The "factories" were not workshops or manufacturing centres but the offices, trading posts, and warehouses of foreign factors,[1] mercantile fiduciaries who bought and sold goods on consignment for their principals.

[7] In the case of Guangzhou, early traders were obliged to follow the monsoon winds, arriving between June and September, conducting their business, and then departing between November and February.

[2] In practice, private traders could often avoid these restrictions but the customs superintendent, the hoppo, was always careful to enforce them upon large-volume purchasers such as the East India Company.

For the most part, the supercargos, their assistants, and the bookkeepers stayed at the factories, the crew—except for a few guards or those on shore leave[8]—stayed with the ships, and the captains continued to ferry between the two.

Hog Lane was lined with open-fronted booths and shops catering to them, selling food, drink, clothing, and "chowchows" (novelties), and was policed by Chinese guards stationed at both ends of the alley.

[11] At first the supercargos came and left with the ships, but over the course of the 18th century companies began to rent their factory spaces year-round to avoid being displaced on their return.

[8] In the mid-1750s, the East India Company realized that the fees and prices were both better at Ningbo; it was also nearer the main centres of Chinese tea production and silk manufacture.

The impact of their shift on Guangzhou's tax receipts and a fear of a second Macao being created prompted attempts to force Ningbo to make itself less attractive.

[13][n 1] In order to keep the traders in the factory area and out of the rest of the western suburbs, the 17 Chinese merchants of the port were obliged to establish the guild known to foreigners as the "Cohong" in 1760,[12] each paying an entrance fee of around 10,000 Spanish dollars (74,000 tls.)

[9] The Hong merchants included Howqua (Wu Bingjian), Puankhequa, Mowqua, Goqua, Fatqua, Kingqua, Sunshing, Mingqua, Saoqua, and Punboqua.

[15] Despite the existence of Sinophones[15] and the linguists usually accompanying each ship,[4] foreigners were notionally banned by imperial decree from learning the Chinese language,[1] there being officially appointed translators for that purpose.

[15] The foreign traders—despite most working for government monopolies themselves—protested strongly at the Cohong's control over prices, advances, and exchange rates and predicted the death of trade with China.

[12] In fact, the Cohong helped ensure Chinese production met the traders' needs—some ships had previously been obliged to wait as much as a year to be fully stocked[12]—and by 1769, the area was being expanded to make up for an extreme shortness of apartments.

[4] Subsequently, the British and Americans typically always had ships anchored off Pazhou, allowing them to keep their supercargos and staff in the Guangzhou factories all year.

[19] Parker commissioned Lam Qua, a Western-trained Chinese painter who also had workshops in the area, to paint pre-operative portraits of patients who had large tumors or other major deformities.

[21] These hongs—first established by Pan Zhencheng (潘振成) and nine others in 1760—were granted a lucrative monopoly on foreign trade in exchange for various payments and obligations to the Qing state.

The Hoppo was appointed by the emperor to oversee taxation and customs collection; he also oversaw disputes among the merchants, in an attempt to restrain the foreigners from contacting the imperial government in Beijing directly.