Shanxi enjoyed a long history of business investment. Early, even before the Qin Dynasty (221-206BC), the business trade had already emerged in the southern part of Shanxi. According to a description of that time: "The market starts at midday, when people from all directions meet together with all kinds of commodities. People trade with each other until everybody gets what he or she wants."

In the Sui (581-618) and Tang (618-907) dynasties, new commercial towns appeared, such as Zhangzhou, Taigu, Pingding, and Datong. After Taiyuan City became the northern capital of the Tang Dynasty, Shanxi saw a business boom.

During the Song Dynasty (960-1279), famous regional merchants included merchants groups from southern Sichuan (Shu Nan) and northern Sichuan (Shu Bei ). Shanxi and Hui merchants also became well known. At that time, Shanxi bordered the Song and Liao dynasties. Song needed to import warhorses from Liao, while the latter was also in need of handicrafts from the former. Shanxi hence became an important trade market then.

Merchants Group

When it came to the Yuan Dynasty (1271-1368), the business activities were inevitably affected by war to some extent. Nevertheless, the separation of Song, Liao, and Jin ended with the unification of Yuan, which actually enlarged the territory of business activities. From the Travel Journal of Marco Polo we could learn that, "Merchants original from Taiyuan to Pingyang (Linfen) spread all over China, acquiring huge benefits."

The rise of Shanxi merchants could be dated back to the "Kai Zhong Policy" in Ming Dynasty, in which government officials commissioned merchants to transport food supplies. Besides, Shanxi had rich mineral resources, while the handicraft and manufacturing industries also achieved considerable scale, which provided a substantial base for the merchants' development.

At the same time, due to the dense population in southern Shanxi, merchants had to travel to other parts of China to gain their living. As a result, Shanxi merchants could be found all over China. Once there was a saying in Beijing that "Most of the rich merchants in Beijing come from Shanxi."

The business competition became ever more furious over time. So to strengthen their own power, Shanxi merchants began to organize into merchants group. At first, it was the rich merchants who employed local business people. Later, it developed into "Dong Huo Zhi ," which was similar to the current joint stock system. This pioneering work of Shanxi merchants was the reason why their organization could last for a long time.

Although Shanxi merchants emerged as a regional group in the Ming Dynasty, yet it was in the Qing Dynasty that they enjoyed their full bloom, with the set up of the guildhall as a symbol. The guildhall was designed for the communication and connection of Shanxi people at the beginning; later it became an organization of self-protection for the merchants.

The Strongest Merchants Group: In Qing Dynasty

Shanxi merchants became one of the, if not the most, successful and powerful merchants groups in China. They were viewed as equals to Italian merchants in world economic history. The development of business not only brought people wealth, but also changed the traditional belief of "He who excels in study can follow in the career of an official."

The saying went that, "It's better to have a connection in a teahouse than to have a large amount of money" and "To be a government official is not as good as to work in a tea house or bank." Teahouses and banks were both hot industries at that time.

In the Qing Dynasty, Shanxi merchants were listed at the top of merchants groups in China, with a good reputation in Asia and even Europe. They excelled especially in three industries: camel teams, ship teams, and draft banks.

Camel Team

Camel teams, one of the important Shanxi merchants groups, specialized in transportation by camel, and tea was their main product. The merchant's specialty was that they were in charge of every aspect from buying, processing, and transporting fresh tea, to selling the tea in different destinations.
Shanxi merchants purchased several tea mountains along Fujian, Hunan, Hubei, Zheijiang, and Jiangsu provinces, acquired fresh tea, and processed into brick tea, and then by road or river delivered the products to their franchise stores. Their tea mainly went to Mongolia and Russia. The transport of tea was quite a dangerous job at that time.

Ship Team

Ship teams emerged in the middle of the Qing Dynasty. With the development of business and commerce, there was an increasing demand for copper, which was used for minting. Shanxi merchants then began to organize ship teams to import cooper from Japan. Jie's and Fan's were all famous "merchants of foreign copper."
Even though camel and ship teams enjoyed a good reputation, the greatest applause went to another industry: Shanxi draft banks.

How Could Shanxi Merchants Thrive for Hundreds of Years?

How could Shanxi merchants stay at the top of China's business world throughout the Ming (1368-1644) and Qing (1644-1911) dynasties? And why did so many Shanxi people take to business? In a sense, this was determined by both geographical and historical factors. At the same time, the spirit of Shanxi merchants was another important reason for their prosperity. They showed no fear towards any kinds of difficulties, which were described by Western scholars as "the Spirit of Shanxi," or more precisely, "the Spirit of Shanxi Merchants."

The Barren Soil

Shanxi is not a good place for crop production. So throughout the ages people had to earn their living through business. The earliest record of this can be found in History Record. According to other historical literature, the southern part of Shanxi was not able to provide enough food for residents, so people had to do business in other areas. Yet few people in north Shanxi needed to do so.

Beginning in the Ming Dynasty , the arable soil became more precious due to the increasing population. Therefore, more and more Shanxi people began to leave their home to do business.
Most Shanxi merchants were originally miserable farmers with little property. They were forced to start their business from scratch. When they obtained some profits, they became models for neighborhood, which gradually led to the creation of merchant groups.

A Place of Strategic Importance

Bordering the northern section of the Great Wall , Shanxi lay next to the nomads of Inner and Outer Mongolia. South Shanxi contained plains for agriculture. Therefore, Shanxi lied in the junction of the stock raising, agriculture, and handicraft industries.