Abstract
This paper focuses upon the hosiery industry, in which both Japan and China had a comparative advantage in the world market during the pre-World War II period. The hosiery industry in Japan began to expand its exports in the early 20th century, while its counterpart in China experienced an import-substitution phase during World War I, and gradually expanded its exports towards the Southeast Asian market until the 1930s. This paper discusses how institutional differences were responsible for the contrasting characteristics of the industries by analyzing them from various economic viewpoints, such as the scale of the producers, ‘vertical cooperation’ among merchants and producers of different phases, and ‘horizontal cooperation’ among competing producers or merchants.
The hosiery industry in China became polarized between large factories and household production, while its counterpart in Japan was dominated by medium-sized factories which cooperated with one another through the auspices of the seizo-tonya (i.e. wholesalers coordinating production-processes as well). In China, however, there was much less vertical cooperation, but rather a tendency to centralize production into large factories. There was no need for large factories and small producers in China to cooperate, as there was too much contrast in the respective interests and market segments of these types of enterprise.
There were some differences between the two countries in terms of horizontal cooperation. In Japan, it was necessary to cooperate in terms of acquiring and sharing market information and sharing the reputation (seika in Japanese) of the producing districts, as there were similarities in the interests and markets of the producers. However, the guilds (or trade associations) in China had few functions corresponding to those of their counterparts in Japan, and therefore it can be concluded that horizontal cooperation was weaker in China.
To sum up, intra-industrial institutions in Japan were characterized by information-sharing, while those in China were non-cooperative, with individual producers showing differentresponses to the markets.
