View from City Road: Opium catches up with Jardine

Folk memories of pre-revolutionary Shanghai have a strong hold on businessmen in the Far East, judging by the way companies have been queuing to buy back their old headquarters on the Bund, Shanghai's waterfront business district.

It can be stated with a high degree of certainty, however, that one company that will not be moving back is the Jardine Matheson trading empire. The degree of antipathy that exists between the Chinese and Jardine is hard to overstate. For the Keswick family who run Jardine, it is grounded in the memory of being ejected from China's great business centre in 1949 by the communists, who seized their assets.

For the Chinese on the other hand, the Keswicks and their hong remain a living reminder of the degradation and wars surrounding the opium trade that made the family's fortunes in the 1830s. Jardine and James Matheson were selling 6,000 chests of opium a year in those days.

It is not often you have to look so far back for an explanation of a modern business row. But Peking's decision to prevent Jardine participating in a consortium to extend the Hong Kong container port has a wonderful continuity to it.

Ever since Chinese control of Hong Kong began to look a reality, the Keswicks have been backing away - moving Jardine's domicile to Bermuda a decade ago, cancelling the primary listing in Hong Kong three years ago, and delivering a final snub this year by dropping the secondary listing in favour of Bermuda.

Jardine claimed that last move was to avoid having to obey two regulatory codes in Bermuda and Hong Kong at the same time. That excuse was greeted by the rest of the Hong Kong business community with well deserved derision.

Most interpreted it as one more expression of the company's long held belief that the Chinese communists would mess up Hong Kong capitalism just as they had brought Shanghai to a grinding halt. They also pointed out that Bermuda had drawn up a special takeover code for Jardine, making it easier to detect and repel any Chinese capitalist boarders who might want to take control of the Jardine companies with a conventional bid.

There is a special twist to the container saga. A Jardine executive who happened to sit on the legislative council is said to have changed his mind at the last minute and abstained on the Hong Kong democracy legislation, delivering victory to Chris Patten by one vote. No wonder the Peking boot went in.

The truth is that many Hong Kong business people quietly share Jardine's fears, some of which appear well founded. But their response to it is rather more mature. Not for nothing is Jardine's portholed headquarters in Hong Kong known as 'the house of a thousand arseholes'. Most businessmen want nothing done that offends Peking, which is why the Chinese and English business community has been against the democracy initiative from the start.

It will be tougher for Hong Kong business after 1997. But the economic development of mainland China is unstoppable. One company that will not be sharing in it is Jardine Matheson.