Dutch East India Company, Trade Network, 18th Century

The Dutch East India Company (VOC; Verenigde Oost-indische Compagnie), founded in 1602, is often considered as the first true multinational corporation. From the 17th to the 18th century trading companies such as VOC (and its British counterpart; the East India Trading Company) acted on behalf of European governments in Asia. As joint stock companies they were private mercantilist tools with a guarantied trade monopoly in exchange of rights paid to their respective governments. They were almost states by themselves with their own ships (military and merchant) and military forces. Their initial goal was to develop trade links for prized commodities such as pepper and as time progressed they became increasingly involved in the control and development of their respective territories.

In 1610, VOC gained a foothold in Batavia (Indonesia / Dutch East Indies) and conquered most of the island of Ceylon (Sri Lanka) by 1640, establishing the stronghold of Galle. The major trading hub of Malacca was taken from the Portuguese in 1641. By the mid seventeen century VOC has replaced most local trading networks with their own with a series of fortified trading posts. Cape Town (South Africa) was also founded in 1652 as a crucial stage for the long Europe-Asia voyage. Later, plantations, which forced the introduction of new forms of cultivation such as coffee in West Java (1723), were established. It resulted in a growing quantity and variety of cargo being traded. The company essentially achieved for about a century a monopoly on nutmeg (meat preserver) and cinnamon trade and raked substantial profits. Most of it was coming from the "Spice Islands" in the Dutch East Indies. By 1750, VOC employed around 25,000 people and was doing business in 10 Asian countries. However, mainly due to corruption and mismanagement the company faced bankruptcy in 1799 with its holdings transferred to the Dutch Crown.

When VOC first came to Asia, ships made the long distance trip back and forth from Europe. Later, a trade network composed of two layers was established, reminiscent of a hub-and-spoke structure. A regional trade network was serviced by smaller ships that called along coastal trading routes a variety of ports throughout the region. The goods where then collected in large warehouses in protected strongholds; Batavia (Indonesia) and Galle (Sri Lanka) were the most significant. Traded commodities included textiles, pepper and yarn from India; cinnamon, cardamom, and gems from Sri Lanka. Some were traded only over short distances, while others traveled greater distances, such as between Indonesia, China and Japan. Other commodities, such a cinnamon and nutmeg were mainly exported back to Europe. To do so, much larger "return ships" of 500 to 1,000 tons were used for the long haul which included a stopover in Cape Town. The route and the season these ships traveled was configured to take maximum advantage of dominant winds. On the inbound route from Amsterdam, ships essentially crossed the Atlantic to reach the South American coast and then catch the fast Westerlies that would bring them to Cape Town. From there, the Westerlies brought the ships straight across the Indian Ocean towards Australia and then a sharp turn north to Batavia or Galle. The return route was more direct and took advantage of the southeast bound winter monsoon winds.