2009-32
The Local Management of Japanese
Cotton Spinners in China during the Inter-War Days
：Naigaiwata & Company
Tetsuya Kuwahara

The Local Management of Japanese Cotton Spinners in China during the Inter-War
Days：Naigaiwata & Company
Tetsuya Kuwahara
Graduate School of Business Administration, Kobe University
20090816
Abstract
Naigaiwata kept its position of being the most advanced cotton spinning company intechnology and management and value addition of product during the inter-war days.
Its competitiveness in technology and management were developed in-house by the
local factories in Japan and were transferred to its factories in China through a large
number of Japanese expatriates. It also adapted part of its labor management to fit the
local situation in China. However, Naigaiwata did not allow the promotion of theChinese from the rank and file to the administrative position. These practices wereconsidered the uniqueness of local management of Japanese cotton spinning firms in
China before the end of Second World War.
Question and Viewpoint
1. Question
Japanese companies started to become multinationals along with Japan’s process ofindustrialization started. The trading companies that engaged in import and export
activities began to set up with the construction of their branches at the beginning. Afterthe Japan-Sino War investment from Japan began to pour into the colonized countries
and after the Japan-Russo War investment across the China continent and Korea,
direct investment in infrastructure such as the South Manchurian Railroad began. In
1911, Naigaiwata based in Osaka was the first manufacturing company to start cotton
spinning in China. This was the beginning of Japanese direct investment by the
majority of large Japanese cotton spinning companies in China after the the First World
War. The Japanese owned cotton spinning factories in China are known as called as“ Zaikabo”. Although the majority of them managed to gain a strong foothold in China
and grew to dominate the Chinese cotton market, the Second World War brought an end
to what they had achieved.
The overseas operations that were lost as a result of the war were re-started in the
1950s and showed remarkably rapid growth from the 1970s. By 2002, Japan became acountry that was ranked fifth in the world in terms of direct foreign investment (Note 1).
However, the continuity of multinationalization by Japanese companies going back to1the late 19th century is still not fully understood. The mainstream view, especiallyamong researchers in Japan, has been especially that overseas activities by Japanesecompanies before the Second World War, especially direct investment in China werevery different in nature from those after the Second World War, as were the differencesin the multinationalization strategies between the Japanese companies and otherforeign companies.
The author has already brought to light the fact that in the period before the Second
World War Japanese overseas investment was carried out to protect the export market,
by major companies acting independently as they had their own in-house resources tosustain this situation. (Note 2) The aim has been to explain the process of how theJapanese multinationals maintained their position in the Chinese market immediately
after the World War One, by focusing on the top managers and the product market
structure of their companies. In this paper a much persuasive explanation will bepresented of the continuity in the management practices of the Japanese multinational
companies that can be seen in the local management practices of these companies in theearly 20th century up to the present day, by looking at Naigaiwata Company the largest
company of Zaikabo.
2. Previous Research
Research on investment in China before the Second World War by the Japanesecotton companies is widely accessible. Virtually all of the research on Japanese
investment in China have been carried out using economics research methods thatprovide explanations from the point of view of imperialism.( Note 3)
These works explain the invasive characteristics of Japanese cotton spinningcompanies towards Chinese investment, in which China was under an enforced unequal
treaty. Furthermore, when investments were made with the backing from both politicaland military powers, it was assumed that these investments would return profits. While
this might have been a necessary condition given the conditions of the time, it is rather
difficult to assert that this condition had also been a sufficient condition for the successof the Japanese companies in China. Indeed, very little research has been carried out on
the history of Zaikabo from the point of view of their in-house capabilities for solving
management problems. ( Note 4)This paper aims to analyze the process of development of the local management by
the Japanese companies in China, highlighting the case of Naigaiwata and explaining
how they independently created an in-house ability and local management structures tosolve problems through a series of trials and errors in China during the days of the2Inter-War Days.
3. Data Sources
One of the reasons that a clear picture of Zaikabo has not been established, to date, isthat there is a lack of primary research materials on local management in China, andfew documents remain from that era. However, it has come to light that there are over1200 items of documents related to Naigaiwata that had been preserved in the Liaison
Center of Policy Research at the Research Institute of Economics and Business
Administration at Kobe University. These documents had been reserved at Naigaiwata
office located in Osaka, when it began to be dissolved in 1949.

Among the records sent

to the head offices from the three operation bases in China, there are communiqués
between the headquarters in Osaka and the local factories, which have been used here
to shed light on the local operations of Naigaiwata in China at that time. The
documents of Naigaiwata mostly cover the period from 1922 up to 1948 when
Naigaiwata was reorganized as Shin Naigaiwata Kaisha(New Naigaiwata & Co.). This
paper has used these rare and authentic documents to explain the process of how local
management was developed by Naigaiwata in China during the interwar days.
Chapter 1. The Chinese Cotton Spinning Industry and Naigaiwata
Section1.

Formation of a Chinese Spinning Iindustry

Chinese cotton spinning had already begun in Shanghai around the 1890s, but thegrowth of the industry up to the First World War was slow. However, during the war
period production increased rapidly as the number of spindles increased from 520,000 in1913 to 2.27 million by 1922. In the years to the World War One, the spinning firms
based on foreign investment was established. In
Treatythat

between

Japan

and

China

was

April

signed．

1895,
It

the

Shimonoseki

containedaclausepermitted Japanese nationals to engage in manufacturing activities in the treaty

ports. However, the initial investment came from Western companies and not from theJapanese companies. In 1897, four Western companies built local plants based on themost favored nation clause backed their respective home countries. They were Iwo
Cotton Spinning and Weaving Company and Lao Gong Mao

Cotton Spinning

Company of both British capital, Ruiji Cotton Spinning Company form Germany, andInternational Cotton Manufacturing Company from U.S.A. Subsequently Gongyi
Cotton Spinning Company of Britain started production in 1907 and Yangshupu Cotton
Spinning Company of Britain started production in 1914.
Initial entry in the Chinese cotton spinning industry from Japan began with trading
3

companies. In 1902, Mitsui & Co. bought out a Chinese company Xing Tai Cotton
Spinning Company and set up Shanghai Cotton Spinning Co.

They acquired another

Chinese company San Tai Cotton Spinning in 1906. They reorganized the Shanghai
Cotton Spinning to the Shanghai Cotton Spinning and Weaving Co. which owned afactory of San Tai Cotton Spinning Company in the year. In 1907,

Japan Cotton

Company, a trading company set up a joint venture Jiu Cheng Cotton Spinning
Company with the Chinese, which was fully taken over by Japan Cotton in 1909, wasrenamed as Ri Xin Cotton Spinning Company in that year. However, in 1916 it wasbought out by a Chinese. Naigaiwata was the first cotton spinning company to invest in
China, starting up a factory of 20,000 spindles in Shanghai in 1911.

(Note 5) However

the major cotton spinning companies in Japan continuously increased in export toChinese market for another 10 years, and entered there for local production
immediately after the World War One.
Section 2. Development of the Chinese Cotton Spinning Industry
Many local Chinese native cotton spinning companies increased on a large scale
during the World War One, leading to marking a rapid expansion of the industry in
China. As the Chinese cotton spinning industry expanded, so did Japanese cotton
spinning companies make massive investments in China. In addition to Naigaiwata &Company and Shanghai Cotton Spinning and Weaving Company that had been
operating in China before the War, 13 other Japanese companies of Knegafuchi Cotton
Spinning, Touyou Cotton Spinning, Dainippon Cotton Spinning, Fuji Gasu Cotton
Spinning, Tong Xing Cotton Spinning and Weaving, Nissin Cotton Spinning,
Fukushima Cotton Spinning, Nagasaki Cotton Spinning, Manchuria Cotton Spinning,
Japan China Cotton Spinning and Weaving、Donghua Cotton Spinning、Tai An Cotton
Spinning、Toyoda Cotton Spinning started local production in China. (Note 6 )In 1930 the number of spindles of the 80 companies in the Chinese cotton spinningindustry had numbered around 4.61 million spindles : 2.84 million spindles were ownedby 64 Chinese native companies (including one overseas Chinese company owning 213
thousand spindles), 1.64 million by 15 Japanese companies, and 177 thousand by one
British company. (Note 7)

The 10 largest companies in terms of spindle number held

51% of the share of spinning equipment (Table 1) and the majority of these had weaving
sections, so that the number of weaving machines was around 55% of the total of all the
spinning companies. Among the top ten companies, three were Chinese native
companies, one overseas Chinese company, four the Japanese companies and one
British company.
4

Most of the Japanese companies creating a foothold in China and grew intolarge-scale companies. As mentioned above, the penetration of the Japanese investors
in Chinese cotton industry and the market took two forms, one in the form of trading
companies, such as Mitsui & Co., and the other in the form of spinning companies suchas Naigaiwata. All of the local plants of these cotton spinning companies posted goodresults, much better than those of trading companies except for Shanghai Cotton
Spinning and Weaving Company. In particular, Naigaiwata, Kanegafuchi, Touyou,
Dainippon rapidly developed themselves as central players in the Chinese market.
Among the Zaikabo funded by trading companies, Japan Cotton Company had pulled
the spinning subsidiary out of China during the WWI temporarily. In 1918 aninvestment group centered around Japan Cotton, Chu Ito & Company and an
entrepreneur in wool trade named Suketarou Kawasaki, with which Fuji Gasu Cotton
Spinning joined in Shanghai, bought out International Cotton Manufacturing Company
owned by an the American trading company, and formed Japan China Cotton Spinningand Weaving Company. In 1920, Donghua Cotton Spinning Company formed by a groupof Osaka based cotton trading companies bought out the Chinese company Yongyuan
Cotton Spinning Company and started operations. In 1922 Donghua built a new factoryand grew to operate 60,000 spindles. However, both companies operated with poor
performance. In the 30 financial periods from 1921 to 1935 Japan China Cotton
Spinning had 8 periods with losses and Donghua had 13. (Note 8) In that period,
Donghua sold its first factory to a Chinese company and reduced its operation to 45
thousand spindles. Eventually, it was bought out by Japan-China Cotton Spinning andWeaving in 1944. Before that, in 1939 Japan China Cotton Spinning and Weaving had
fallen under the control of Kurashiki Cotton Spinning Company who had bought half
their shares.
Western owned companies in China declined since the World War One. The German
funded Ruiji

Cotton Spinning Company was controlled by a UK company when the

WWI broke out and renamed it as Dongfang Cotton Spinning Company. Later in 1929,
it was bought out by a Chinese company Shen Xin Cotton Spinning Company. As
already mentioned, the International Cotton Spinning and Weaving Company of U.S.A
had been bought out by a Japanese group in 1918. Laou Kung Mow Cotton Spinning
Company which began with funding from the British was bought out by Kanegafuchi
Cotton Spinning in 1925. Although Jardine Matheson bought the two British owned two
spinning companies, vis. Gongyi Cotton Spinning Company and Yangshupu Cotton
Spinning Company in 1922 and its cotton spinning division Iwo Cotton Spinning andWeaving Company controlled these two. This resulted in a spinning company of 170,000
5spindles and 1900 looms; the growth was slow afterwards. Jardine Matheson floated
Iwo’s shares on the market and as a result 80% of the shares went into the Chinese
hands by the latter half of 1920s (Note 9). The companies from the West were not able
to sustain long-term results; with 1 of the 6 companies was bought out by Chinese
native spinners and 2 out of the 6 were bought out by Japanese companies. The
remaining 3 companies were integrated into one but remained stagnant, as above
stated.
The Chinese spinning companies continued to increase even after the World War One,and held the largest share in terms of quantity of production. However, most of themhad serious management problems that could not been solved, resulting in a short life
span of the company; with many factories being bought out or sold off. Despite this
there were some companies, such as Shen Xin and Da Sheng, and overseas ChineseYong An that are worthy of note, which introduced new technologies and streamlined
their operations. These Chinese companies became competitive enough to resist foreign
investment including that from the Japanese companies and grew into major companies(Table 1). (Note 10)
Section 3, Initial Growth of Naigaiwata
In 1909, Naigaiwata decided to build by themselves a spinning plant in Shanghai
from scratch and within 2 years that is in 1911, the plant became operational (Note 11).
Naigaiwata was operating two factories in Japan, which had been acquired at home.
Before operations started in Shanghai, Chinese female employees were brought toNishinomiya for training. They dispatched substantial number of Japanese personnel tolocal plants from domestic factory in Japan, formed this structure of direct managementof Chinese workers, which became a model for local management of Zaikabo.
Naigaiwata carried out direct management of its factories in Shanghai from 1911
onwards, which as stated above, gave it a leading edge over the Chinese native
companies which employed “the Number One System” in which companies contractedpart of spinning processes with experienced workers and the European owned cotton
spinning factories that employed a system in which factory owner gave out a contract
for the whole factory production to Chinese comprador. Naigaiwata secured a strong
position in the Chinese market and grew very rapidly compared to most of the Chinese
cotton mills and most Western mills that were poorly run. Naigaiwata built sevenspinning and two weaving factories and bought out one spinning factory in Shanghai
from 1913 to 1923. (Note 12) Thus Naigaiwata owned a total of eleven factories inShanghai by 1923. Then from 1930 to 1932 they built two weaving factories and two
6

processing factories of cloth. In 1916 they started construction of a factory in Qingdao
which came into operation in 1918, to be followed by two more that were completed in
1923 and 1930, resulting in a production capacity of 90,000 spindles there. Furthermore,they completed construction of two factories in Jīnzhōu in the Kwantung Leased
Territory in China in 1925 and 1928, and by 1930 they had a total capacity of 63,200
spindles in that region. By the year Naigaiwata had become the biggest spinningcompany in China with a total production capacity of 433,812 spindles, 1600 looms andone processing plant in China.
Naigaiwata had invested 93% of its capital in China by 1922 and this figure rose to98% by the first half financial period of 1932 (Note 13). By the second half of financial
period of 1932 its investment in Shanghai accounted for 70% of its total assets.

The

sales of Shanghai Branch kept to enjoy the largest share of total sales of Naigaiwata.
With 72 percent of the total sales, the Shanghai Branch enjoyed the largest share of
total sales of Naigaiwata in 1922 (Table 2).

Afterwards the Shanghai branch regularly

maintained over 60 percent of the total sales. In sum the Naigaiwata’s central location
was in Shanghai. The product value added strategy was developed mainly at the
Shanghai Branch, that will be explained in the Chapter 4.
Chapter 2 , Technology Transfer
Section 1, Japanese Personnel in Local Plants
Naigaiwata faced major challenges from the large Japanese cotton spinningcompanies who constructed large number of plants in China immediately after the FirstWorld War. Moreover some of Chinese native cotton spinners set about modernization offactories and began to catch up with the Japanese firms in China.
The Japanese expatriates increased to 367 in 1924 from 54 in 1917 (Table 3).
Japanese expatriates increased more rapidly than the increase of number of spindles.
During the period, the number of the spindles per one Japanese worker decreased from2139 to 869. Large number of Japanese expatriates was retained and later the numberof Japanese expatriates increased. Chinese workers per one Japanese worker decreased
from 41 of 1921 to 28 of 1930.
The Naigaiwata’s Japanese staff asked Chinese labor to follow the work discipline
strictly and adopt the standardized work motion punctually. In 1927, Japanese workers
increased to 397 persons and the spindles per Japanese worker decreased to 788 in thatyear from 869 in 1923. Looking into the factory operations in Shanghai, the factory was
managed just like in Japan, except that workers were Chinese. A majority of managing
people such as directors, factory heads and department heads were ten and out of whom7

eight were engineers and only two were in charge of trade, labor and office work. In
1929, engineers and technicians were 217, equivalent to 59% of the total of 368
Japanese employees. The Japanese in charge of labor affairs is 30% of that. (Note 14)
This pattern of personal composition that was largely dominated by engineering staff in
the Chinese factories resembled with the pattern in the factories in Japan.
Section 2,

Ratioalization

Beginning in the 1920s, Naigaiwata undertook to replace the operators from maleworkers to female workers. They intended to reduce cost by employing the Japanesemodel of division of labor. In cotton spinning factory, female workers consisted of 90% of
total number of workers in Japan. The kind of division of labor between male andfemale was already established in cotton spinning factory as early as in the 1890s. The
female workers were posted as operators in the processes of drawing, roving, spinningand reeling, where most of the labor of cotton spinning factories was put in. On theother hand male workers were in charge of machine maintenance, as well as being
posted as operators in the processes like mixing, carding and packing where relatively
small number of manpower was required. The wage of young female workers was lessexpensive than adult male ones who supported family financially. Operators in spinning
factory could reach at required level of skill in less than half a year. Consequently even
if young female workers served in the period before their marriage, they could
contribute well enough to the factory operation. Hence for the reasons of lower cost of
female workers, it employed more women than men. Naigawata adopted this model in
China in the 1920s. Looking at composition of workers of eight factories in Shanghai in
1925, five spinning factories i.e. No. 3, No.4, No.5, No.8 and No.12 which werecompleted by 1919, the number of male workers were larger than female ones, while thefemale workers were more than male ones in three factories of No. 13, No.14 and No.15
which were built in 1922 and 1923. (table 4)

Moreover, the percentage of female

workers was higher in the factories of No. 14 and No. 15 build in 1923 were higher thanin No. 13 build in 1922. Male workers were posted in maintenance activities and also as
operators in processes of mixing, carding and packing, while female workers were put as
operators in processes of drawing, roving, spinning and reeling where most of the labor
was posted in. As mentioned before although the number of male workers was larger
than female workers in five spinning factories of No.3, No. 4, No. 5, No.9 and No.12 in
1925, the number of female workers was dominant in all the factories by 1937. During
the years, the number of male workers decreased from 6758 to 3736, while number offemale workers remained steady from 8956 to 8796. In total 15 factories except for 2
8

processing factories, female worker percent increased to 75% in 1937. Although,Naigaiwata succeeded in increasing in female percentage, the subsequent dismiss ofmale workers lead to tension of industrial relation and hence Naigaiwata had to develop
a new labor management practices. The process is explained in Chapter 3.
Naigawata gave a training program for maintenance workers begun in 1919 Chinese
trainees were chosen out of male experienced workers. Naigaiwata gave the educationof Japanese language in the preparatory course for one hour in work time every day,and then the education of the technical expertise of spinning for one hour in work time
every day in the regular course following training standardized motion. The training of
newly recruited workers began in 1922. (Note 15) Zaikabo factories including
Naigaiwata

put newly recruited female workers on one month training program in1931.(Note 16)
Naigaiwata was able to continually update its technology in the local Chinese
operations by transferring the latest technical and management know-how from Japanthrough this structure. At the latter half of the 1920s the Shanghai mill was upgradedto a high draft system followed by the Jīnzhōu plant at the second half of 1929. The
machinery in the weaving section of No. 1 Factory was fully automated in 1931 and thatof the No. 2 in 1932. By 1933, 69% of the total of 3,793 weaving machines in operation in
Shanghai had already been automated. (Note 17)
Under the Japanese management, rationalization went on steadily in Naigaiwata’s
factory in China. The number of Chinese labor decreased from 15714 in 1925 to 12532
in 1937 whereas the number of spinning and weaving machines increased. As a results
spindles per Chinese labor increased from 20 to 33.（Table 3）
Section 3, Constraction of New Factory of the State of Arts in Japan
In the midst of rapid technological developments in the Japanese spinning industry,
there were still problems of aging equipment in the two domestic plants operated by
Naigaiwata. By 1930 the Denpou Factory in Osaka was already 40 years old and wasshut down that year and the Nishinomiya plant was also over 30 years old. In order toprevent any delay in technology transfer to China due to the aging of plants in Japan,
Naigaiwata drew up plans to build a new domestic plant with state of the art technology
at the end of the 1920s. In 1929, it bought land in Anjou in Aichi Prefecture for their
new plant. Giichi Takamasa who was transferred from the Shanghai Branch to
Nishinomiya in 1930 to oversee training of new employees, was given the responsibility
for designing the new plant in Anjou. He was sent on a 6 month fact finding mission
from May to October 1931 to observe plants in America, Britain, Belgium, Holland,9Germany, Czechoslovakia, France, Switzerland and Italy (Note 18) He and his teamdrew up designs for the Anjou factory in the Osaka headquarters and construction work
started on the No. 1 Factory in 1932, which was completed in 1934 followed by the fully
operating No. 2 Factory in 1935. The Anjou plant operated 60,000 spindles and wasequipped with cutting edge technology for a spinning plant in that era. It was said to beamong the top three plants in the country, in terms of technological facilities, ranking
alongside Dai Nippon Cotton Spinning’s Kaizuka plant, the Fukushima Cotton
Spinning’s Sasazu plant. Also, the Anjou Factory had taken over the role of spinningtechnology transfer from the Nishinomiya plant, which kept to be responsible forweaving technology transfer to China.
wasenrolledin

NaigaiwatainAccordingApril,

to

Yasunobu

Nakamura

who

1939,

fifteen of the new employees;

graduates from university, college and high schools,

were given training at Anjou.

(Note 19) The career of eleven of total fifteen were confirmed based on his letter to theauthor. Eight were engineers, among them, two were graduates from engineeringcolleges and the other six graduates from technical high schools. The other three werefrom commercial high schools. After having initial training in Anjou Factory for twomonths seven of the total fifteen were posted in Shanghai, Qingdao and Zinzhou. They
were given further on-job training in above factories in China. Four stayed behind in
Anjou. One out of the four was dispatched to No. 7 Spinning Factory of Shanghai in two
years and the other one to the No. 4 Spinning Factory in about three years. Nakamurastates that at the No. 1 Spinning Factory in Shanghai, they used the new technologies
from Anjou to upgrade the transmission of spinning frame from belt-driven to direct
motor. They also paid particular attention to the air conditioning system. In fact Anjou
took a role of mother factory for transferring spinning technology to the plants in China.
Chapter 3, Localization of Labor Management
Section 1, Incentives for Workers’ Motivation
Naigaiwata attempted to duplicate the management practices of its Nishinomiya
Factory to its factories in China. The Japanese management enforced strict regulations
and demanded high levels of workmanship from the local workforce. If we look at its
operations in 1930 we see that new local recruits were molded into disciplined workers.
This was a major difference from the management in the factories run by native
Chinese companies. While some local Chinese spinning companies such as Shen Xin,
Yong An and Dasheng started to rationalize their operations, the majority of thesecompanies employed very loose practices in terms of cleanliness in the plants, with10

workers eating in the shop floor, looking after children while working, and sitting down
during breaks on the shop floor.
Ayazou Takei who was appointed the President of Naigaiwata in August 1922, madethe following reply to a letter sent to him on 28th February 1925, from the Shanghai
Student Association and other 41 groups, criticizing Naigaiwata for their harshtreatment of local staff (Note 20) “They make it public known that Japanese spinningfirms drive workers hard like a beast of burden. This is a misunderstangings at all. It isa opinion of persons who don’t know the realities in factories at all. Otherwise theyslander the Japanese firms intentionally by using the words which arouse easily the
public sympathy. They should conduct field research well deeply. Every person can visit
our factories and observe for themselves the operations inside the factories if they makethe appropriate applications to visit our factories. We would like them to come and see
for themselves what the real situations is. Japanese management fully realize thattreating working people too harshly was in fact unproductive, making the performance
deteriorative. Far from making our Chinese labor work too hard, we are in fact striving
to give the workers better working conditions and better life “. He realized that thecriticisms by local agitators were unfounded if they came to see the plants. His view wascommon among management people of the Japanese cotton spinners in China. Takei
also made the following comment about the wage structure (Note 21). Naigaiwata paid
the Chinese workers considering their needs for living cost so that they themselves were
not making any demands for wage increase. Chinese workers earned virtuallyequivalent of Japanese workers of good skill in Japan considering relatively lessexpensive local living standard. “ A survey by Toua Doubun Kai reported that in
January of 1925 the average wage for weaving employees in Zaikabo ranged from 50.5
cents in Shanghai Dollar at Naigaiwata to 41.9 cents at Donghua Cotton Spinning.
Compared to this, Chinese native spinners paid 39.0 cents and British owned factories
paid 40.0 cents(Note 22). Also, Freda Attley stated that wages in Japanese factories

were higher than Chinese native factories (Note 23) Chinese workers in cotton spinning
factories in Qingdao were reported as saying ‘If you want to have an easy life with sparetime go to Chinese factories, if you want to earn good money go to Naigaiwata’ .(Note 24)
Naigaiwata took all the steps it could to improve the living conditions for its workers,
and implemented many plans for its Chinese workers. In March, of 1925, Takei gave thefollowing explanation of the welfare facilities at the Shanghai Branch (Note 25) . In thefactory dining hall, hot tea was provided. Prior to this, the Chinese workers would eat
on the shop floor whilst standing. Provision of dining hall brought a noticeable
improvement in conditions. Accommodation was also provided through the construction11

of 2000 apartments in single and double storey buildings, with cheap rents. Thesehoused 14,300 people of which 6,700 were Naigaiwata’s workers. Schools were also
provided for their children and five teachers were employed to teach 300 children who
attended classes. Furthermore, in a park named “Moon on Water” situated in the
Shanghai Branch, every spring, 100 key workers were invited to a luncheon party withall the Japanese staff. This park was also used for outdoors theatres and film shows in
the summer and sports events in the autumn, where all the workers could participate.
These gatherings were treated to snacks and local cuisine. There was also a medical
center, a kiosk, etc that offered comprehensive welfare facilities (Note 26). Care ofworkers concerning their every-day life outside the factories was the responsibility oflabor contractors. Chinese workers were strictly supervised inside the factories but theworkers were free to do whatever they wanted once they left the factory gates, without
any regulations on their living or restrictive values from the company. This was in stark
contrast to the Japanese factories where even life outside the factories that is in thedormitories was also directly and strictly controlled by the company.
It was quite easy to ensure the employment stability of Chinese workers whilst thecompany was in a period of growth. Japanese companies, including Naigaiwata, wereseldom the targets of buy-outs by Chinese companies due to their strong financial
performance figures. Also, they did not undertake measures to curtail their operations,as frequently as did the Chinese native and British companies with the downturn ofbusiness, and therefore the Japanese companies offered relatively more stability to the
local workforce.
Chinese workers were able to acquire high-level skills by working in the strict andtechnically advanced environments at Naigaiwata, and workers who gained thisexperience were highly prized by local Chinese companies and preferred over otherworkers at the time of the recruitment. For example, Qingdao in 1919 Hua Xin Cotton
Spinning Company recruited 300 workers from Naigaiwata when they started up a new
operation(Note 27). This suggests that the skills acquired by the Chinese workers byworking in the Japanese companies was highly evaluated in terms of employability, andthat these Japanese-trained workers played a significant role in technology transfer
when they moved from Zaikabo to local Chinese companies.
Section 2、Adopting the System of Labor Contractors
The labor relations that had been relatively stable so far became unstable when
Naigaiwata began to replace operators on spinning factories from male worker to female
worker. One worker of Naigawata recalled, Japanese managers came and talked to the12male workers. ”Ourfactoryisgoingbankrupt,

andcannotkeeprunning.

We will give you some money, and you can go look for other way ofmaking a living,’ they said to us. Just like that they eliminated us one by one, and thenrecruited women to do our jobs”（Note 28）. Male workers protested against thisreplacement policy of Naigaiwata. Some of the male workers manipulated the Hank
meter, an instrument measuring output. Malpractices in the shop floor intruded fromaround November 1924 (Note 29). Naigaiwata dismissed total 85 workers in No. 8
Factory from the end of January to the beginning of February, 1925. Male workers
began to protest fiercely and in all of the factories of Naigaiwata labor strike broke out
from 12th of that month. Naigaiwata had not experienced the strike caused by labor
management issue by that time, although, labor strike broke out in factories during theperiod June 5th -11th of 1920, at the height of the May Fourth movement, which was apolitical protest against Japan. However, strike of February 1925, had the causes ofworkers’ dissatisfaction against labor management practices. This labor strike spread to
all Zaikabo in Sanghai. Communist Party and the left wing of Guo Min Dang
(Nationalist Party) intervened with that strike. The Communist party had alreadyplanted their fraction in Naigaiwata factories to exercise their control on male workers(Nnote 30)
Sabotaging happened frequently in Naigaiwata factories since the beginning of May.
They dismissed seven male workers in No. 12 Factory on May 14. On that occasion
outsiders together with Naigaiwata workers intruded desperately No. 7 Weaving
Factory using cotton yarn of No. 12 and No. 5 spinning factories and destroyed themachines. One of the Japanese staff fired gun and one Chinese worker was killed. This
incidence developed to anti-imperialism movement widely in town and the May
Thirtieth Incident brought out Nan Jing Lu in Shanghai in May 30, 1925, following
General Strike there for the next three months.
Naigaiwata had to remove the intervention and turbulence from outside factory.
Tying alliance with social network in Shanghai was considered for a possible solution. It
developed an alliance with Green Gang which was a secret society of mutual assistancefor workers, an organization that had a strong influence in Shanghai. Naigaiwata set a
part of labor management contracts to member of Green Gang (Note 31) .

Naigaiwata

delegated labor recruitment and care of workers’ daily life outside factories to labor
contractors who were Green Gang members. Naigaiwata expected to develop mutualinterests with Green Gang and wanted Du Yesheng head of the Green Gang to work as amediator of labor conflict. So far Naigaiwata recruited Chinese workers in a variety ofmethods.

In case of a Naigaiwata factory with 30000 spindles in 1919, out of total 191913

workers 69% was recruited by recommendation mainly by Number One, heads of laboron the work sites, 26% was recruited by advertisements and 4.4% was from applicants.
(Note 32)

Since the latter half of 1920s, Naigaiwata began to use the labor contractor

system for recruitment, through their alliance with Green Gang. Subsequently thissolution is considered to be effective by the Japanese Cotton Spinners Association in
China, which was organized by the Japanese cotton spinners in China on June 18th in
the mid that General Strike and they agreed to adopt this strategy to overcome thelabor problems arising out of the General Strike. (Note 33)
The labor contractors recruited young female workers using their linkage in ruralvillages around Shanghai and took them to Shanghai. They borrowed the company
housing built by Naigaiwata and let those workers live there. They took care of meals of
their recruits, their clothes and medical care. The contractors served as supervisors ofthese factory labors outside the factory premises. They received wages of the workers
and handed out the balances to them after deducting the housing and meal expenses of
the workers. “In the days when this system was popular, a labor contractor in a
Japanese spinning company had more than 600 workers under his supervision.” “Insummer of 1940, in Zaikabo in Sanghai many contractors had more than 15 workers
under each of their supervision, while some contractors had several dozen of workers”(Note 34).
It is estimated that more than 50% of workers in Sanghai was under the control oflabor contractors before the Sino-Japanese War of 1937 (Note 35). Using this labor
contractor system that was operated in alliance with Green Gang, Naigaiwata could
stabilize the industrial relations. They experienced 44 labour strikes during 2 years 10
months i.e. from Feb. 1925 to Nov. 1927, and afterwards up until Sino-Japanese war, it
experienced only three labor strikes(Note 36).
Naigaiwata adopted outright transfer of its labor management practices of
Nishinomiya Factory its factories in China. It provided a variety of incentives andaimed to improve workers’ morale and motivation. These labor policies worked well for
Naigaiwata in China. However not all of them were accepted. Consequently,
Naigaiwata had to modify the labor management practices, accommodating to local
society. This localization contributed significantly to stabilize the industrial relations（Note 37）.
Chapter 4, Product Value Added Strategy
Section 1, Increasing Quality Products Demands in China Market and ProductStrategy of Naigaiwata14

In the latter half of 1920s, in the process of rationalization of operation of local
factories, Naigaiwata took extensive steps in Shanghai towards value addition on its
cotton products. This meant that Naigaiwata tried to improve its product quality of tis
products so that these products could become substitute for imports of higher quality
products to China (Note 38).
During and after the WWI, in China, the demand for cotton products moved uphigh in quality and the need to manufacture value added product began to growsignificantly. This also reflected the steady growth in the income of people in China as
the Chinese economy grew. Those value added products were mostly imported fromJapan and Britain. There was shift in imports from plain cloth to processed cloth which
was made of thin and light cotton cloth woven by medium and high count cotton yarns.
The Chinese imported cotton cloth totaled 184million Yuan in 1929. At least 75% (dyed38%, printed 17% and bleached 19%) of the amount was processed cotton cloth. Plain
cloth was 21% and miscellaneous cloth was 4.0%. Modern processed cotton cloth
manufacturing had begun since the 1910s, but the Chinese could not compete against
imported processed cotton cloth. Total output of Chinese owned factories in Shanghaithat had more than ten employees totaled 5.18 million Yuan even in 1930, while theimports of printed cotton cloth in Shanghai reached 21.39 million Yuan in the same
year.
Since the WWI period, Chinese government endeavored to restore the custom duties
autonomy for that purpose of protecting domestic industries. After the revision ofcustom duties in 1919, it raised the duties to 5% of the current prices in 1923 based on
resolution of Washington Conference of the previous year. In 1926 the government of
Nationalist Party in Kanton executed the inland transition tax of 2.5 % in addition to
the import tax of 5% in 1926. Subsequently, Peking government executed additional
import duty of 2.5% to the import tax in 1927. Finally, China could restore the tariff
autonomy in 1929. Naigaiwata, most of whose business was located in China recognized
the opportunity to replace imports of value added cotton products through local
production of value added product.
Takei recognized the prospective product strategy of Naigaiwata as he wrote to his
son visiting in London in July 1924. (Note 39)“Considering the cotton business, which

I am engaged in, the spinning of low count cotton yarns like 16 count and 20count haveno future even in China. The 32 and 42 count cotton yarns might still survive, but notfor long. Definitely we should take steps to produce bleached and dyed cotton cloth fromnow on. In the field of processed cotton cloth there are items such as printed cloth andmercerized cotton cloth. We should definitely manufacture these items in China. To my15

understanding, the polishing techniques we should adopt are mercerization for cotton
yarn and silk-finishing for cotton cloth. While consulting this issues with Mr. Atarashi
of Mitsui & Company in London, it is good for you to visit and study generally theprocessing factories in Britain.” At the general meetings of shareholders of Naigaiwata& Company on September 28th, 1931, he mentioned. ( Note 40)“ Peoples’ life in Chinais gradually improving and the culture and society will progress. We should therefore
try to advance our business step by step, to adapt to the higher living standard of theChinese people.”
The success or failure of production of value added product was dependent upon
management of quality control. It means manufacturers were required the ability for
production of high volumes with quality goods and at high yield rate. The higher thevalue addition of the products, the longer the production processes

and accordingly, we

require more hands, and longer time. Production of high count cotton yarn requires
longer time with more hands than the production of lower count yarn. Quality of cotton
cloth is dependent upon the quality of grey cotton yarn as well as upon quality control ofweaving process itself. Quality of processed cotton cloth is dependent upon quality ofgrey cotton cloth as well as upon product quality control in processing stages. Moreover,as the price of raw cotton for fine cotton goods is expensive, the yield rates have to be
maintained well. These capabilities in the factory for quality management were realized
in local production in China through Naigaiwata’s the process of technology transfer,
skill development of workers, and the localization of labor management.
The value added product strategy that was started in Shanghai was then replicatedin Qingdao and then moved to Zinzhou.
Section 2, Development of Value Added Products Strategy
1． Medium and High Count Cotton Yarn
Naigaiwata used to produce low count cotton yarn in Shanghai. After the World War
One it started to produce some medium count cotton yarns, but in 1923, 95% ofproduction was still thick yarn thread (Note 41) In the first half of the financial year
1926, their cotton yarn included: more than 90% were thick yarns of 20 count, 16 countand 20/3 count (cotton made from 3 strands of 20 count yarn), and remaining 8% were
medium 42 count doubled yarn. (Note, 42) However, from there on, production of higher
count yarn gathered momentum, and within four years it was producing only mediumcount yarns. By the first half of year 1929, more than 95% of its whole yarn production
was 42 count doubled yarn, 40 count, 32 count, and 32 count doubled yarns. By thesecond half of 1929 all its yarns were medium count yarns. From January, 1930 No. 15
16Factory(renamed as No. 8 Spinning Factory in 1931) was refurbished and started
production of 60 count gassed yarns, and in the following year it refurbished No. 4
Spinning Factory to make 80 count gassed yarns.
Sales of medium count yarns were not confined to the Chinese market they were also
exported to other third countries, especially India. It is reported that in 1928 15% of thecotton was exported abroad (Note 43). Also, in 1930 Japan had a gold embargo withrising yen price and the Japanese companies had difficulties to export overseas.
However, Naigaiwata could export to India from Shanghai and acquired larger market
shares of medium yarns in India, a market that was earlier dominated by Toyo Cotton
Spinning Company, Dainippon Cotton Spinning Company and Fuji Gasu Cotton
Spinnning Company (Note 44). In 1932 17% of Naigaiwata’s sales were in India.
2. Fine Cloth
Production of cotton cloth had already started in October 1918 at No. 7 Factory(renamed No.6 Weaving Factory in 1931) with 600 weaving looms. This was followed byproduction at No. 9 Factory bringing the total number of looms at Naigaiwata in
Shanghai to 1600 in 1922. Sales of cotton cloth reached 28% of total sales of Shanghai
branch total sales by 1927 (Table 5).

Production of processed cloth was started bybeing supplies of grey cotton cloth by No. 1 Factory built in 1931 and was expanded withthe start of the grey cloth production in No. 2 in 1932, taking the total number of looms
in Shanghai to 3,521.
During that time, cloth produced in Shanghai was of very high quality. At the second
half of 1927 over 80% of the total output figures was for thick cotton cloth like sheeting
but from the second half of the same year the figure for thin cloth like shirting rose
sharply to 50%. Fine cloth accounted for the 100% mark at the first half of 1929.
3, Shift to Printed Cloth
The major breakthrough for Naigaiwata in its product strategy for the Chinese
market was in processed cotton cloth. From 1927, it started designing and choosing
equipment for its processing plants led by an engineering staff Tarou Yamakawa. (Note45) Yamakawa’s team drew up plans by bringing in outside expertise. In 1930, there
was a big industrial dispute at the Knegafuchi Cotton Spinning Company, and one of
the main base of the dispute was the Yodogawa factory in Osaka. Because of thisdispute many expert dyers left Kanegafuchi and Naigaiwata hired them, completing theNo. 1 Processing factory in 1930. This was a pilot plant, and it led the way for a second
full scale plant starting operation in July, 1932. Naigaiwata’s processing plants were the17largest in China and were far ahead of others in terms of volume of production. This
shift to processed cloth was made possible by supplying good quality of yarn and cloth.
Weaving of fine cloth require high quality medium and high count yarns. Processed
cloth that can be traded at high prices could be made only from fine cloth.
Sales of processed cloth were good, and in the second half of 1932, sales of processed
cloth surpassed that of grey cloth. By the second half of 1932, processed cloth accounted
for 65% of total sales in the Shanghai branch and went on to be the main product item
there (Table 5).
4, Value-added products in Qingdao and Jīnzhōu
In Qingdao from around 1931 Naigaiwata began to switch over low count yarns to
medium count ones. In 1934, 25% of the yarns in Qingdao were medium count (Note 46)
In Jīnzhōu large spinning cum weaving factories were constructed in 1936 and 1940. In
1940 the Jīnzhōu factory was equipped with 108,352 spindles and 2,003 looms. By theend of 1941, cloth accounted for 45% of sales there (Note 47)
Chapter 5, Performance in China
The outcome of a value added product strategy in the operations started in Shanghai
soon became clear. Up to the first half of 1929 sales from China contributed over 80%
level of the total sales but from the second half of the year this figure rose to over 90%(Table 2). What do these figures tell us from the viewpoint of profitability? With the endof the boom era after the First World War, profitability from sales in China fell to 15%
by the first period of 1923, and remained around that level (Table 6).
The Shanghai Branch that was the lynchpin of Naigaiwata’s operations in China
posted profitability figures of over 50% immediately after the First World War, but thisfell to around 10% and bounced back to 18% by the start of 1923, thereafter it stayedaround the 15% mark. The profitability figures for the Shanghai office can therefore be
evaluated positively. The good operating figures from Chinese operations played asignificant role in making up for the poor domestic figures from the beginning of 1923.
The Denpou Factory in Osaka, regularly posted negative results from 1927 and wasshut down in 1930. Nishinomiya Factory fell below 10% profitability in 1928 and posted
losses on both halves of 1930. The problems suffered by the domestic plants wereoffset by the Chinese operations and as a result Naigaiwata & Company as a whole did
not feel any damaging effect that other Japanese spinning companies faced during thistime.
However, it was to experience increasing downturns on sales in China, due to labor18

strikes and the political incidents in both Shanghai and Qingdao. For example, in 1927
Chang Kai Shek’s army moved to Shanghai causing mayhem and stopping production.
In January 1932 the first Shanghai Incident broke out and Japanese personnel had tobe repatriated until April of the same year. In July 1937 the Japan-Sino War started
with the second Shanghai Incident and Japanese personnel were again forced to go backto Japan until January of the following year, stopping operation of all factories duringthat period. Profitability of Shanghai operations fell to 4% in the second half of 1925, 9%in the first half of 1927, 3% in the first half of 1932 and 4% in the second half of thesame year. It bounced back to around 15% after that but fell back to 8% in the first halfof 1938. In Qingdao there were similar turbulent results with profitability running at
6% in the first half of 1925, 4% in the first half of 1927, 5% in the second half of thesame year, and 5% in the first half of 1929. Also, production was stopped in August 1937
following the Shanghai Incident, when Japanese personnel were repatriated, and theplant was finally damaged by bombing the following December.
This clearly shows that external events such as political incidents, rather thanmanagement practices, which were beyond the control of Naigaiwata, led to the periodsof turbulence in China significantly disturbing the operations of Naigaiwata.
Conclusion
During the period of fierce competition in China after the First World War,Naigaiwata emulated the practices of the newly built local factories of major Japanesecotton spinning companies. It was also critical to keep a close eye on some Chinesecompanies to catch up with the best in China. Naigaiwata kept rationalizing production
for quality control and to keep the cost down. It increased its number of Japanese
expatriates in Shanghai from 54 in 1919 to 398 in 1926.

It began to transplanttechnology and management of Nishinomiya Factory in Japan to China, and later fromthe Anjou Factory, a newly built factory with the state of arts technology in 1934.
Naigaiwata gave training programs to Chinese workers and asked them to carry out
standardized work practices and to observe work disciplines strictly. In the process of
the rationalization, Naigaiwata faced a formidable protest from the male workers, when
it began to replace male operators with female workers. The communist group and theleft wing of Nationalist Party took advantage of this occasion to gather their own
strength, and soon the labor conflicts developed to anti imperialism campaign fromoutside the factories to the town. For removing unstable social disputes inside andoutside company, Naigaiwata created ties with the local network Green Gang inShanghai. While it controlled labor strictly inside factory, it left recruitment of workers
19and care of their daily lives to the labor contractors; the members of the Green Gang
network. This labor management method stabilized the industrial relations inside andoutside factory.
While Naigaiwata proceeded with the rationalization of local operation, it took a stepin the product value addition strategy on a full scale in the latter half of 1920s. All ofcotton yarn became medium count cotton yarn in 1927, and production of gassed yarnbegan in 1930. All of the plain cotton cloth became thin and light cloth like shirting by
1931. The dyed, bleached and printed cotton cloth which began to be produced in 1930
occupied 65% of the total Shanghai sales in 1933. This also made it possible for
Naigaiwata to segregate its own market from that of the local Chinese producers.
Qingdao Branch and Jinzhou Factory followed the product strategy of Shanghai.
Naigaiwata could maintain its position of largest cotton spinning company in China
during the inter war days. It realized profitability on total assets to about 15% there,with only temporary drop in its performance due to political and military incidents
between Chinese government and Japanese government.
Naigaiwata kept its position of most advanced cotton spinning company in technology
and management and value addition of product. Its technology and managementcompetitiveness were developed in-house of its local factories in Japan and were
through the transferred to its factories in China through a large number of Japanese
expatriates. It also adapted a part of its labor management to the local situation in
China. Its process of local operation has a great deal of continuity to that of Japanesemultinationals after the Second World War. However, Naigaiwata did not allow thepromotion of the Chinese from rank and file to administrative class. The above practices
were considered the uniqueness of local management of Zaikabo.
Epilogue
After the Japan-Sino War broke out Naigaiwata was in a poor condition as it had
suffered from severe damage during the conflict and the impact was disastrous. In the
2nd Shanghai Incident in 1937 military conflict had forced Japanese nationals in
Shanghai to return to Japan from August until January of the following year, and theJapanese nationals in Qingdao Branch had to also repatriate in this August under theuneasy situation. The factory in Qingdao was destroyed by explosives in December 1937.
During the Japan-Sino War, Naigaiwata had been forced to manage Chinese spinningcompanies under military control, and it is almost certain that Naigaiwata did not want
to be involved in taking on that role, but were forced to do as a way of supporting themilitary in its campaign.
20

In 1939 it became difficult to procure raw cotton at Qingdao and Jīnzhōu and operations
declined sharply (Table 7). In 1940 Shanghai production levels fell constantly due to alack of cotton, and from there on followed a period in which Naigaiwata sales of cotton,
which represented their main business, reduced sharply. During that period
Naigaiwata’s Chinese operations posted high profits in their profit and loss statement
sheets (Table 6). However, if we consider the decrease in operating levels it is hard to
take these figures to represent the real situation for their sales figures. This wasnothing more than a result of inflation during the war period.
In this situation, its factories were under the control of the military and were notproductive. The spinning and weaving machinery were delivered for military purpose,whilst at the same time it shifted away from producing yarn and cloth to other areas tosupport the military campaign under the Japanese military command. In the end, thisresulted in the destruction of its ability to operate as a cotton company. At the end of thewar in 1945, Naigaiwata’s assets in China were seized by the Chinese authorities.
Acknowledgment
This paper has made use of part of the database created through an MEXT research
grant of Promotion of Sciences of Ministry of Education (No. 11630080), which was held
between 1999 and 2002 entitled ‘Rise and Fall of Japanese textile companies in China:
an analysis of Naigaiwata Company from 1920-40’. I would like to thank my researchcollaborator Professor Takeshi Abe (Graduate School of Economics, Osaka University)
for allowing me to use this information. This paper was edited by Dr. Amar K. J. R.
Nayak(Associate Professor of Xavier Institute of Management, Bhubaneswar, India) towhom I am grateful.

[2009.8.17 936]
Footnotes
Note 1, Geoffrey Jones,

Multinationals and Global Capitalism from the Nineteenth

to the Twenty First Century, Oxford University Press, 2005, p.22.
Note 2, Tetsuya Kuwahara, Kigyou Kokusaika no Shiteki Bunseki (Historical

Aanalysis of Internationalization of Firms: Japanese Cotton Spinners’ Direct
Investment in China before the Second World War), 1990.
Note 3, Major contributions from this view point are as follows: Seijirou Usami andHarumaru Harada, “Shoukuminchi Shinnryaku to Kokka Dokusen Sihonsyugi(Invationin Colonies amd National Monopolic Capitalism) ” , Seijirou Usami and Harumaru
Harada, Kiki ni okeru Nihon Shihonsyugi no Kouzou( The Stracture of Japanese

Capitalism in the Crisis), Iwanami Syoten, 1951.
21

Zhongpin Yan （ YoshiieYoda

translated ） , Chuugoku Kindai Hattatsushi (History of Development of Modern

China) ,Azekura Syobou, 1966. Juichi Nakase, “Sen-i Sangyou no Kaigai Sinsyutu toZaikabo ( Chapter 9, Overseas Operations of Textile Industry and Zaikabo”

in Mitsuo

Fujii, Juichi Nakase, Kei Maruyama and Mitsumasa Ikeda, Nihon no Takokuseki

Kigyou no Shiteki Tenkai( Development of Multinationals from Japan in Historical
Perspective, Vol.1, Ohtsuki Shoten, 1999. Hiroaki Yamazaki, “Senji-ka ni okeru Zai
Kahoku Nihon Bouseki Kaisha no Keiei Doukou ni kansuru Oboegaki(Note on Business
Process of Japanese Cotton Spinning Companies in North China during the
Sino-Japanese War)” , Tokyo University Shakai Kagaku Kenkyuusho ed., Shakai

Kagaku Kenkyuu(Jouranal of Social Sciences), Vol. 4・5, 1977． Peter Duus, ”Nihon
Bouseki Kigyou to Chuugoku- Teikokusyugi no Hitotu no Keisu Stadei(Japanese Cotton
Spinning Industry andChina- A Case Study of Imperialism-)”, Rhuuei Nakamura,Senkan-ki no Nihon Keizai Bunseki (The Japanese Economy in the Interwar Years),
Yamakawa Syuppan-sha, 1981. Naosuke Takamura, Kindai Nihon Mengyou to

Chuugoku (Modern Japanese Cotton Industryn and China), Minerva Shobou, 1986.
Hiroshi Nishikawa, Nihon Teikoku to Mengyo(Japanese Empire and the Cotton

Industry), Minerva Shobou, 1987. Peter Duus, “Chaper 3, Zaikabo, Japanese Cotton
Mills in Chaina, 1895-1937,

Peter Duus, Ramon H. Mayers, and Mark Peattie, R.

Peattie ed., The Japanese Informal Empire in China,1895-1937, Princeton University
Press, 1989.
Note 4, The major contributions from this viepoint are as follows: Tetsuya
Kuwahara, ibid., 1990. Takeshi Abe, “ Mengyou( Cotton Industry)”, Haruhito Takeda,

Nihon Sangyou Hatten no Dainamizumu(Dynamism in Development of JapaneseIndustry), University of Tokyo Press, 1995. Tetsuya Kuwahara, “Zaikabou no Seisui –Kuni no Unmei to Kigyou no Unmei, Naigaiwata Kaisha ( The Rise and Fall of theJapanese Coton Spinners in China – The

Loss of War and the Firm’s Destiny ,Naigaiwata.” ,Kobe University, Kokumin Keizai Zasshi(Journal of Economics andBusiness Administration), Vo. 178, No.4, 1998. Tetsuya Kuwahara, “ Zaikabou no
Sosiki-nouryoku ― Ryoutaisenkan–ki no Naigaiwata ( Naigaiwata in the Inter Period) ”,
Ryuukoku University, Keieigaku-Ronshu(Journal of Business Studies), Vo.44, No.1,
June 2004. Tetsuya Kuwahara, “ Zaikabo – Shinshutsu Kigyou to Minzoku Kigyou no
Soukoku – (Zaikabo: Competition against Chinese Native Firms)”, Keieisi-gakkai,

Gaikoku-Keieishi no Kiso-Chishiki( Basic Kowledge of Business History of Foreign
Countries), 2005. Tetsuya Kuwahara, “Nihon Kigyou no Kokusai-keiei ni kansuru
Rekisiteki Kousatsu - Ryoutaisenkan-ki, Chuugoku ni okeru Naigaiwata Kaisha –( The22

Overseas Operations of Japanese Manufacturing Multinationals during the Inter-war
Years: Naigaiwata in China)”, Nihon Rodo Kenkyu Zasshi ( The Japanese Journal ofLabour Studies), No.262,May 2007.
Note 5, Tetsuya Kuwahara, ”The Establishment of Oligopoly in the Japanese
Cotton Spinning Industry and the Business Strategies of Latecomers:Case of
Naigaiwata”, Keiichiro Nakagawa and Hidemasa Morikawa ed., Japanese Yearbook on

Business History, vol.3, 1986
Note

6, Knegafuchi Cotton Spinning Company had been operating a silk spinning

factory in Shanghai, the local name Shanghai Silk Spinning Company which was
acquired at the merger of Kenshi Bouseki Kaisya(Silk Spinning Company) in Kyoto,
Japan in 1911 . Tetsuya Kuwahara, ibid., 1990, pp.1-8, 145.
Note 7, Cotton Spinning and Weaving Association of Shanghai City, Zhong Guo

Mian Fang Tong Ji Zi Liao ( Coton Spinning Satatistics in China)、Shanghai,1950．
Note 8, Takamura, ibid., 1986, p.131.
Note 9, Takamura, ibid.., 1986, p.131.
Note 10, Although outstanding research that includes fieldwork exists such as
Zijian Wang, Zhen ｚ hong Wang(tranlated by Fumio Kunimatsu), Sina Bouseki-gyou(Cotton Industry in China ), 1940, and Toshiyoshi Okabe, Kyuu Chuugoku no Bouseki
Roudou Kenkyuu (Research of Cotton Spinning Labor in Old China ), University of
Kyusyuu Press, 1992, there are still some important facts that have been missed andneed further investigation.
Note 11, Tetsuya Kuwahara, ibid., 1986.
Note 12, In 1913 they built No. 4 Spinning Factory, and in 1915 No. 5 Spinning
Factory. In 1918 they bought out Yu Yuan Cotton Spinning Company and gave name of
No.9 Spinning Factory. It built No. 12 Spinning Factory ( renamed as No.6 Spinning
Factory in 1931. hereafter the factory number renamed in 1931 is denoted in theparentheses) in 1919, No.8 Spinning Factory (No. 7 Spinning Factory) and No. 13
Spinning Factory(No. 1 Spinning Factory) both in 1922, No14 Spinning Factory (No. 2
Spinning Factory) and No. 15 Spinning Factory(No. 8 Spinning Factory) both in 1923.
Moreover two weaving factories were built: No. 7 Weaving Factory in 1918 and No.9
Weaving Factory in 1922.
Note 13, Tetsuya Kuwahara, ibid., 2004, Table 2.
Chapter 2 , Technology Transfer
Note 14, Kinpuu Sha, Sina Zairyuu Houjin Jinmeiroku(The Directory of Japanese

Residents in Shanghai) , the 21st version, March, 1930.
23

Note 15, Yasushi Udaka, Sina Roudou-mondai( Labor Problems in China) 1925, pp.
352~356). Emily Honig, Sisters and Strangers: Women in Shanhai Cotton Mills,

1919~1949, California University Press, 1986, p.79. Kiichi Nishikawa、Chuubu Sina
Roudousya no Genjo to Zenkoku Roudou Sougi( The Reality of Workers in the Middle
China and Industrial Conflicts over China, 1924, p.20.
Note 16, Toua Doubun-kai, Sina Kougyou Souran( Overview of Chinese Industries),
1931, pp.93-95.
Note 17, Tetsuya Kuwahara, ibid., 1998, p.32.
Note 18,

Tetsuya Kuwahara and Takeshi Abe, ibid., June 2003.

Note 19, Letter to Tetsuya Kuwahara from Yasunobu Nakamura, dated on April 12,
2004,

reserved by the author.

Chapter 3, Localization of Labor Management
Note 20, Naigaiwata Kaisha, ”Shanghai Naigaiwata Hikou Jijou( Labor Strikes ofNaigaiwata, Shanghai)”, June 1925. , Statistics of the end pages.
Note 21, Naigaiwata Kaisha, ibid., June 1925, pp.47,48.
Note 22, Toua Doubun-kai, ibid., 1931, p.89.
Note 23, Freda Attley, “Eikokujin no Mitaru Zaisi Bouseki-gyou(The Cotton Spinning
Firms in China Observed by A British)”, Touyou Boueki Kenkyuu( Study of the Oriental

Trade), Vol.80, No.10, Oct. 1929, pp.7,8.
Note 24, Tooru Kubo, ibid.., 2005, p.85.
Note 25, Naigaiwata Kaisha, ibid., June 1925、pp., 51-55. Yasushi Udaka, ibid., 1925,
p. 346.
Note 26, Naigaiwata Kaisha, Naigaiwata Kaisha Gojuu Nennshi (The Fifty Years ofNaigaiwata & Co.), 1937, pp. 133~145.
Note 27, Tooru Kubo, ibid., 2005, p.69.
Note 28, Emily Honig, Sisters and Strangers: Women in Shanghai Cotton Mills,

1919~1949, California University Press, 1986, p.51.
Note 29 Naigaiwata Kaisha, ibid., 1937, pp. 67~75. Naigaiwata Kaisha, ibid., June
1925, pp1-11. Yasushi Udaka, ibid., 1925, pp.587~597．
Note 30, Yasushi Udaka, ibid., 1925, p. 596.
Note 31, Sherman Cochran, ibid., 2000, pp.111~112. Emily Honig, ibid., 1986,
p.130.The Green Gang swept away the Communist Party in supporting Chang Kai
Shek’s army in Shanghai in 1927 and was getting more powers there.
Note 32, Yasushi Udaka, ibid., 1925, p.329 .
Note 33, Danzou Tachikawa, Funatsu Tasuichirou, 1958, pp.174-176, 186.
24

Note 34, Toshiyoshi Okabe, “Sina Roudou-ukeoi-seido no Youshiki( The Patterns ofLabor Contractors System in China”, Kyoto Daigaku , Toua Keizai Ronsou( Journal of

East Asian Economy), Vol. 1, No.2, February 1941, p.152.
Note 35, Toshiyoshi Okabe, “Sina Bouseki-gyou ni okeru Roudou-ukeoi-seido ( TheLabor Contractors System in Cotton Spinning Firms in China)”, Kyoto Daigaku, Toua

Keizai Ronsou( Journal of East Asian Economy), Vol. 1, No.1, February 1941, pp.204.
Toshiyoshi Okabe, “Sina Roudou-ukeoi-seido no Hattatsu(2) ( The Development of Labor
Contractors System in China(2)”, Kyoto Daigaku, Toua Keizai Ronsou( Journal of East

Asian Economy), Vol. 1, No.4, December 1941, pp.202, 203.
Note 36, H. D. Hong, Cotton Industry and Trade in China, 1932, p.164. Sherman
Cochran, ibid., 2000, p.112.
Note 37, However the contractors often conducted intermediary exploitation of female
labor and this practice is considered to decrease their manpower.
Chapter 4, Product Value Added Strategy
Note 38, Tetsuya Kuwahara, ibid., 1998.

Zhongpin Yan（Yosiie Yoda translated）, ibid.,

1966, tables at end pages. After that year China’s processed cotton cloth factories grewunder the protection of tariffs based on the custom autonomy. Tooru Kubo “ Nankin
Seifu no Kanzei Seisaku to sono Rekishiteki Igi”(Custom Duty Policies of the Nanking
Government and its Historical Significance), Tochi Seido Shigaku (Journal of Political

Economy and Economic History) Vo.8, p.46. Kou Takei, Takei Ayazou Ibun-syuu(Essayof Memories of Ayazou Takei), 1935, p.135.
Note 39,

Ayazou Takei, ibid., 1934, pp.135-136.

Note 40, Naigaiwata Kaisha, Kabunushi Soukai Gijiroku(Minutes of General Meetingof Shareholders), 1931.
Note 41,

Shouichi Okuyama, “Shanghai ni okeru Houjinn Bouseki Gyou( TheJapanese Cotton Spinners in Shanghai)”, Kobe College of Commerce, Kaigai Ryokou

Cyousa Houkoku (Research Report of Overseas Travel , Summer of 1924) ,1925.
Note, 42, Naigaiwata Kaisha, Zousi Kinenchou( Memirial Photo Album of Increase of

Capital of 1931), 1932.
Note 43,

Naigaiwata Kaisha, Kabunushi-soukai Gijiroku(Minutes of General

Meeting of Stochholders), Jan. 1929.
Note 44, Shunyou Adachi, Naigaiwata wo Kataru( Talking of Naigaiwata.), 1932,
pp.10,11, 12.
Note 45,

Tetsuya Kuwahara, ibid., 1998, p.30.

Note 46, Zaika Bouseki Dougyou-kai, “Zaika Bou Seisan-daka( Product Output of25

Zaikabo)“, 1935, reserved in the Department of Library, Research Institute of
Economics and Business Administration, Kobe University.
Note 47, Tetsuya Kuwahara and Takeshi Abe, “ Zaikabou no Seisui- 1920~ 40 Nendaino Naigaiwata Kaisha no Bunseki (The Rise and Fall of Zaikabo: Analysis of
Naigaiwata. during

Years 1920s~1940s) “, Kagaku Kenkyuu-hi Houkoku-syo ( Reportof Research by the Grant for Promotion of Science of Ministry of Education and Science)
C-2, No. 11630080 , June 2003.

26

Table 1
Top ten cotton spinning firms in China(based on spindles)
1930
location
nationalit
rankingfirms
Shanghai, Qingdao, Jī
1 Naigaiwata & Co.
Japan
nzhōu
Shanghai, Wu xi、Han
2 Shen Xin Spininng
China
Kou
Japan China Cotton
3
ShanghaiJapan
Spinning and Weaving
Overseas
4 Yong An Spinning
Shanghai
ChineseKanegafuchi Cotton
5 Spinning （Shanghai Silk
ShanghaiJapan
Manufacturing )6 Iwo Spinning and Weaving

Shanghai, Qingdao

7 Dasheng Spinning
Shanghai
Shanghai Spinning and
Nan Tong 、Qi Dong
8
Weaving、Hai Men
9 Dainippon Cotton Spinning Shanghai, Qingdao
10 Hu Bei Spinning and Weaving Wu Chang
Total for the 10 companies
Total for the other 70 companies
Total for 80 companies

number of spindles number of weaving looms remarks
Oneprocessing plants
434,776
9%
1,600
4%
is not included
383,232

8%

3,857

10%

244,832

5%

500

1%

213,216

5%

1,298

3%

193,7204%

3,048

No.3 factory of silk
8% spinning is notincludedJapan

178,288

4%

4,388

11%

U.K

177,228

4%

2,480

6%

China

152,444

3%

1,392

4%

Japan
China
2,200,728
2,391,862
4,592,590

134,992
90,000
48%
52%
100%

3%
2%
21,08318,35339,436

1,320
0
53%
47%
100%

3%
0% out of operation
137,314141,128
278,442

SourceShanghai Shi Mian Fang Zhi Gong Ye Tong Ye Gong Hui, Zhong Guo Mian Fang Tong Ji Zi Liao
( Coton Spinning Satatistics in China) 、Shanghai、1950．

Table 2, Sales by branch
unit:Yen

1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937

year

No. 1
Factory

No. 2
FactoryFirst Half

n.a.

n.a.

Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second Half

5%
5%
6%
5%
5%
4%
4%
6%
8%
5%
n.a.
n.a.

n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.
13%
13%
13%
12%
10%
10%
12%
11%
19%
10%

n.a.
n.a.
4%
2%
2%
2%
2%
2%
1%

Anjou Domestic Shanghai Qingdao
branchtotal
branchFactory
n.a.
18%
19%
18%
17%
15%
14%
16%
17%
26%
15%
n.a.
n.a.

n.a.
70%
72%
72%
70%
67%
65%
64%
65%
42%
63%

n.a.
n.a.

Jīnzhōu
Factory

12%
10%
10%
13%
18%
20%
20%
18%
23%
18%
n.a.
n.a.

Total in
China amount
n.a.
n.a.

n.a.
n.a.

n.a.
n.a.

share
n.a.

20,303,022
24,270,844
22,518,321
25,364,497
26,173,787
38,811,651
40,350,516
38,887,104
27,151,185
35,865,141

82%
81%
82%
83%
85%
86%
84%
83%
74%
85%

9%
4%

Total

n.a.
n.a.

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
n.a.
n.a.

12%
16%
55%
24%
5%
84%
100%
21,033,761
8%
10%
60%
25%
5%
90%
100%
26,693,849
8%
10%
58%
26%
6%
90%
100%
26,700,625
7%
9%
60%
23%
8%
91%
100%
28,632,563
8%
11%
71%
9%
10%
89%
100%
22,182,038
6%
8%
64%
17%
10%
92%
100%
20,846,603
7%
9%
61%
19%
12%
91%
100%
16,155,643
5%
5%
62%
22%
11%
95%
100%
18,385,196
7%
7%
59%
22%
12%
93%
100%
14,405,416
6%
6%
44%
35%
16%
94%
100%
15,306,528
6%
6%
59%
23%
12%
94%
100%
21,641,199
100%
6%
6%
55%
27%
13%
94%
26,996,998
5%
5%
60%
24%
11%
95%
100%
32,906,260
5% 0.00939
6%
59%
23%
12%
94%
100%
33,591,438
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
4% 0.037113
8%
58%
21%
11%
92%
100%
41,085,600
5% 0.050176
10%
53%
23%
15%
90%
100%
36,440,336
4% 0.048756
8%
58%
19%
14%
92%
100%
40,640,078
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
8% 0.097237
17%
35%
14%
34%
83%
100%
26,092,498

First Half
Second HalfFirst Half
1939
Second HalfFirst Half
1940
Second HalfFirst Half
1941
Second Half
1938

8% 0.105158
4% 0.048357
4% 0.065231
3% 0.06409
1% 0.028645
2% 0.021447
2% 0.029528
2% 0.022978

18%
8%
10%
10%
4%
4%
5%
4%

34%
63%
52%
59%
73%
68%
64%
66%

0%
0%
4%
9%
10%
13%
14%
14%

47%
29%
34%
22%
13%
15%
17%
16%

82%
92%
90%
90%
96%
96%
95%
96%

20,144,883
36,119,113
29,401,859
28,771,852
65,925,041
75,487,918
56,730,060
62,683,439

100%
100%
100%
100%
100%
100%
100%
100%

Data
Naigawata &Co. ,"Kaku-siten Koujou-keisan-bo（Account Books of Branches and Factories)" First Half of 1921- Second Half of 1941.
sourc
However, figures are not available for Second Half of 1926, First Half of 1927, Second half of 1934 and First Half of 1935, and First half of 1937.
Notes
1, The sales volume are calculated as follows: Sales for each product= balance brought forward from the previous period + turnover for that period balance brought forward from the next period + profit (or loss)
The sales for Shanghai and Qingdao for the period 1935-41 are obtained by converting the local currency into Yen.
The conversion rate is referred to the following lliterature.
Hisiao Liang-lin, China's Foreign Trade Statistics, 1864-1949,( Harvard East Asian monograph; 56),1974,p.192
Haikwan Tael = 1.114 Shanghai Dollar (Shanghai $) = 1.05 Qingdao Yin
2, Waste thread and waste cloth are added to the respective spinning and cloth products up to 1938

Table 3,
Spindles, Japanese Expatriate and Chinese Labor at Shanghai Branch (1911-1942)

Japanese
expatriates at Chinese labor
Shanghai branch

Spindles

1911
1912
1913
1914
1915
1916
1917
1918
1919
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938

20736
21504
52304
54304
106937113991
115,527
115,527
192,040
192,040
192,640
233,076
319,061
319,061
319,061
319,061
312,973
330,813327,193
343,089376,730
340,262
340,162
416,686
393,646
393,886
393,886
393,886

Chinese labor
per oneJapanese

Spindles per
Chinese

54

2139

65
118

2954
1627

232
367

1005
869
842
842
816
788

379
379
391
397
370

15,11915,714
15,400

40
41
39

10589

29

350

398
380

927

Spindles per
Japanese

21
20
21

32

972

12,532

31

990
1037

31

1939
393,886
1940
393,906
363
1085
1941
392,454
1942
392,454383
1025
Remarks
The number of spindles include twisting machines, weaving machines, processing equipment shich are converted to number of spindles.
source1, number of spindles
1911-1937:Naigaiwata Kaisha, Naigaiwata Gojuu Nennshi (The Fifty Years of Naigaiwata)、１９３７、end pages.
1937-1942:Naigaiwata Kaisha, "Kotei-sisan Kanjou(Accounts of Fixed Assets)", The Second Half each.
The rate converted to spindles from looms, twisting frame and processing machines to spindles is available
on the end pages of Naigaiwata Kaisha, ibid., 1937、end pages.
2, Number of Japanese expatriate1), Number of the following years is from, Kinnpuusha, Sina Zairyuu Houjin Jinmei-roku(Directory of Japanese Residents in Shanghai)
1917; The 8th Version, December 1917.
1919; The 10th version, in December 1918.
1920; The 11th version, in June 1920.
1922; The 13th version, August 1922.
1923; The 14th version, July 1923.)
1926; The 17th version, May 1926.
1927; The 18th version,April 1927.
1930; The 21th version, Marchl 1930.
1933; The 24th version, January 1933.
1938; Rinji Shanghai Ban (The Special version of Shanghai), June 1938.
1940; Kinen-gou (The Memorial Issue of the 30th version), September 1940.
1942; Chuusi Ban, (The Memorial Issue of the 32th version), August 1942.
2), 1937: Naigaiwata Kaisha, ibid., 1937, end pages
3, Number of Chinese labor
1924: Yasushi Udaka, Sina Roudou Mondai(Labor Issues in China) , 1925,p.111.
1925: Naigaiwata Kaisya, "Shanghai, Naigaiwata Kaisha Hikou Jijou( Labor Strikes in Naigaiwata, Shanghai) June 1925.
1926: Shigeo Imura, Bouseki no Keiei to Seihin( Business and Products of Cotton Spinning Companies) , 1926, pp. 346,347.
1930: Shanghai Shi Mian Fang Zhi Gong Ye Tong Ye Gong Hui, Coton Spinning Satatistics in China 、Shanghai、1950．
Labor of weaving section is included.
1937: Naigaiwata Kaisha, ibid.,１９３７、end pages.

Table 4
Labor of Sex Distinction at Shanghai Branchfactory
name in 1925
No. 3 Spinning
No. 4 Spinning
No. 5 Spinning
No. 7 Weaving
No. 8 Spinning
No. 9 Spinning
No.9 Weaving
No. 12 Spinning
No. 13 Spinningname in 1937
No. 3 Spinning
No. 4 Spinning
No. 5 Spinning
No. 7 Weaving
No. 7 Spinning
No. 9 Spinning
No.9 Weaving
No. 6 Spinning
No. 1 Spinning
No. 1 Weaving
No.14 SpinningNo.2 Spinning
No. 2 Weaving
No.15 Spinning
No.8 SpinningNo.1 Processing
No.2 Processing
Total
percentage of male and female outof total

labor
May,1925
May, 1937
male
femaletotal
malefemale total
191107
861
499
1360
195
516
711
191304
955
912
1867
197
867
1064
191411
2130
1268
2398
283
1130
1386
191810
262
1410
1672
167
805
972
192202
265
518
783
161
718
879
191810
783
96
834
184
372
556
192201
321
1226
1547
184
818
1002
191904
306
285
591
283
1103
1386
192208
344
864
1208
290
599
889
193109192
680
892
192306
255
876
1131
188
427
615
193207186
626
812
192310
321
1002
1323
208
748
956
193001178
52
230
193209
672
89
761
6758
8956
15714
3736
8796
12532
43%

57%

100%

29.8%

70.20%

100%sourcelabor of 1925; Naigaiwata Kaisha, Shanghai, Naigaiwata Kaisha Hikou Jijou( Labor Strikes in Naigaiwata, Shanghai) June 1925.
labor of 1937; Naigaiwata Kaisha, Naigaiwata Gojuu Nennshi (The Fifty Years of Naigaiwata) 、1937, end pages.

Table 5
Sales by product for the Shanghai Branch
Units: 1921-41 Yen, 1942-43 Shanghai Dollars
Products
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936

First Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfGrey cotton
Processed
Other
Total
cloth
cotton clothproducts
％
％
％
Value
％
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
14,296,082 100%
n.a.
n.a.
n.a.
17,471,962 100%
n.a.
n.a.
n.a.
16,101,849 100%
n.a.
n.a.
n.a.
17,754,582 100%
n.a.
n.a.
n.a.
17,573,099 100%
n.a.
n.a.
n.a.
25,284,600 100%
n.a.
n.a.
n.a.
25,781,587 100%
n.a.
n.a.
n.a.
25,462,267 100%
n.a.
n.a.
n.a.
11,343,900 100%
n.a.
n.a.
n.a.
22,418,937 100%
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
72%
28%
0%
0
11,622,444 100%
70%
30%
0%
0
16,143,042 100%
74%
26%
0%
0
15,533,935 100%
69%
31%
0%
0
17,141,156 100%
70%
30%
0%
0
15,693,036 100%
74%
27%
-1%
0
13,380,573 100%
75%
14%
11%
0
9,801,132 100%
67%
30%
4%
0
11,385,581 100%
66%
15%
20%
0
8,469,140 100%
61%
25%
14%
0
6,661,394 100%
51%
10%
40%
0
12,833,138 100%
53%
14%
33%
0
14,915,764 100%
33%
4%
63%
0
19,748,274 100%
36%
9%
55%
0
19,850,196 100%
n.a.
n.a.
n.a.
n.a.
100%
n.a.
n.a.
n.a.
n.a.
100%
32%
11%
57%
0%
23,754,006 100%
36%
10%
54%
0%
19,319,281 100%
31%
8%
60%
0%
23,731,711 100%

Cotton yarn
％
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

n.a.
n.a.

1937
1938
1939
1940
1941
1942
1943

Data

First Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second Half

n.a.

n.a.
42%
39%
40%
46%
45%
47%
47%
42%
39%
32%
46%
42%
34%

n.a.
10%
27%
26%
12%
10%
20%
13%
21%
14%
24%
16%
10%
21%

n.a.
50%
34%
34%
42%
44%
32%
38%
36%
46%
43%
38%
49%
44%

n.a.
0%
0%
0%
0%
1%
1%
2%
2%
1%
0%
0%
0%
1%

9,119,502
6,890,296
22,800,745
15,408,929
16,930,296
48,110,565
51,466,281
36,255,353
41,584,562
159,246,018
115,239,028
124,934,814
76,335,678

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Naigawata Kaisha, Kakuｰsiten Koujou-keisan-bo（Account Books of Branches and Factories)" First Half of 1921-Second Half of 1943.

Notes
1, The sales volume are calculated as follows: Sales for each product= balance brought forward from the previous period + turnover for that period balance brought forward from the next period + profit (or loss)
The sales for Shanghai for the period 1935-41 are obtained by converting the local currency into Yen.
The conversion rate is referred to the following literature. Hisiao Liang-lin, China's Foreign Trade Statistics, 1864-1949(Harvard East Asian monograph 56), 1974,p.192.
2, Waste thread and waste cloth is added to the respective spinning and cloth products up to 1938

Table 6
Profitability of total assets of branches (1922-1943)

branch

1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932

NIshinomi
Denpouya
Spinning
Spinning
Anjou domestic Shanghai Qingdao Jīnzhōu
andandFactory
total
BranchBranch Factory
Weaving
Weaving
Factory(
Factory(HOsaka)
yougo)First Half
15%
32%
Second Half
79%
82%
First Half
75%
80%
Second Half
41%
39%
First Half
25%
29%
Second Half
4%
2%
First Half
37%
34%
Second Half
9%
17%
First Half
29%
12%
Second Half
30%
36%
First Half
8%
1%
Second Half n.a.
n.a.
First Half
-6%
34%
Second Half
-2%
27%
First Half
-18%
9%
Second Half
4%
8%First Half
-3%
7%
Second Half
-9%
13%
First Half
-20%
-11%
Second Half
-14%
-21%
First Halfn.a.
30%
Second Half n.a.
26%
First Halfn.a.
17%
Second Half n.a.
19%

25%
81%
78%
40%
28%
3%
35%
14%
17%
34%
3%
n.a.

58%
50%
46%
42%
18%
18%
14%
15%
15%
4%
13%
n.a.

21%
19%
1%
7%
4%
6%
-14%
-19%
22%
20%
13%
14%

61%
47%
15%
6%
8%
11%
14%
18%
6%
8%
9%
n.a.

9%
12%
12%
12%
17%
19%
15%
12%
24%
16%
3%
4%

total in
China

59%
50%
39%
33%
15%
16%
14%
16%
11%
6%
10%

3%
-4%
n.a.

4%
5%
11%
15%
20%
5%
9%
9%
12%
8%
17%
13%

total of Japanese operations andChinese operations

n.a.
-4%
10%
5%
7%
12%
10%
5%
2%
20%
15%
19%
14%

ordinalprofittotal assets

profitability6189720
21,904,593
6171098
23,637,570
5393554
25,935,649
4646394
27,525,519
2739091
34,090,524
2616027
34,119,267
2766553
38,071,867
288302936,752,627
264830747,684,532
1433808
43,596,799
2004738
40,309,880
n.a.
n.a.
n.a.
7% 1436877
37,680,340
10% 1842998
36,019,135
11% 1886708
36,237,684
12% 2038420
34,326,328
17% 3057308
36,845,109
14% 2632502
37,438,114
13% 2525043
44,068,366
10% 2119619
46,978,706
21% 4270008
40,710,573
15% 3280482
44,495,601
7% 1773503
48,737,744
6% 1675487
52,378,320

57%
52%
42%
34%
16%
15%
15%
16%
11%
7%
10%
8%
10%
10%
12%
17%
14%
11%
9%
21%
15%
7%
6%

1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943

First Half
n.a.
Second Half n.a.
First Half
n.a.
Second Half n.a.
First Half
n.a.
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second HalfFirst Half
Second Half

73%
60%
57%
n.a.

7%
n.a.

32%
24%
32%
27%
n.a.

n.a.
14%
8%
11%
14%

n.a.
26%
59%
37%
29%
25%
22%
4%
35%
31%
13%
9%
6%
-12%

56%
46%
21%
n.a.
20%
12%
13%
17%
n.a.

19%
32%
24%
20%
21%
25%
4%
17%
26%
23%
6%
4%
30%

9%
13%
17%

n.a.
21%
40%
27%
23%
22%
24%
4%
24%
28%
19% n.a.
7% n.a.
5% n.a.
13% n.a.

19%
14%
12%
n.a.

17%
14%
15%
16%

24%
18%
22%
n.a.

10%
6%
13%
19%
n.a.

12%
7%
25%
31%
43%
56%
54%
8%
48%

n.a.
13%
0%
0%
9%
24%
22%
38%
25%
39%

n.a.
n.a.
n.a.
n.a.

n.a.
11%
13%
12%
9%
n.a.
22%
33%
42%
42%
35%
28%
18%
11%
18%
16% n.a.
17% n.a.
14% n.a.
13% n.a.

12% 3487335
53,579,325
14% 3683161
51,306,519
17% 4811870
56,435,816
n.a.
n.a.
n.a.
15% 4680113
60,721,751
12% 3748546
60,408,896
14% 4133698
59,467,958
15% 4200713
55,072,987
n.a.
n.a.
n.a.
14% 4451526
59,036,666
15% 4186117
49,835,162
29% 8327796
57,295,869
31% 8382676
54,509,970
38% 11070411
59,267,741
47% 24452564
105,995,944
47% 25748878
114,153,837
11% 5745770
100,671,932
42% 28780376
137,485,048
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

13%
14%
17%
15%
12%
14%
15%
15%
17%
29%
31%
37%
46%
45%
11%
42%

sourceNaigawata Kaisha, Kakuｰsiten Koujou －keisan-bo（Account Books of Branches and Factories), First Half of 1921- Second Half of 1941.

Notes

The conversion rate of local currency (Shanghai dollar, and Qingdao Yin) to yen during years
from Second Half of 1935 to Second Half of 1941is obtained in Hsiao Liang-lin, China's Foreign Trade Statistics, 1864-1949,(Harvard East Asian Monographs; 56), 1974, p.192.
Conversion rate among local currencies is as follows:
1 Haikwan Tael=1.114 Shanghai dollars =1.05 Qingdao Yin

Table 7
Operation Rates of Branches (1939-Second Half of 1944)
Branches and Factories
Domestic(Nis
Year
Notes
hinomiya andShanghai
Qīngdăo
Jinzhou
Anjou arecombined)
Spinning 80%,
Spinning 100%,
The Jinzhou's rate 60% was the figure
First Half
64%
Weaving ６
60%
Processing 70%
from April.
０％
The figures of domestic factories and1939
of Zinghou were those from September
SecondSpinning 100%,
61%
83%
50% onward. The figures of Shanghai
Half
Processing 90%
factories were those at the end of thperiodFirst Half
70%
100%
67%
52%
1940 Second
The figure of domestic factories were
53%
66%
79%
50%
Half
that at the end of th period.
First Half n.a
50% n.an.a1941 Second
n.a
n.a
n.a
n.a
Half
1942

First Half

n.a

n.a

n.a

40%

Shanghai planned for closure of No. 9
Factory and No. 1 Processing Factory.

Second24%28%
45%
40% Nishinomiya was reduced by 21,184
HalfspindlesFirst Half n.a
n.a
n.a
n.a
1943 Second
n.a
n.a
n.a
n.a
Half
1944 First Half
10%
11%
21% Anjo ceased operation from 5th MarchsourceTetsuya Kuwahara, "Zaikabo no Seisui – Kuni no Unmei to Kigyou no Unmei, Naigaiwata Kaisha( The Rise and Fall of the Japanese Coton Spinning Firms in China; The Loss of War and the Firm’s Destiny, Naigaiwata & Co.)”
Kobe University, Kokuminkeizai Zasshi(Journal of Economics and Business Administration) , Vol. 178, No.4, 1998, p.35.