies and exaggerations which appear in print."
In February 1930 the Nationalist government's acting minister of health, Liu Ruiheng, responded to Wu and other advocates of regulation by issuing the "Proposed
Written by four Chinese scientists, including one Western-trained pharmacologist, the draft regulations delighted the physicians who had been critical of new-style Chinese medicines and drugstores. Upon hearing news of the proposal, Bernard Read, a distinguished research scientist at Peking Union Medical College, spoke for many doctors when he published his endorsement of the draft regulations in the National Medical Journal of China (Shanghai) and the China Medical Journal (Beijing) and expressed his relief that new-style medicines, a "group of drugs flooding the China market," would finally be put under the "most rigid control…to protect the medical profession and the public against fraud, undesirable secrecy and proprietary advertising." But this declaration of victory for the medical profession over new-style drugs and drugstores proved to be premature.
Even before the proposed regulations were announced, Huang Chujiu and other sellers of "new medicine" had already organized resistance to them. In January and February 1927, as Chiang Kai-shek's troops were preparing to take Shanghai, Huang Chujiu convened in his home two meetings of twenty of his fellow Chinese owners of new-style drugstores. At the first meeting he proposed the formation of a trade association, and at the second he announced the founding of the Shanghai New Medicine Trade Association (Shanghai xinyaoye gonghui) and the election of himself as its first president. Once before, in 1909, on the eve of the founding of the Chinese republic, Huang and a few other Chinese drugstore owners had established the Foreign Medicine Guild (Yangyao gongsuo) in anticipation of the need for a lobbying organization to deal with a new government that, as it turned out, was established with the founding of the Chinese republic in 1912. Now, on the eve of the Nationalists' founding of another new government, Huang formed a trade association in anticipation of the same need.
Huang also took advantage of his informal contacts with people who had direct access to Chiang Kai-shek. He had a close relationship, for example, with Huang Jinrong, the very first person from Shanghai to call on Chiang after the Nationalist leader's arrival in the city in 1927. Huang Chujiu and Huang Jinrong were from the same native place, Yuyao, and Huang Chujiu had cultivated a friendship with Huang Jinrong since 1917, when Huang Chujiu had constructed his first large building in Shanghai's French Concession—an area where Huang Jinrong wielded immense power because he held a position as a detective in the French police force and used elaborate networks of Chinese "disciples" (xuesheng) to control an underworld organization known as the Green Gang. Through Huang Jinrong, Huang Chujiu also formed alliances with two younger Green Gang leaders, Du Yuesheng and Zhang Xiaolin. According to an investigation in 1931 by Tan Shaoliang, superintendent in the police force of Shanghai's International
Besides befriending these powerful underworld figures, Huang Chujiu formed alliances with the second person to call on Chiang after the Nationalist leader's arrival in Shanghai in 1927: Yu Ziaqing, president of the Shanghai Commercial Federation (Shanghai shangye lianhehui). Since 1915, Yu had been a major shareholder in Huang's Great China-France Drug Store, and during the same period Huang had served with Yu in the Shanghai General Chamber of Commerce and other merchant organizations.
As head of the Shanghai New Medicine Trade Association, as a friend of Shanghai's leading underworld figures, and as a business associate of Shanghai's leading merchants, Huang Chujiu proved to be an effective lobbyist. In 1930, as soon as the Nationalist government's Ministry of Health announced its proposed regulations governing patent medicines, he formally protested in the name of the Shanghai New Medicine Trade Association, and in all likelihood he informally used his personal contacts to mobilize support for this protest. In response, the government agreed to delay implementation of the regulations. According to the draft regulations, the new laws were to be promulgated in July 1931 and were scheduled to go into effect after a grace period of six months, in January 1932. But in actual practice the regulations were not enforced in 1932, or later. In 1933, according to D. Barat, an officer in the association of licensed pharmacists in Shanghai, "all these regulations exist only on paper." He cited a survey by the Health Authorities of the Foreign Settlement, which found that 90 percent of Shanghai's pharmacies were "run by unqualified people, and the importance and sale of pharmaceutical products is in the hands of laymen." As a result, Barat complained, not only Shanghai but the country as a whole had acquired a dubious distinction: "China is regarded by smaller as well as bigger manufacturing enterprises as the only country in the world that can be flooded with all kinds of worthless medicines."
Meanwhile, advertising for these "worthless medicines" also went unregulated. In 1936 Lin Yutang wrote in his history of the press that "China is the ideal land for quack doctors, which is really a new evil arising only in modern times from the growth of periodicals." He was particularly disturbed by the large number of advertisements run by these "quack doctors" in the most widely circulated newspapers. Based on an analysis of one of China's two biggest newspapers, Shen bao, he concluded that it "is carrying on different days [in May 1936] not one, but four… ‘medical supplements' and ‘health supplements,’ run by different groups of doctors with different medicines to sell."
In January 1937 the Nationalist government promulgated a new Patent Medicine Law that closely resembled the one passed in 1930. Even if, as the government vowed, it intended to enforce this law with greater resolve, it had little opportunity to do so before the Japanese military invasion of China in the summer of 1937.
Wartime "Golden Age," 1937–45. During the Sino-Japanese War of 1937–45, the biggest Shanghai-based, Chinese-owned new-style drugstores continued to expand and extend their distributing networks outside Shanghai as well as within it. Even while many Chinese people and some Chinese businesses suffered under draconian Japanese rule, several leading Chinese-owned drugstores made informal and formal political arrangements that gave them opportunities to prosper. In fact, some of them raised sales and increased the number of their branches and franchises so dramatically that Chinese historians have characterized the wartime years as their "golden age."
Outside Shanghai, as Chiang Kai-shek's Nationalist government retreated up the Yangzi River to its wartime capital at Chongqing, the biggest Chinese-owned drugstores sent some capital and equipment along with it. In 1937 and 1938, the Great China-France Drug Store moved upriver under the auspices of the government's Commission for Removal to Sichuan (Qian chuan weiyuanhui) and converted its Chongqing branch into the headquarters for a newly founded subsidiary, the China-France Company of the Western Region (Zhongfa Huaxi qu fen gongsi), capitalized at 1 million yuan with branches in Chengdu and Kunming and franchises in smaller cities and towns.
In Shanghai, the key to new-style Chinese drugstores' political survival was their owners' relationship with the Chinese politician Chu Minyi, a close associate and brother-in-law of Wang Jingwei who founded the most prominent Chinese collaborationist government under Japanese rule. Before the war, some of these owners had dealt with Chu because of his role as a medical administrator with a special interest in pharmacology; although he never practiced medicine, in 1921 he had graduated from the University of Strasbourg in France with degrees in medicine and pharmacy, and in 1928–29 he had served on the Nationalist government's commissions on public health and national hygiene in China. In 1931, within a few months after Huang Chujiu had died, Chu had been appointed to the board of directors of the Great China-France Drug Stores by Huang's successor, Xu Xiaochu (who was also Huang's son-in-law), and after the war broke out in 1937, Xu's friendship with Chu served him and his business very well.
Between 1937 and 1941, thanks to help from Chu, Xu was able to circumvent Japanese regulations without suffering from Japanese reprisals. After 1937, when Japan occupied part of Shanghai, Xu operated his business in the unoccupied part, the International Settlement and French Concession, which were still under Western rule, and he registered it behind a Western dummy front—an American-owned drug company that pretended to own his business in exchange for a payment equivalent to. 01 percent of its total value. He and the Chinese owners of other big Shanghai-based drug companies (who used similar ruses to evade Japanese regulations) did a booming business.
In Shanghai, medicine companies benefited from rising demand as the city's population mushroomed from 3 million in 1937 to 6.5 million in 1938; and they transported goods outside the city too. Between 1937 and 1941, some of the big
Though prosperous in the short run, Xu and other Chinese owners of drug companies were well aware that Japan might soon seize the Western concessions in Shanghai, and they relied on Chu Minyi to protect them in that eventuality. In 1940, as soon as Wang Jingwei had set up his Japanese-sponsored government at Nanjing and had named Chu Minyi as the foreign minister and vice-president of his Executive Yuan, Xu elevated Chu from his position as member of his Great China-France Drug Store's board of directors to that of chairman of the board; some other big drug companies made similar efforts to ingratiate themselves with Chu. At the end of the following year, 1941, when Japan bombed Pearl Harbor and invaded much of East Asia, including Shanghai's International Settlement and French Concession, Xu's company was not taken over by Japanese authorities or subjected to "military management" as some other Chinese-owned enterprises were. Thanks to Chu's intervention, it and the other businesses under his protection remained under the original Chinese managers' control.
For the duration of the war, 1942–45, Xu and some other Chinese owners of businesses continued to benefit from efforts by Chu and others in Wang's government to secure greater political autonomy for Chinese capitalists and financiers in Shanghai. As a result, Xu and other Chinese steadily increased their authority over distribution. At first, in April 1942, all Chinese industrialists had to distribute through a Japanese administrative organization, the Central China Commission for Control of Medicine (Huazhong yiyaopin tongzhi lianhehui), and although Xu held the highest position given to a Chinese in this organization, he was still subordinate to its Japanese head, Nakajima Seiichi, a manager in the Japanese-owned Takeda Pharmaceutical Company. A year later, in March 1943, after lobbying by Chu and others in Wang's government on behalf of Chinese capitalists, the Japanese authorities established at Shanghai the National Commission for the Control of Commerce, which was characterized by the Japanese as a "self-governed merchant group" and was composed of Xu and other leading Chinese businessmen in the city. Under this umbrella organization, Xu and other Chinese owners of drugstores held top positions in its subunit, the Shanghai New Medicine Trade Association (Shanghai xinyaoye shangye gonghui), founded in April 1943, and they served in these and other administrative positions in Wang Jingwei's government until the end of the war.
Postwar Expansion. After the war, Chinese owners of drug companies flourished even though their wartime political patrons did not. While the Japanese
|SOURCES: Shanghai shehui kexue yuan jingji yanjiu suo, comp., Shanghai jindai xiyao hangye shi(Shanghai: Shanghai shehui kexue yuan chubanshe, 1988), 79, 350–57; Chen Xinqian and Zhang Tianlu, Zhongguo jindai yaoxue shi (Beijing: Renmin weisheng chubanshe, 1992), 31, 33–34, 39–41, 43.|
Politically well connected, Xu's Great China-France Drug Store distributed medicine and advertising extensively in postwar China. It was finally free of its long-standing rival, Japanese-owned Humane Elixir, which retreated to Japan with the defeated Japanese military forces in 1945; and the Chinese company's management filled the vacuum by casting a wide net for its own Human Elixir. In 1946 it signed "special sales contracts" (teyue jingxiao hetong) specifying sales territories, setting commissions, granting credit, and taking responsibility for advertising with thirty sales agents in fifteen Chinese provinces and three Southeast Asian countries, and in 1947 its staff formulated an advertising plan for blanketing all regions of China with billboards and posters at every level of the urban hierarchy, down to the levels of county (xian) and rural market town (zhen). By 1949 it reached all nine of China's macroregions and all bordering regions except Tibet, and it sold 75 percent of its product, Human Elixir, outside Shanghai.
Meanwhile, it advertised intensively as well as extensively. In the late 1940s its opportunities for intensive advertising increased because new-style drugstores proliferated, as shown in table 2.3. Thus in the late 1940s the Great China-France Drug Store and other sellers of "new medicine" had an unprecedented opportunity to advertise in more than a thousand new-style drugstores in China's three biggest cities alone, not to mention the rising number opened in other cities and towns.
Although civil war between the Nationalists and Communists began in 1946 and raged throughout the late 1940s, not until late 1948, when the Communists'
On January 1, 1951, less than two years after the Communists had won the civil war and founded the People's Republic, the new government took over the marketing of Human Elixir in China. The government recruited the Great China-France Drug Store's manufacturing division, Zhonghua Medicine Mill (Zhonghua zhiyao chang), to be the first pharmaceutical company to sign an official purchasing agreement (baoxiao hetong), which guaranteed that the government would supply all of Human Elixir's raw materials and would buy and distribute all of its finished goods. Lacking these guarantees, Human Elixir's rivals could not compete with it, so they soon either signed similar purchasing agreements with the government or became more fully nationalized as jointly managed companies (gongsi heying). On January 1, 1956, the Great China-France Drug Store's Zhonghua Medicine Mill finally became a jointly managed company—it was the last major pharmaceutical plant in China to do so—but by then it had lost all control over the marketing of its goods. The signing of its purchasing agreement with the government five years earlier had effectively brought to an end the marketing of medicine in China by itself and other large-scale presocialist commercial enterprises.