How the Sassoons of Bombay became one of China’s wealthiest families

In Shanghai’s busy downtown area, along the shimmering Huangpu River, one Art Deco building on the historic Bund stands out with its green pyramid roof: the Sassoon House. Now the Fairmont Peace Hotel, it was one of the first skyscrapers built in Asia and served as “a glamorous playground for the elite, where every night was an extravagant gala event and veritable Parisian fashion show,” according to the hotel’s website.

While both local and foreign tourists photograph the beautiful illuminated building at night, it is a stark reminder of what China calls the “Century of Humiliation”, a period that began after the First Opium War of 1839 and ended after the Second World War in 1945.

The 13-floor building was completed in 1929, a time when large parts of Shanghai were occupied by colonial forces and the Sassoons, after whom the Sassoon House was named, were among the richest and most powerful families in China.

Setting up shop

The Jewish Sassoon family, led by patriarch David, first began to scout for opportunities in China in the 1840s, a decade after it moved to Bombay from Baghdad and set up several thriving businesses. The key of its lasting success was its flexibility and readiness to branch out, says Madhavi Thampi, who taught Chinese history at Delhi University for 35 years, in her book Indians in China, 1800-1949.

“They were not necessarily pioneers, but they knew how to make use of opportunities as they arose,” Thampi writes.

The family set up shop in mainland China in 1844, two years after the First Opium War between Britain and the Qing Dynasty ended in a humiliating defeat for the Chinese. The post-war Treaty of Nanking forced the Qing rulers to open China to British traders.

David Sassoon’s second son Elias David Sassoon, or ED Sassoon, first arrived in Canton in 1844 and moved to Shanghai a year later once he recognised that the best business opportunities were in this coastal city.

By this time the family was already profiting considerably from the opium trade into China. “About one-fifth of all opium brought into China was shipped on the Sassoon fleet,” the Shanghai Star said in a 2001 article. “They brought China opium and British textile and took away silk, tea and silver.” Stories of the Sassoons’ wealth in China reached Bombay and many business houses tried to move to Shanghai to replicate its success.

“After the death of his father in 1864, E.D. Sassoon decided to secede from the parent firm under his brother Albert and to set up his own,” Thampi writes. “In 1872, he formed a new company with its headquarters at 5 Renji Road in Shanghai, called E.D. Sassoon & Sons, but which in popular parlance came to be known as the ‘New Sassoon’ firm as opposed to the ‘Old Sassoon’ company.”

Elias Sassoon imported cloth from Britain and sold it to the most elite stores in Shanghai that were catering mainly to wealthy European settlers. His son Jacob Sassoon joined the business and took over when Elias passed away.

“The Sassoons...continued with their penchant for seeking newer avenues for profitable investment,” says Thampi. “They engaged in the insurance business, acting as agents of the North British Fire and Marine Insurance Co. Ltd, as well as in shipping. Later on, in the scramble to provide loans to the Chinese government in the 1890s, the ‘old’ company, David Sassoon & Sons, offered sterling loans for railway construction.”

Both the old and new Sassoon companies continued to expand in China, while carrying on their business operations and philanthropy in India.

“Taking advantage of the newly-obtained concession that enabled foreigners to set up factories in China, both the Sassoon firms also set up spinning and weaving plants in China, as well as rice, paper and flour mills,” Thampi writes. “Later they even ventured into setting up breweries and laundries.”

Both companies mainly employed foreigners in top-level managerial positions and filled almost all blue-collar jobs with local Chinese.

Shrewdest move

A shift in the business environment came in the last decades of the 19th century as trade between China and Europe grew and, with a reduction in the importance of opium, the Qing rulers were able to regulate the import of the drug. In 1907, the Qing Dynasty signed the Ten Years’ Agreement with British India, under which China agreed to ban native cultivation and consumption of opium on the understanding that the export of Indian opium would fall in proportion and totally stop within a decade.

By the turn of the 19th to 20th century the old Sassoon company’s activities greatly declined in China and its position was taken by the new company.

By this time, the new Sassoon business empire was managed by Jacob Sassoon, Elias Sassoon’s son, who had the official British title of Baronet. Under him, the family added real estate to its portfolio in Shanghai, which Thampi considers its “shrewdest move”.

“They began to acquire prime properties, especially along the waterfront, under the name of various companies such as the Hua Mao Real Estate Co., the Shanghai Real Estate Co., and so on,” Thampi writes. “In the nineteenth century their profits from real estate were estimated to be just about one-nineteenth of their profits from opium, but from the early 1920s, with the opium business at an end, real estate developed into the most profitable segment of their business empire.”

Leaving India

In the 1920s, the Sassoon empire was headed by Victor Sassoon, the nephew of Jacob Sassoon. He served in the British Royal Flying Corps during World War I and even survived a plane crash, although the injuries it gave him affected his mobility for the rest of his life.

Victor Sassoon seems to have had a busy life. He received the title of Baronet of Bombay after his father’s death in 1924. He split his time between Poona (now Pune) and Shanghai and was involved in the colonial administration in British India, serving as a legislator twice in the 1920s. He was also a member of the Royal Commission for the investigation of labour conditions in India.

In the 1920s, as his family’s Chinese real estate empire grew to new highs, Victor Sassoon commissioned the Sassoon House, which would house the Cathay Hotel, on Shanghai’s Bund. The family owned several properties on the Bund that stand to this day.

Meanwhile, in India, with the independence movement gathering steam, Victor Sassoon become disillusioned with the country. In an interview to Reuters in July 1931, he said, “The outlook for the foreigner in India did not seem to be bright.” The family’s business in India was contracting, he said, and its only big undertaking in the country was the cotton mills. The Sassoons could not compete with Indian firms that had small overhead charges, he concluded.

He announced his intention to leave India for Shanghai and make the Chinese city his principal centre of activity. “Then, too, the political situation does not encourage one to launch out on any big schemes in India for the time being,” Victor said in the interview. “It looks as if India, under the Swaraj, will have a great deal of trouble. On the other hand, China is getting over her civil wars and other troubles. There is a general feeling in India against the foreigner developing the country, which they call ‘exploiting,’ but in China they are only too glad to welcome the foreigner working for China’s interests.”

At the time Victor Sassoon decided to leave India, his company, ED Sassoon & Sons, had a share capital of Rs 1 crore, while a financial company he headed, the ED Sassoon Banking Co Ltd in Hong Kong, had a share capital of 1 million pounds.

In October 1931, Victor Sassoon left Bombay for Shanghai, but still maintained a degree of optimism for the future of India. “I only trust that everybody in this country will exert every influence to avoid political disturbances, and to effect compromises between the communities to this end,” he told the Straits Times. “I feel sure that, if this is achieved, next year will prove a happy one for India.” He said he wanted to visit India regularly.

The move to Shanghai, at least initially, proved to be lucrative. “In the 1920s and 1930s, Shanghai saw an influx of wealthy Chinese from other parts of the country, due to the widespread conditions of insecurity prevailing in large parts of China at that time,” Thampi writes. “The Sassoons took advantage of the situation to make even greater profits through the issue of shares and bonds.”

Fortune reversal

The family’s good fortune began to unravel when the Imperial Japanese Army invaded Shanghai in 1937. The city’s foreign-ruled areas, the International Settlement and French Concession, were flooded with refugees, although they were more or less independent from Japanese occupation.

For three years, the Chinese city offered unconditional refuge to Jews escaping the Nazis, with the Sassoons contributing monetarily for their Jewish brethren. Victor Sassoon, who had negotiated with the Japanese to keep them away from the colonial areas, knew it was a matter of time before Japan seized the International Settlement. He left Shanghai for Bombay in the spring of 1941. In December of that year, the Japanese attacked Pearl Harbour and the United States was drawn into the war as well, making the International Settlements and French Concession in Shanghai Japanese targets.

When the Japanese occupied all of Shanghai in 1941, they forced the Jews to move into a ghetto.

Exiled from his favourite city, Victor Sassoon returned only after the war ended in 1945. But instead of settling down again, he sold his holdings to Chinese businesses under the Kuomintang regime and moved to the Bahamas. Other western settlers did not have as much foresight as Sassoon and had no choice but to leave China when the communists won the Civil War and established the People’s Republic of China.

The Cathay Hotel was bought by a Chinese company in 1947 and allowed to continue operations for three years after the establishment of the People’s Republic of China in 1949. It was taken over by the government and used as the local municipal construction department until 1965, when it was partly restored as a hotel.

Victor Sassoon, who did not have children, passed away at the age of 79 in 1961, with the family fortune secure.

The Sassoon House, like other buildings on Shanghai’s Bund, has been tastefully restored, but the centre of business activity in the city is now on the other side of the river, where an impressive skyline reflects the country’s economic prowess. Till today, tourists cruising down the Huangpu River hear stories of the wealthy colonial family from Bombay that became tycoons on the back of a humiliated China’s impoverished masses.

Ajay Kamalakaran is a writer, primarily based in Mumbai. His Twitter handle is @ajaykamalakaran.