How one company survived two world wars and a changing China to make roots in Hong Kong
Michael Green does not have time to pause and reflect on the past. The 78-year-old chairman of Arnhold & Co may have handed most of the decision-making at the building materials and engineering equipment business to his son Daniel, 44, but he is still closely involved in the 152-year-old company, which his father, followed by Green himself, salvaged after the second world war.
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He must also juggle the demands of various charitable commitments: he is chairman of the Incorporated Trustees of the Jewish Community of Hong Kong, responsible for the historic Ohel Leah Synagogue, in Mid-Levels, and the Jewish Cemetery, in Happy Valley, for example. He complains that Judith, his wife of 50 years, is insisting on a holiday to the Galapagos Islands because he may miss important emails due to patchy phone coverage.
Nevertheless, there are some memories a busy schedule will never erase, and for Green, one of those involves Spanish floor tiles and tinned fish.
For three horrific years (1942-45), he, alongside his mother, Louisa, was held in Japanese internment camps in the Philippines. They had been evacuees sailing from Shanghai to Australia when seized. All the while in captivity, his mother was unsure whether her Hong Kong-born husband, Maurice, had survived the Japanese invasion of Shanghai, where he had stayed on as a senior manager at the company.
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"My memory of Santo Tomas camp [in Manila] includes a big sports hall with Spanish tiles on the floor, and small tins of fish," Green says. "I survived because my mother gave me her food ration."
He remembers, too, the filthy conditions, the every-man-for-himself attitude of starving inmates and his mother having an operation without anaesthetic. In the late 1980s, he and Judith decided to revisit the site.
"We went to Santo Tomas. The local university was our first camp. I couldn't recognise it," he says. "Then, I noticed some of the wooden floorboards were chipped and, when I looked closer, I saw that they had covered up the terracotta Spanish tiles. It was gratifying to have old memories confirmed. I guess traumatic things stay with you."
Memories may resurface unbidden, but giving those memories a wider, historical perspective requires systematic research. Green wanted that perspective for his children but had little time for investigation. His knowledge of Arnhold & Co was limited to what he had learned from his late father, who joined the company as a young engineer in the 30s and became its biggest partner in 1959. So, two years ago, he commissioned Hong Kong-based journalist Vaudine England to unearth the full story.
"The first thing I needed to find out was exactly where and when the company was founded," England says. "Thanks to a clue from the Carl T. Smith Collection, a very special archive on Hong Kong, I knew when to look around in the old newspapers, which, in those days, published announcements of all kinds of company and personal business. So I found the notice that said a company called Arnhold, Karberg and Co was opened for business, in Hong Kong, on September 11, 1866."
"Another discovery came about only because I drove down to a tiny village in south England and knocked on doors until I found a neighbour who knew a direct descendant of one of the original founding families," England says. "That descendant had died but through this kind neighbour I found the next generation of Arnholds and so got family photographs and more."
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The result of England's work is a new book called Arnholds: China Trader, which is a forensic account of early trading along the China coast and life in bygone treaty ports. And it is particularly interesting today since China's determination to become a mighty political and military power under President Xi Jinping is accompanied by a drumbeat of resentment about its 19th-century defeats.
The late Qing dynasty (1644-1911) saw China crippled by corruption. Taking advantage of the situation, foreign powers used their military strength to win the right to import and export through China's treaty ports - as well as the European colonies of Hong Kong and Macau - and to set up trading posts replete with the sporting clubs, Masonic lodges and amateur dramatic societies of home.
The Opium war (or how Hong Kong began)
The company's first Canton office, set up in 1872 on Shameen Island (Shamian Island), was an elegant, three-storey affair with living quarters. Photographs from the time show a large inspection room containing bundles of raw silk, but the company soon expanded into all areas of trade between China and the West: silk, skins and agricultural products, such as sesame seeds, outbound; cotton and oil coming the other way.
Their German-Danish background suggests they were not opium importers: that lucrative business was dominated by British firms with access to supplies from colonial India. Later, when the company was run by Arnhold's sons Harry (born 1879, in Hong Kong) and Charles (born 1881, in London), it would use its German credentials and that country's reputation for engineering excellence to sell machinery and firearms to China. This, however, would put it in hot water during the first world war.
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For most of the tumultuous first half of the 20th century, traders along the China coast refused to be distracted by politics. In 1910, one of the first revolutionary uprisings, a precursor to the full-blown event the following year, happened on the doorsteps of the foreign merchants in Canton, but Arnhold, Karberg & Co showed no sign of pulling back, proudly exhibiting its latest products - a switchboard, fire trucks, surveying instruments, small arms and a model of a German torpedo boat - at a China trade show.
Most of Hong Kong was unaffected when Britain declared war on Germany in 1914 but German nationals were interned and their businesses liquidated.
"The German Club was where St Joseph's College [in Central] is now, and the Hong Kong Club used to play bowls with them," says England. "Then the war started, and former friends, sport partners, were rounded up and sent to a camp in Hung Hom Bay."
A 1915 article in the South China Morning Post gave a sense of how nasty things were getting for businesses with German connections. On May 24 that year, a report from Newchwang - a northern treaty port now called Yingkou, in Liaoning province - suggested that the trading company had been boasting about the damage its German weapons had inflicted on the British navy. "Arnhold Karberg & Co are circularising expresses in Chinese, supplied from Shanghai, which tell the Chinese how many British ships have been sunk by them," the article read. "This firm also adopts the changed name wheeze to export cargo in allied ships."
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By now the company was being run by Charles, an Oxford University graduate, and Harry Arnhold. The brothers fought back, insisting they were British by dint of their places of birth. What's more, they took part in the (quintessentially British) Shanghai Paper Hunt, they played or umpired cricket, they rowed in regattas and Harry's wife knitted socks for the British war effort.
In 1917, they formed a new company called Arnhold Brothers & Co and, technically at least, severed ties with German partners in the old firm. They also argued that since Arnhold's creditors were mostly British banks, it was Britain that would lose out if they were prevented from doing business. That would win the argument, but not before concerted efforts were made by rivals to undermine the company.
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Writing to a colleague in Peking on July 14, 1915, the British consul general in Shanghai, declared, "[Harry] Arnhold has as a Jew no national feeling where profit is to be got and he is as full of excuses and subterfuges as an egg is of meat."
In another note, he harrumphed, "The business of Mr Arnhold [...] is conducted in such a way that it amounts to an open scandal [...] In peace times they elected to run with the German hare; it appears unfair to their British competitors that they should be allowed in time of war to hunt with the British hounds."
Fluidity of identity, however, is something the Greens - whose original Romanian family name has long since been forgotten - have had to grapple with more than most. Like Charles and Harry Arnhold before him, Green, whose English accent came from King George V School, in Kowloon, ended up being British. The family held British National (Overseas) passports, but in 1990, London granted 50,000 households the option to apply for British passports before Hong Kong was returned to China. His was one of them.
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"A passport is more than a travel document," Green says. "I am loyal to Britain. It is a debt I owe them for giving me a passport." But how do his four children and seven grandchildren see themselves?
When he joined the business, in 1962, the company was barely able to pay its bills. Today, the trim, immaculately besuited community grandee speaks with the forceful self-belief that comes from decades of fighting battles. He has no doubt where he stands in the world. But he wants to offer his heirs knowledge of the company's history as an anchor.
"Daniel went to school with the children of Hong Kong's big property tycoons," Green says. "This book will help him establish who he is and the company's place in Hong Kong history."
The company survived the first world war, but the second was even less kind to its fortunes. Tremors of disaster could be felt throughout the interwar years in the form of Japan's growing aggression and tension between China's Nationalists and Communists. But complacency was the name of the game in Shanghai, by now the heart of Arnhold Brothers' trading network.
In the 20s, the company merged with E.D. Sassoon & Co. Shanghai's Zionist newspaper, Israel's Messenger, described the joining of the two concerns as "one of the most extensive transactions of its kind in the history of the Far East". E.D. Sassoon was helmed by flamboyant, Harrow and Cambridge University-educated Victor Sassoon, a cousin of poet Siegfried Sassoon. The family, originally from Baghdad, claimed to be direct descendants of King David.
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When Victor Sassoon became head of the clan, dubbed the "Rothschilds of the East", in 1924, he took over a 200-year-old business empire that had its centre of gravity in Bombay, India, and outposts in London, the Middle East, China and Japan. It had interests in shipping, property and opium.
Business acumen is not necessarily hereditary, however, and Sassoon made decisions that would ultimately damage the Arnhold Brothers' legacy.
In the 20s, for instance, he started shifting the bulk of the family's assets to China because he was deeply disturbed by the rise of India's independence movement. In Shanghai, he built the Cathay Hotel (now the Fairmont Peace Hotel), a beautiful art-deco declaration of optimism where he held legendary parties. He, the Arnholds and many other businessmen seemed oblivious to the looming dark clouds. They continued to celebrate British dominance of the International Settlement in Shanghai, and the Sassoons and Arnholds expanded their operations, accumulating ever more property.
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In 1937, reality started to sink in with the beginning of the second Sino-Japanese war. When the Japanese bombed Shanghai in August, Sassoon began shifting assets and staff to Hong Kong. Harry and Charles Arnhold, incredibly, kept their part of the trading operation going while Chinese cities fell to the Japanese one after another.
Despite the Nanking massacre, in December 1937 (the scale of the violence was under-reported at the time), the blockade of the Yangtze and Pearl rivers, and continued Japanese bombing of Shanghai, contemporary records show that the city's foreign community partied on. In fact, assets sent to Hong Kong in 1937 started to return and many were convinced the Japanese, now in charge, would allow them to carry on with business as before.
Confidence could have been driven by the pragmatism of capitalism or the collective myopia of those living in a bubble - a bubble that burst in 1943, when the West returned the treaty ports to the Nationalist government in exile and the Japanese rounded up the remaining foreigners and put them in camps.
Like the Arnhold brothers, Maurice Green was among them. He had, at least, sent his wife and Michael on a ship bound for Australia.
The fall of Shanghai to Mao Zedong's Communist forces came as another shock. As Michael Green recalls in the book, the family was on holiday near Torquay, that most genteel of English seaside towns, when his father read the news in the newspaper. The fighting meant they could not go home to Shanghai. Instead, they moved to a cramped, new home in Hong Kong, bringing with them just two chests and three suitcases.
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The Arnhold brothers stepped back from the business - Harry had gone to New York after the war (he died in 1950, aged 71) and Charles stayed in Hong Kong (passing away in 1954, at the age of 73). By 1957, Maurice Green had a controlling interest in the company, which he was determined to revive, but, says Michael, "We had no connection in Hong Kong. We were more than uprooted. We had lost everything. My father remained cheerful and healthy, but he lost his oomph. It was all a bit too much, losing everything twice."
Michael left for Canada at the age of 15, to be looked after by an aunt. He later attended Montreal's McGill University, where he studied engineering, and returned after graduating to assist his father. His early years perhaps explain the steeliness he carries to this day. "Nobody in Hong Kong will stoop to help you," he says. "They will step over your body. My father didn't have the ticket to the top table but he was clever. He taught me to always make an effort every day of your life, and to respect those who have scaled the mountain, not those born at the top."
Michael Green put his engineering training to good use. By day, he would cold call down-and-dirty workshops to sell the company's products. By night, he would don his best suit and woo expatriate chief executives at drinks parties. As Hong Kong struggled to accommodate the huge influx of refugees in the 50s, the Greens imported pipes, valves, pumps and, later, the quality bathroom fixtures the city's new buildings needed.
There have been many obstacles to overcome along the way, with lawsuits against dishonest subcontractors, unprofitable investment in the internet before the dotcom bubble burst and the Asian financial crisis of 1997. But the company has survived as a medium-sized concern. Green will not divulge its current size but in 2010, when it was still a listed company, turnover was HK$379.7 million. He does not count his family among the super-wealthy.
That said, in 1969, Green and Judith (who, apart from a short time at boarding school in Europe, has never left Hong Kong) spent their savings on a beautiful 1930s house on The Peak, designed by Stanley Feltham, the architect behind Fanling Lodge, the country estate reserved for colonial governors and now the city's chief executive. They still live on Mount Kellett Road, and their children grew up there. At the far end of the manicured lawn is a swimming pool that overlooks Pok Fu Lam and Aberdeen.
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In 1972, the joy of living here made Green decide to walk away from a windfall. A large British conglomerate proposed a buyout of the company. Maurice Green, then in his mid-60s, welcomed a chance to retire and Michael considered working for the merged entity as an employee. But then board members of the potential buyer suggested the car Michael drove was too flashy for his "grade", and that only company directors should live on The Peak. "Our living there would cause some difficulties," he recalls. That killed the deal.
But Sassoon's bad bet in Shanghai and the trials his own family had been through made Michael Green wary of the property market. "Bricks and mortar traps you," he says. "Perhaps it was a refugee mentality. We only bought fixed assets for our own use - the house we live in, our offices and factories in China. It turned out it was a big mistake that we did not speculate on property. But leave them lots of money and you destroy your children. If you leave them a task, you build them."
He lights up when he talks about the accomplishments of Daniel, who is taking the business in new directions, including an expansion into Africa. Son Joshua is managing director of financial services firm Guggenheim Investment Advisors, and also on the board of Arnhold. Daughter Emily is associate director, corporate relations.
"Every year we get voted the most free economy. What they mean is not free, but unregulated. We have reached the extreme of free market capitalism. Wealth has trickled up. The rich are getting insanely rich. Vested interests and entrenched power are uncurbed. And that is unforgivable."
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As he rolls down the hill in his chauffeur-driven car on his commute to his office in Fortress Hill, the sun is out and he concedes that life is very good.
"Hong Kong is a wonderful place. I wouldn't rather be anywhere else. Certainly not Montreal, where the winter is unfit for human habitation. And I don't want to go to Ecuador," he says, remembering the threatened Galapagos trip. "As Westerners, we have no say in the politics. We live off the crumbs off the table. Power and money have always been in the hands of the Chinese here, despite what the British thought, but we've clawed our way up to be the establishment."
This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2018. South China Morning Post Publishers Ltd. All rights reserved.
