Tin had been mined and traded in Southeast Asia since at least the tenth century. Although the production and trade in the early period was limited in scale, tin was no doubt a valuable and popular commodity. The mountain ranges in peninsular Burma, Thailand and Malaya share the same geological structure of granite masses forming and contain rich tin reserves (Courtenay 1972, pp. 47–52; Ooi 1963, pp. 295–97). This tin belt, centred in Malaya and extending for hundred of miles northwards into southern Thailand and lower Burma, and southwards to the islands of Singkep, Bangka and Billiton, was the richest and most extensive in the world. It was not until the Industrial Revolution spurred the demand for tin and motivated Chinese merchants and miners, however, that this tin belt was turned into a production powerhouse. As mentioned in Chapter 2, the tin mining business in Phuket and Perak, the two richest tin producing states in the nineteenth century, was in the hands of the Big Five. But this does not mean that the Big Five faced no challenges. In fact, the competition for “White Gold” (tin) was no less than for “Black Gold” (opium). It is not surprising that the Ghee Hin was one of the most aggressive competitors, since tin mining was a very profitable enterprise and was also inextricably tied to the opium farming business. Besides Ghee Hin, the Singapore Hokkien mercantile elite also made attempts to break into the Big Five's tin mining domain in Larut of Perak. This chapter will examine the competition from the various sides and how the Big Five responded.

Larut and the Big Five's Tin Mining Interests

With the discovery of tin fields in late 1840s, Larut quickly became the magnet for coolies and capitalists from Penang. This phenomenon was due to the expansion of the U.K. tinplate industry which in turn led to an increasing demand for Straits tin. The Hakka from Zengcheng district of Guangdong province, who formed the majority of the members of the Hai San hui, were the first miners who went to Larut.

The Western inroads into the Big Five's shipping and trading enclaves, as discussed in the previous chapter, were not the full extent of the Western business challenge. From the 1910s onwards, Western enterprises extended their business interests towards the primary production sector, especially in tin mining and plantation agriculture. It was at this point that the full force of Western commercial powers first descended on this Penang-centred region. By organizing as public joint-stock companies, Western mercantile interests were able to gather the larger amounts of capital necessary to adopt new technologies and to attract the skilled management that would enable them to establish their supremacy in the tin and rubber industries. On top of this, the modernization and expansion of Western-style political and administrative apparatus, which increased state power, had adverse effects on revenue farms and landownership. In the face of these changes, the Big Five lost their ability to compete and began to disintegrate. This was not a natural or inevitable process, but a result of their unsuccessful attempt to cope with the problems and challenges that emerged in a dynamically changing economic and political order.

This chapter broadly outlines the economic and political changes that would ultimately disadvantage the Big Five and considers why the Big Five failed to survive as the dominant economic force in the new order. We will consider two main arenas of change in turn, beginning with tin.

The Tin Industry

Western enterprises began to gain ground in this traditionally Chinesedominated industry from the late nineteenth century. Their first inroads were in the smelting sector. From the late 1880s, Western companies began to break the practical monopoly of smelting held by the Chinese (Brown 1994, p. 77; Yip 1969, p. 105). The Straits Trading Company was most successful in this respect and by 1902, it was smelting 55 per cent of the tin exported from the Straits (Cushman 1991, p. 76). Challenged by this growing Western control over tin smelting, in August 1907 the Big Five and theirassociates established a local limited company — Eastern Smelting Company — with modern smelting facilities as part of the Khaw Group (Wong 1965, p. 229; Cushman 1991, pp. 76, 78). This enterprise was floated in England with a capital of $1.5 million.

Before the 1880s, direct competition from Westerners was insignificant since they had only a peripheral interest in the region and played an auxiliary role as providers of capital. However, the Western mercantile elite began to pose a competitive threat to the Big Five from the mid-1880s, a period which saw a shift from liberalism to management characterized by increasingly powerful colonial governments and rapid expansion of Western interests in trade, shipping, and insurance. This chapter explores the Western competition in this Penang-centred region and the countermeasures taken by the Big Five. It first examines the shipping and trading intrusions made by the large-scale and financially-powerful Western business concerns. It then turns to the response of the Big Five towards the Western challenge.

From Liberalism to Management

The unprecedented Western penetration into the commercial orbit of Penang in the late nineteenth century was not simply a response to its profitable trade and commerce. It was also a result of intensifying international economic expansion and political rivalry. The last decades of the nineteenth century witnessed the change in the global economy from commercial to industrial capitalism.1 As such industrial production became the engine of growth and the key to wealth and power in the West. From this period, Britain, until then the leading industrial power in the world economy, faced fierce competition from new Western industrial powers like Germany, France, Holland, and America.2 The challenge to Britain from these Western powers heralded an intense scramble for resources. Hence, Southeast Asia became more fully open to the impact of the Industrial Revolution and more Western states showed increasing interest in the region. In order to consolidate their control of economic resources and opportunities, the British and the Dutch, who had firmly established themselves in Southeast Asia, began to delineate their respective business spheres. To achieve this, corporate enterprises were organized to penetrate into all the major business sectors while state power was centralized to support this business thrust and, at the same time, to annex territories in contention and solidify colonial boundaries.

These new Western corporate enterprises were different from the Penang-based Western trading and entrepreneurial interests which had been established in the early-to- mid nineteenth century. They were incorporated companies, representing large capital resources and business interests centred mainly in the Western metropolitan cities.

The Big Five Hokkien business families of the nineteenth century controlled the most crucial economic elements of the age and the region, namely labour, capital, organizations, and business networks. The family alliances and power relationships that they formed in and around Penang crucially and profoundly shaped the development of the region. Hence, they serve well as a point of access to recover the vibrant socioeconomic and political life at local and regional levels, to contextualize the subtle interaction between the business elite, the grass roots, and the colonial and indigenous political powers, and to reconstruct the local state and wider regional history. My work serves not only as a complement to the scarce literature on the Hokkien business families and their business networks, but also another trajectory to use the Hokkien business families as a tool of analysis for the study of Southeast Asian economic history in the nineteenth century. This is in contrast to some previous studies which tended to take a Euro-centric approach. It has led us to believe that Western interests played the leading role, while this study on the Big Five tries to deconstruct the conventional narratives and restore the long-neglected local agency and show a more nuanced picture of the Southeast Asian communities, societies and histories in the nineteenth century, where the Hokkien business elite families played such a central role.

My work has also shown that the economic importance of the local Chinese merchants and their crucial business networks in transforming Penang into not just a trading port, but also a financial and business centre from which numerous enterprises were launched and controlled. This development helped to consolidate the business leadership of the Hokkien elite families during the colonial period of rapid economic expansion. A detailed analysis of the Big Five's business operations, family relationships, inter-huiconflicts, economic cooperation and competition has led us to see a wide-ranging web of hybrid and fluid regional business networks that contributed to the Big Five's economic ascendancy and fashioned the contours and patterns of Penang and its surrounding states (southern Burma, southwestern Siam, western Malay states, and the north and eastern coasts of Sumatra) as a single economic unit in the nineteenth century.

Despite the rise of Singapore, Penang, being a maritime base of the Big Five, remained as a regional entrepot.

As a Hakka boy born and raised in Perak, despite its proximity, I only learned about Penang as a trading port established by Francis Light from school history texts. It was not until a trip in the year 2000 that I came to know Penang better personally. Walking around the streets of George Town, the business centre of Penang, I was amazed to see five temple-like kongsi houses standing magnificently in the middle of the town. These five kongsis are believed to have owned at least half of the shops and houses in the old part of George Town. More interestingly, they were once connected with each other by some secret passages and started the worst riots in the British colony at that time. Later, I came to know that a group of wealthy merchants from five Hokkien families founded these kongsisin the nineteenth century. Despite all this mythology, surprisingly, no one has ever seen fit to place them under a scholarly examination. Who were these Hokkien merchants and what roles did they play in Penang? How important were they? It was questions like these that stimulated me to ponder the relationship between those little-known Hokkien merchants and Penang about two centuries ago and to embark on researching the story about them.

In the existing literature, Penang's history has been framed within a colonial paradigm and studied from a top-down angle. The rise of Penang as a hub of commerce and trade, to many scholars, was due to the British free trade and free port policies as well as the legendary Francis Light. As L.A. Mills commented in 1925:

Seventy years later, echoing Mill's view, Sundara Raja remarked in 1997 that Francis Light, who promoted free trade, contributed greatly to making Penang a free port which stimulated vigorous trade and growing migrant settlement (Raja 1997, pp. 104–8). For these scholars it seems the colonial factor was central and sufficient in itself to explain the rise of Penang.

CHINA'S RISE AND SOUTHEAST ASIA

This book has been motivated largely by the rapid rise of China and its consequent influence in the world, particularly in Southeast Asia. As an emerging power in East Asia, China is the main driver behind the geopolitical and economic reconfiguration that is taking place in Asia. Southeast Asia is one of the areas that is affected most directly by the rise of China. On the other hand, interactions between China and ASEAN (Association of Southeast Asian Nations) will, to a great extent, affect the future and prospect of the entire Asia, leading East Asia to become the world's new economic centre of gravity, and affect the world economic and energy map.

In East Asia, few relations have evolved as much as that between China and ASEAN. The threat of China looms large in the history of the relations between China and Southeast Asian countries. In particular, Chinese support for local communist groups during the 1960s and its views of ASEAN as an anti-Chinese, anti-communist alliance created distrust and frictions in China–ASEAN relations. China's siding with ASEAN during Vietnam's occupation of Cambodia contributed to re-establishing relations with Thailand, Malaysia, and the Philippines, but those between China and Brunei, Indonesia, and Singapore were not restored until 1990–91. Mutual suspicion lingered through much of the 1990s, due to memories of its support for communist insurgencies and the Chinese tendency to dismiss these smaller countries as puppets of U.S. imperialism.

The end of the Cold War was a pivotal turning point in China–ASEAN relations. ASEAN and China began to perceive complementary advantages in closer cooperation. Southeast Asia had energy resources which China did not have; China was modernizing rapidly and could contribute to modernization in Southeast Asia. China embarked on a new policy that was more geared toward the East, with Southeast Asia as a major focus. China's “good neighbour policy” was aimed at strengthening regional relations so as to surround itself with benevolent states, which would allow China to focus on its economic development.

The twenty-first century is known to be the Asia century. The coming decades will see global economic growth increasingly being generated by Asian emerging economies. ASEAN is seeking to build political security and sociocultural communities as well as the economic community. With the rising population and economic growth resulting in an increasing share of global gross domestic product (GDP), Southeast Asia is seeing rapid growth in its energy demand and is consequently shifting the centre of gravity of world energy demand to Asia, along with its neighbours of China and India. These countries will account for an increasing share of international trade, investment flows, and energy resource demand. Such dramatic and rapid changes and shifts have created challenges in providing for energy resource supply, energy security, and environmental managements, as well as challenges to the international relations in the region.

COOPERATION OR CONFLICTS?

The previous chapters have analysed that, from an economic point of view, Asia is increasingly regarded as the most important region in the world. Indeed, it is widely thought to be the next most important focal point of the world economy that may soon replace the United States as the engine of global economic growth. The rise of China, the ASEAN Community, and other Asian countries like India economically has prompted East Asia to become the world's new economic centre of gravity and created a great impact on the world energy resource market, and will hence accelerate the changes in the world energy system, accelerating the energy shift from west to east.

In the background of rapid economic growth and increasing energy resource shortage, China's broader energy security strategy has been to pursue supply diversity, to find more and develop more offshore oil and gas resources in Southeast Asia. China has the intention to invest more on natural gas sectors in some ASEAN countries, such as Indonesia, Myanmar, and Malaysia. China expanded its foreign direct investment (FDI) to Southeast Asia after the global financial crisis in 2008, and China–ASEAN energy cooperation has developed to a new level, extending from energy trade to energy resource exploration and related infrastructure-building.

China's search for energy resources in Southeast Asia can help deepen China–ASEAN relations in cooperative terms. It can also be a cause for possible conflicts. Rising energy prices, fears of supply scarcity, and rapid increase in oil-import dependence in China and ASEAN countries have helped drive resource nationalism among regional governments and local communities. In the South China Sea, the question of access to maritime energy resources is interlinked with national sovereignty issues, making the South China Sea disputes more complex. This chapter will try to analyse two critical questions: whether the potential energy reserves in the South China Sea has contributed to aggravating these territorial disputes and thus intensified regional suspicions of China's hegemonic ambition; or whether these potential energy reserve can instead provide a means for the parties to seek cooperative and collaborative solutions, and thus improve China– ASEAN relations.

MARITIME ENERGY RESOURCES AND THE “SOVEREIGNTY DILEMMA”

In the South China Sea, maritime energy nationalism is often tied to disputes over territorial claims and fishing rights. Maritime energy resource nationalism is exacerbated by some speculative estimates that the ocean floor is rich of energy resources. Politics, both domestic and diplomatic, supports a predilection for optimistic assessments from the claimant states. Although geographic evidence suggests that the actual prospective areas are quite small, as most of the seabed lacks the characteristics to be seriously prospective, some countries’ estimates on South China Sea resource reserves are at a high level. Some international sources have suggested that the South China Sea could be “Asia's Mediterranean”, a “new Persian Gulf ”, and leading Chinese sources give estimates of the potential oil resources that are far higher than other estimates. In November 2012, the China National Offshore Oil Corporation (CNOOC) estimated that the South China Sea held 125 billion barrels of oil (bbo) and 500 trillion cubic feet (tcf) of gas beneath the South China Sea. In January 2013, the U.S. Geographical Survey published a much lower estimate of 11 bbo in proved and probable reserves, and 190 tcf of gas in undiscovered resources.