The Vereenigde Oostindische Compagnie, or VOC (sometimes "Jan Compagnie" colloquially as testament to its influence) was founded in 1602 with a basic state monopoly on Dutch activity from the Cape of Good Hope eastward. It really was a law unto itself; while in the Netherlands it operated mostly under its own 17 office directors (the Heeren XVII) within society, overseas it was a rather brutally efficient and militarized organization that conquered territory, reorganized production, and occasionally fought significant conflicts all on its own. The depot at Batavia (Java) was the heart of its operations, and it paid a great dividend for the better part of two centuries. But what happened?

The usual culprit we point to is the corruption possible in VOC offices overseas. For the Cape Colony (which I know well), founded as a way-station in 1652, I can tell you that the colonists who spread out from the central settlement after 1657 had a very stormy relationship with the Company government that tried to control prices and skim off the top. It was bad enough that they tried to bar itinerant travelers in the mid-1700s from visiting, after one had conveyed grievances of the colonists (which weren't being forwarded) to the Heeren XVII and prompted an investigation. By the last few decades of the 1700s, more distant agrarian colonists (known as trekboers) were actively asserting their independence from the Company, which was unwilling to support them in any way. The corruption possible in Batavia, in the Indies themselves, was all the greater because the wealth to be gained was also far greater than in the backwaters of Southern Africa.

The aggregate effect of these issues, together with declining profits in the face of greater competition from European companies and the overhead a company-as-government had to deal with, put the VOC on the brink of bankruptcy by the late 18th century. What put it out of its misery was the Napoleonic Wars. After the conquest of The Netherlands, the VOC quietly liquidated effective 1800, and its holdings passed into the ownership of the puppet Batavian Republic and then, with the exception of a few places like the Cape that were handed over to Britain to pay debts following the restoration of the House of Orange (1814/1815), the Dutch government took over formal control.

There are a few books that deal with the rise and fall of the VOC, in much greater nuance than I can here. Boxer's The Dutch Seaborne Empire (1965?) is a classic, but his Jan Compagnie in War and Peace (1979) is probably better. Stephen Bown's Merchant Kings: When Companies Ruled the World, 1600-1900 (2012), about the entire phenomenon of imperial companies, is accessible and will have further reading although it's designed for a popular audience and may leave you wanting on the VOC itself. I suppose if you want context, Israel's The Dutch Republic is still important, but it's a huge book and covers far more with a very European focus. If you can read Dutch, I can make other suggestions.

[Edit: How could I forget Parthesius's Dutch Ships in Tropical Waters (2014)? It's a more academic study of trade network development, but if you like that, it's something. In Dutch, I hear buzz about Kuipers's short VOC: de Verenigde Oost-Indische Compagnie, 1602-1799 but it's not actually out yet.]

The Dutch East India Company was organized around the 17th Century Euro-Asian trade. In the 18th Century, this method of trade was outdated. The VOC was built to monopolize the spice trade, not tea. To become so successful, the VOC conquered and retained control of a huge amount of settlements around Asia and Indonesia. This conquest and idea of “there is no trade without war” became a huge burden to the VOC as time went on. The costs of maintaining and retaining these lands in terms of money and manpower were staggering.

As the market changed, the VOC’s power waned. As the focus shifted from the Asian spice islands to the Chinese and new Indian tea trade, the VOC became less a trader and merchant organization, and more an administrator desperately holding on to what it still had. On top of these problems, the tea that the Dutch did trade, was notorious for being lower quality, so they never had a great hold on the new tea market. Early efforts by Great Britain to enter in Chinese trade met failure, but were alleviated when they brought tea and goods through Portuguese and Chinese merchants at Canton. It is known for certain that by 1657, tea was introduced to the British public due to the first advertisement for tea on the streets (Griffiths 15). During this time, tea began to become fashionable at the court of Charles II and was a regular article of export by the VOC to Holland from China and Japan. “Montgomery Martin, in his book The Tea Trade in England from 1832, states that in 1666 exports from China to Europe was over 16 million lbs”(Griffiths 15). By 1669, tea was regularly imported, and all English ships sailing to the Indies were chartered under the EIC. Tea was at this time brought from traders at Bantam, Madras, or Surat from Portuguese ships from China. In 1685, the Manchu emperor opened all ports for trade, but then closed them only allowing trade at Canton. Here, merchants established settlements, houses, and factories to facilitate their trade. Only through Chinese oversight and under the “Intolerable Eight Regulations” were they allowed to trade (MacGregor 4).

Around the 1720’s, the implementation of the importation of cheaper Green teas led to tea drinking for all classes in Britain, leading to a huge boom in commercial value for tea. With this trading deficit, the EIC in China had to balance their tea shipments with imports of metals, wool, and cotton. To do this, they increased their Opium growth in India and gave Opium to firms to sell in China in exchange for the silver they needed to operate. Due to this shady dealing and smuggling, several complications arose which almost led to war, and resulted in the treaty of Nanking in 1842. In this historic treaty, Hong Kong was ceded to Britain, and Canton, Amoy, Foochow, Ningpo, and Shanghai were all opened to free trade (MacGregor 5). In order of importance, it was Canton, Foochow, and Shanghai. Due to China’s highly developed in land waterways; it was efficient for traders to get tea from many different growers from different regions. By the 19th Century, tea was a national beverage in Britain, and in 1819 the quantity of tea imported was cited as around 24 million pounds.

Curiously enough, evidence of tea in India was not found at an early date, despite it’s proximity to China. However, it can be said that by 1638 tea was in use by at least the upper classes in India. This is evidenced by the narratives by John Albert Mandelslo in Surat and J.Ovington’s narrative A Voyage to Surat in 1689, in which they both tell of accounts of encountering the beverage (Griffith 11,12)

The Tea trade in India apparently only really started because the EIC wanted to expand its staple cash crops and needed new ideas. The planting and cultivation of tea was suggested in 1778. By 1793, the British sent botanists to China to sample plants and seeds for growing. They sent back some samples to Calcutta, where the authenticity was questioned time and again. This was a major problem for the Tea trade in India. No one trusted samples sent back were in fact authentic “good” Chinese tea. The urge to get tea growing in India was spurred on and given new flame after Japan closed itself off from the West and China was looking to about to do the same around 1828 (Griffiths 35). As if by a miracle, tea shrubs were discovered growing in the Upper Assam region. It was thereafter discovered that these tea plants were indigenous to the region and were indeed an authentic Chinese species of plant. This was important because the Chinese species of plant were higher valued, as was the Chinese technique of producing it. Quickly after its discovery, Tea shrubs were planted all over the country to try and find the most successful area for growing them. In 1839, samples of tea collected and produced from Assam were sent back to London to be tasted and graded. It was decreed at this time that Assam tea, while not the best, was passable as “good” tea. (Griffiths 53). Directly after news of this triumph, buyers for large amounts of chests of tea were sprouting up. In 1839, the Bengal Tea Association was formed in Calcutta and the Assam Tea Company was founded leading to the increasing and explosive tea trade in the Indian Ocean World.

By the 18th century, the EIC overtook the VOC as Europe’s main supplier of tea, and they could not recover.

Simply put, in trade with Chinese merchants, the Dutch refused to trade in the much preferred silver method, instead opting to continue trading Asian spices in goods in kind to make a profit. This method was frowned upon in the Chinese trade and trusted buyers began looking elsewhere. Because the Dutch tea was such a lower quality than the rest of Europe’s, when the prices dropped and the supply increased globally, the VOC was left in the dust with little to no profits. The VOC’s failure to adapt to a changing global trade climate, greedy past and corrupt leadership led to its downfall. The Dutch Tea trade destroyed itself. (Goodman 66-68)

Citations used but not limited to:

Goodman, Brian. “The Dutch East India Company and the Tea Trade.”

Griffiths, Percival, Sir. The History of the Indian Tea Industry.

MacGregor, David R. The Tea Clippers: An Account of the China Tea Trade and of Some of the British Sailing Ships Engaged in It from 1849 to 1869

edit: At first I wrote a short, simple answer, but felt I should maybe just use part of my paper from a class in college. In no way is this a complete analysis of it's downfall this is merely one aspect of it's shortcomings in the face of changing global trade. As my paper was primarily focused on the growth of the globalized tea trade, I felt the need to provide a background on the tea trade as a whole, to show the growth of the EIC and it's subsequent toppling of the VOC as a result. u/khosikulu has a great answer here as well.

I'm not sure if another question should get a different thread, but this is so basic I'm somewhat ashamed that I don't already know:

Were the British East India Company and the Dutch East India wholly separate companies?

I suppose I always assumed they were two branches of an early multinational, but after reading this thread, I feel mistaken.