The Portugese had been the first European power involved in establishing relations in the area. They managed to create a trading factory and concession at Macao from 1557. There were many goods that could be acquired relatively cheaply and sold for many more times its price back in Europe; silk, spices, tea, etc... The other European nations wanted to get involved and to take a cut of the huge profits that were being made by the Portugese. The English East India Company sent their first ship to Macao in 1635 but found it difficult and prohibitive to engage trade with the Portugese. Trading directly with the Chinese was not much easier. Trade was restricted to the port of Canton where English traders had to deal with one of 13 merchants selected by the Chinese government. These were referred to as the 'Hong'. For the Eighteenth Century, the English East India Company had a monopoly of British trade from Asia at least which in many ways counter-balanced the Chinese trading restrictions. However, in 1833 the British government ended the East India Company monopoly and traders rushed to fill the vacuum.
These traders would become known as Taipans and they competed voraciously to get hold of the precious Chinese commodities. Unfortunately, they did not have many products that were of interest to the Chinese - silver was preferred but was in short supply. Therefore, many of the Taipans resorted to using Opium as a trading commodity. The Chinese government was concerned at the debilitating effects of the drug and wished to prevent the inflow of Opium into the country. To this end, in 1838 they appointed a new Imperial High Commissioner to Canton, Lin Tse-hsu, to stamp out the importation of Opium.
The British traders were to use his policies as an excuse to force the Chinese government to relax its restrictive trade practices. The so-called Opium War started in 1839 and lasted until 1842. The Royal Navy was able to impose its will on the unsophisticated Chinese fleet. As a result, the British were able to make demands upon the Chinese government before lifting their blockades and stopping the bombardment of important ports. The Chinese agreed to cede the rocky island of Hong Kong to Britain as a free port with rights of trade to the mainland. In fact, both the Chinese and British negotiators got into trouble. Kishen, the Chinese negotiator, was blamed for ceding inviolable Chinese territory to the foreigners, whilst the Charles Eliot, the British negotiator was lambasted for acquiring such an unpromising rocky outcrop with virtually no indiginous population and no history as a port whatsoever. Over time though, the acquisition would prove invaluable to the British.
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