A tiny settlement on the far western side of Papua New Guinea, it’s little more than a wharf, a collection of storage containers, and some ramshackle corrugated-iron buildings serving a hinterland of scattered Papuan villages.

A store run by two men from China’s coastal province of Fujian was the only retail outlet in town, selling the usual range of tinned fish, bully beef, rice, unbranded knives and hardware, outboard fuel, and bright blouses and football jumpers.

Earlier this year the Chinese and Papuans collided violently. The storekeepers made the mistake of dismissing claims for payment from local men for work done to help them.

A robbery by five men followed, in which one of the Chinese men died from a slash with a machete-like bush knife.

The robbers fled up country. Then, from settlements and towns around the region, fellow storekeepers from Fujian got together and organised retribution.

According to local sources, they sponsored a police operation in a chartered helicopter. The police surprised their targets, shooting all five dead.

Bryan Kramer, who recently held the police and justice portfolios in the PNG government, is not surprised.

“We had a similar one here in Madang two years ago,” he says. “Police officers on the payroll of Chinese businesses.”

Two young men from the Rai Coast had held up a Chinese-run store. Police had allegedly found them, taken them to the store for a beating, then back to the police station for further beating, resulting in one man’s death.

“The police never took any charges, obviously because they were involved,” Kramer says.

Unlike the Aiambak case, at least so far, the Madang death in custody eventually got noticed.

A revered former Madang MP and tourism entrepreneur, the late Peter Barter, backed the dead man’s family for an inquiry, which looks set to proceed via the topmost court.

If this happens, it suggests that the law and regulations are finally closing in on the most visible and contentious component of China’s presence in the South Pacific nation.

It is what Australian National University researcher Peter Connolly has heard referred to by a PNG businessman as ‘Wild West mercantilism’.

But this change is yet to reach outposts such as Aiambak.

The wave of people coming to PNG from Fujian – whether jumping tourist and business visas, smuggled in aboard logging ships or fishing boats, no one can be sure how – has occurred over the past three decades.

They have since spread out across Papua New Guinea, to work at stores and kai (fast food) bars across towns big and small. It’s a similar picture in the Solomon Islands and Vanuatu.

Operating with cash only, ignoring company or goods-and-services tax obligations, importing goods through sometimes unorthodox channels and sourced directly from factories and wholesalers in China, the Fujian businesses have been unbeatable competition at the bottom end of the consumer market.

There had been two earlier waves of Chinese migration.

The first came between the late 19th century and World War II. Because of the White Australia immigration policy applied during Australian administration of PNG, entry for Chinese women was made difficult.

Many of the Chinese men married local women, and sent their children to Catholic boarding schools in Queensland.

The second wave arrived between 1945 and the 1960s, in many cases via what is now Malaysia and Singapore. They spoke the dialects of southern China at home, and English and Tok Pisin for business.

They too became quite Australianised before PNG’s independence in 1975.

Unless they had already moved up the chain into specialised trading, light manufacturing and food processing – as is the case with Sandra Lau, owner of the Tropicana group – they found the third wave from Fujian taking their business from under them.

Paul Barker, director of the Institute of National Affairs (a Port Moresby–based, industry-funded think tank), recalls one member of a long-established Chinese business family explaining why she had closed what had been the biggest supermarket in Madang.

“There are two major problems for business in Madang,” she told him. “One is the raskols [criminal gangs], two is the new Chinese.

The new Chinese have only two words of English: ‘How much?’ It applies to anyone who arrives on their doorsteps, whether it’s the raskol gangs or the customs officers, or the police.”

“Most likely they’re undercutting the import duty, not declaring income for GST, they’re not paying company tax,” says Kramer, the current Madang MP. “So you can’t compete because they’re already 40 to 50% up.”

The other side of the coin is the sheer risk taken by the Fujianese.

Downstream on the Fly River from Aiambak, at a small settlement called Obo, is another Chinese store, run by a man of about 40 who stood by its door with a baseball cap pulled down over his face and a surgical mask over the lower part.

He was not anxious to talk, but said he’d been there on his own for eight years, leaving his family in China.

Periodically, mobs attack and ransack Chinese stores in PNG towns, as they also have in Honiara, the Solomon Islands capital.

“When Chinese businesses are accused of not paying taxes or minimum wages they will say, ‘But we are paying, just in a different form: MPs, parties, customs officers’, and so on,” says Barker. “They are vulnerable because they set up their businesses via the back door.”

The full article by Hamish McDonald appears in the September issue of The Monthly