Trading with China created wealth and transformed societies in Europe three centuries ago.

The 18th century is known as the “golden age of China trade.” At that time, Europe and China enjoyed the greatest expansion in trading history.

Already during the 17th century, Portuguese, Dutch and English merchants sailed the East India route with their durable ships and traded with China. They were later followed by traders from countries such as Denmark, Austria and Sweden. Direct trades were possible as a result of the Chinese Qing government’s lifting of trading bans in 1684. Trading concentrated in the port of Canton in southeastern China. By the end of the 18th century, as many as 70 ships traded at Canton during one trading season. Trading vessels had also increased significantly in volume and capacity.

The Svenska Ostindiska Companiet had a significant impact on European and Chinese trade during the 18th century. Three Europeans – Hendrich König, a Swedish citizen of German descent, Colin Campbell, a Scottish nobleman with experience gained in the Royal Navy and the Austrian Ostende Company; and Niclas Sahlgren, a wealthy tradesman’s son from Gothenburg, Sweden – together formed Svenska Ostindiska Companiet and received their first 15-year trading charter, a sort of trading monopoly, in 1731. Subsequent charters lasted 20 years each, and the voyages to China continued until 1806.

Throughout its history, Svenska Ostindiska Companiet carried out a total of 132 expeditions using 37 different vessels. The purpose of its trading voyages was primarily the tea trade. In the 1700s, tea drinking became extremely fashionable among upper-class Europeans, so there was a big demand to be filled. Other goods from China, such as porcelain, silk, spices, lacquer, ceramics, furniture and ornaments, were also highly sought after. Together, these luxuries became a status symbol for the upper class, which adopted the new habit of drinking tea in fine Chinese porcelain and filling their homes with Chinese imports. Chinese-inspired furniture and decorations known as chinoiserie also became popular among the wealthy.

A competitive edge
Svenska Ostindiska Companiet was able to make profits of more than 100 percent through re-exports to other European nations. Its competitive advantage lay in the fact that Sweden had many natural resources and products to offer – iron, timber, firearms, ropes and more. All of these were traded for silver in Cádiz, Spain, which had a large supply from Spanish colonies in Latin America. As China only accepted silver or silver coins as the form of payment, Sweden was able to use the silver obtained in Cádiz and purchase Chinese goods in return.

When the merchant ships returned from China, the goods were auctioned off to traders from other European countries at the company’s headquarters, the East India House, in Gothenburg. As time went by, however, more and more of the goods remained in Sweden. After the first two charters, the company started to suffer from financial difficulties, due to increasing competition, and the heyday of China trade in Sweden came to an end when the company was dissolved in 1813.

Despite the relatively short life span of Svenska Ostindiska Companiet, the role it played in the history of Sino-European trade was an important one. According to Bengt Johansson, an expert in the European Commission’s Directorate General for Trade and the former Swedish consul general in Shanghai, the company’s turnover was the third largest among all European traders in China during the time it was actively trading.

The substantial volume of the Swedish-Chinese trade and the good relationship between the two nations contributed to the fact that the Chinese harboured no aggressive feelings towards the trade, says Johansson, who has also been director at the Swedish Trade Council in Taipei, a consul at the Swedish Consulate General in Hong Kong and minister at the Swedish Embassy in Beijing. “We never took part in the colonisation of Asia,” he says. “Most [European] countries founded colonies in India, Malacca and Africa, but we managed to do trade without creating colonies.” This was difficult, he explains, because the ships sometimes had to sail without stops throughout the entire voyage, and the shortage of fresh water became a disadvantage.

But all in all, the trade was a positive experience. “It brought wealth to China and to Sweden,” he says. “We also gained knowledge of Asia, Asian traditions, Chinese products and Chinese thinking.”

Lost records
During his extensive diplomatic career in China, Johansson had the opportunity to work with some historians at Zhongshan University in Guangzhou (formerly Canton). He found there was a shortage of historical documents in China about trading with Europe, because most such archives were destroyed after each completed trading journey. In addition, a large part of the official Chinese documents were transported to Taiwan at the end of the 1940s, due to the civil war. The Chinese historians pointed out that the Chinese Hong merchants – private Chinese businessmen who had a charter from the emperor to trade with foreigners – were of great importance to the Chinese.

“On the Chinese side, the relationship was very much between these Hong merchants in Canton and the chief customers officers of Imperial China,” Johansson says. “The imperial government earned enormous amounts from the trade by squeezing from merchants. The system could be seen as a little strange. How was it possible that [Sweden and China] could trade [with each other] when there were no official diplomatic relations at all? It was very interesting but … until 1805, it all worked very well. I think for that reason I found it to be one of the best examples of trade between equals.”

While Europe benefited from the infusion of Chinese luxury goods and culture, the expansion of trade led the Chinese to start opening their eyes to the European world. For example, Johansson points out, the imperial Chinese government had no idea what Europe looked like or where its countries were. Scholars knew nothing of the subjects researched by European scientists and priests. Their vague idea of differences between countries lasted until the Hong merchants visited Europe around 1750. So the exchange of ideas through trade enhanced knowledge on both sides.

Looking at the trading relationship between China and Europe today and in the future, Johansson says China is successfully absorbing industrial capacity from all over the world, and Europe’s imports from China will continue to increase. The European Union, which has about a 45 billion euro deficit with China, wants to remain a free trader and not limit imports from China. “But it is difficult,” he says. “We are under pressure from many industries.”

Jörgen Gabrielson, CEO of the present-day Svenska Ostindiska Companiet, which is responsible for constructing a replica of the trading vessel East Indiaman Götheborg I and sailing it to China in 2004, hopes the Götheborg project will integrate Swedish people and business with the Chinese through exchange and communications. His plan is not only to promote Swedish business to China and the other countries where the ship will make stops along the way. “If we are going to do as in the 18th century, we’ll be bringing back goods from China,” he says. “We want Chinese companies, which want to participate and do business with European countries, to be a big part in the European common market. It’s very important because the common market is going to be a very important market for China. I think with this project we can work both ways.”