2023 年 40 巻 p. 64-78
The role played by one of Japan’s leading trading companies in the overseas expansion of the Japanese automobile industry is the important, if understudied, issue to be examined by the present investigation. How were Japanese manufacturers able to enter key overseas markets, dominated by the more technologically savvy American, British, and European manufacturers? To answer the question, we clarify the role played by the Mitsubishi Trading Company in supporting the Nissan Motor Company in its pioneering export of passenger cars to Australia during the 1930s. We then conclude by considering how these interwar experiences relate to Japan becoming a major source of machinery exports – a key manufacturing nation – that was able to achieve dramatic increases in its light-and heavy-industrial exports to the Americas, Western Europe, and eventually the emerging markets of the Asia-Pacific region in the latter half of the twentieth century.
The activities of multinational trading companies have received a great deal of attention in recent years as a driving force in the formation of global capitalism.2 Moreover, with the growing significance of emerging markets such as Latin America and Africa in the world economy, it has become important in business history to examine the structure and development processes of emerging markets from a historical perspective.3 Japan entered the world market in the latter half of the nineteenth century and was initially an emerging market for the commerce of Western economies. Having experienced a remarkably rapid wave of industrialization in the last part of the nineteenth century, however, Japan soon found itself in competition with these Western economies in the exploration and commercial penetration of other, newer emerging markets in the East Asia-Pacific region during the early twentieth century.
Based on an historical awareness of these processes, the present study aims to investigate business issues surrounding automobiles, which are a prime representative of a mass-produced, durable consumer good in the twentieth century, and examine the role played by general trading companies in automobile exports. The specific target of analysis in the transaction process is the export to Australia of the Datsun passenger cars by the Mitsubishi Trading Company (Mitsubishi Shōji Kaisha – MSK) in 1935. From an East Asian perspective, Australia became an important exporter of primary products, such as wool and wheat, integrating closely with Pacific Rim trade during the early part of the twentieth century. As the trade relationship between East Asia and Australia deepened, exports of light industrial products, mainly cotton manufactures and other miscellaneous goods, increased from East Asia – especially Japan – to Australia. The increased export of East Asian products to the Australian market inevitably brought about competition with traditionally exported European goods, and Japan’s general trading companies played an active and audacious role in intensifying that competition.
Jones points out that the arrival of the transportation revolution led to rapid market integration and increasingly competitive export markets among developed countries.4 As for the market in automobiles, a wave of mass production swept the world. Led by the Ford Motor Company, with its innovative conveyor production system, automobile markets entered a period of major global change, especially in the years after the First World War. In February 1925, approximately the same time as Ford was starting its operations in Australia, the Ford Motor Company also established Japan Ford as a wholly foreign-owned subsidiary, and started knock-down production of its famous Model T vehicle in Yokohama. Two years later, in January 1927, the General Motors Company similarly established its own wholly foreign-owned subsidiary, Japan General Motors, and also commenced production in Japan.5 It can hardly be understated, but the global expansion of American multinational corporations during the interwar period is an important component in understanding the origins of the current global economy.6
The present paper will specifically discuss two fundamental research questions. The first is why did Mitsubishi Trading Company, as a representative of Japan’s developing commerce, try to export the most advanced industrial products of the time – passenger cars – to Australia? At that time, the main export products of Japan were light industrial products, often semi-finished products or miscellaneous goods, and exports of machinery were usually of products with a strong “general” character, such as electric fans, sewing machines, or bicycles. The answer has important implications as Japan later became a major source of machinery exports, dramatically increasing its presence in the world market during the 1950s and 1960s. The second question is why was Japan, as an emerging country, able to enter the Australian automobile market at a time when the global market was dominated by well-established Western companies? For example, the Ford Motor Company entered Australia, through the auspices of its Ford Canada subsidiary, and started knock-down production as early as 1925.7 Japanese companies attempting to transition into automobile production were relatively fragile enterprises and generally suffered in comparisons with the major Western multi-national automakers. What then were the conditions for Japanese manufacturers entering the interwar Australian automobile market?
The East Asian market, including Australia and with Japan at its center, became increasingly important to Western automakers during the 1920s. Inspired by the advance of Ford and General Motors, Japanese marques like Nissan and Toyota precociously engaged in mass automobile production during the 1930s. As the sole agent for Nissan’s automobile exports, the Mitsubishi Trading Company played a major role in subsequent export operations, service maintenance, and coordination with local car dealers in Europe, the United States, and in the “emerging market” of Australia. Based on materials held by the National Archives of Australia (NAA), the National Archives and Records of the United States (NARA), and using the internal communications of trading companies held by the Mitsui Archives and the Mitsubishi Economic Research Institute, the present paper examines the actual situation and experience of Japanese automobile exports through trading companies during the nascent period of automobile production. Critically, the present investigation aims to uncover the actions and intrigues of the four main entities involved in these automobile export transactions: the Mitsubishi Trading Company headquartered in Tokyo, the Nissan Motor Company of Yokohama, the Mitsubishi Trading Company’s Melbourne office, and the Eastern Distributors automobile dealership in Australia, in order to reveal the global business relationship between Japan and Australia, which was truly a new trade between two emerging economies.
Until the First World War, most of the cars driving in Australia were made in Great Britain. Owing to the disruption of imports from Britain during the war, however, American manufacturers penetrated the Australian market to an unprecedented degree. Indeed, in the wake of the First World War the Australian automobile market shifted its focus from British manufacturers towards American manufacturers, but this shift was not solely owing to the disruption of imports during the war. Even before the First World War, British-made cars faced significant problems in Australia: their prices were considered high, there was lack of spare, repair parts, and a lack of concern, or technical support, for local conditions faced by their customers. Thus, there was still some room for the entry of newer automobile manufacturers, other than the British, as the “big three” American manufacturers had demonstrated during the war.
Investigation into the number of new car registrations in Australia from 1926 to 1939 reveals that after the First World War, American (and Canadian) manufactured cars had over 80% of the market share until the Great Depression (see Table 1).8 British cars, which benefited from preferential tariffs, only accounted for around 15% of total sales. European manufacturers, such as Citroen (of France) and Fiat (of Italy), were also expanding their shares of the market, but their ratios were small in comparison to the American automakers. Following the Great Depression, however, the number of new car registrations dropped sharply. Surprisingly though, the share of British-made cars increased, centered on the sales of small, low-priced cars of the so-called “baby” class, with engines of ten horsepower or less, mainly produced by Austin and Morris.9 Compared to major automobile producing countries, especially the United States and Canada, the British automobile industry in the 1930s was less affected by the Great Depression, and attempted to cope with the economic downturn by producing smaller, low-priced, low-horsepower automobiles.10 Even in Australia, demand for low-priced vehicles was high owing to the recession, and this small, low-priced baby-class of vehicle demonstrated strong price competitiveness against America-made automobiles, which were mainly larger vehicles with comparatively fuel-thirsty engines.11
Table 1: New car registration in Australia, 1926-1939
Year | Total number | US & Canada | British | France & Italy | |||
---|---|---|---|---|---|---|---|
1926 | 80,655 | 64,889 | 80.5% | 12,355 | 15.3% | 3,411 | 4.2% |
1927 | 82,570 | 67,497 | 81.7% | 13,087 | 15.8% | 1,986 | 2.4% |
1928 | 72,568 | 61,089 | 84.2% | 10,446 | 14.4% | 1,033 | 1.4% |
1929 | 65,720 | 55,403 | 84.3% | 9,332 | 14.2% | 985 | 1.5% |
1930 | 29,571 | 24,171 | 81.7% | 5,028 | 17.0% | 372 | 1.3% |
1931 | 10,299 | 8,078 | 78.4% | 2,044 | 19.8% | 177 | 1.7% |
1932 | 10,684 | 6,898 | 64.6% | 3,688 | 34.5% | 98 | 0.9% |
1933 | 15,679 | 9,672 | 61.7% | 5,922 | 37.8% | 185 | 1.2% |
1934 | 27,868 | 20,030 | 71.9% | 7,649 | 27.4% | 189 | 0.7% |
1935 | 39,955 | 31,242 | 78.2% | 8,584 | 21.5% | 129 | 0.3% |
1936 | 48,206 | 36,766 | 76.3% | 11,403 | 23.7% | 37 | 0.1% |
1937 | 58,064 | - | - | - | - | - | - |
1938 | 58,201 | - | - | - | - | - | - |
1939 | 52,995 | - | - | - | - | - | - |
Source: Robert Conlon and John Perkins, Wheels and Deals: The Automotive Industry in Twentieth century Australia (Aldershot: Ashgate, 2001), 105.
The Australian automobile market was largely classified by price: larger, higher-priced American-made vehicles, such as those of Ford, General Motors, and Chrysler, were chiefly used for inter-city and rural mobility, whereas smaller vehicles in the low-priced range, mainly made in the United Kingdom, were designed for intra-city and suburban transportation. Particularly with regard to urban and suburban transportation, the demand for small, low-priced vehicles was potentially large, owing to the general lack of public transportation infrastructure, such as railway and bus networks, in Australian towns and cities at that time.
What then was the potential for Japanese automobiles in the Australian automobile market? As early as April 1934 – that is a full year before the Nissan Motor Company’s new plant in Yokohama was completed (see below) – Australian newspapers were exclaiming that “Japan is planning to flood Britain’s home and overseas markets with £50 baby motor cars called 'Datsuns'”.12 The Datsun’s similarity to the Austin Seven was duly noted, and Australian newspapers were soon reporting, in great detail, on the new, low-cost Japanese automobile and its Australian prospects.13 In fact, continued media speculation forced the Mitsubishi Trading Company to clarify that there would be no campaign to flood the Australian market with low-cost vehicles, and that while no price for the Datsun had been set, by way of comparison the three-wheeled, Mazda cycle trucks were presently on sale at £175 Australian.14 Apparently, internal company documents considered £250 Australian to be a highly competitive price, although contemporary advertisements in Japan (presumably for the earlier Datsun Model 13 vehicles) showed it prices at 1,950 yen, or £147 Australian, for the four-seater sedan, 1,850 yen, or £138 Australian, for the two-door phaeton, and 1,775 yen, or £133 Australian, for the two-seater roadster. Clearly these figures were way above the alarmist and mischievous £50 reported in Australian newspapers and were presented without any consideration of the costs of duties, commissions, tariffs, shipping, insurance, and handling.15
In sum, there was clear potential for the retail of some classes of Japanese automobiles in the Australian market. The Mazda commercial motor tricycle (the “Mazda-Go”), a reliable and easy to drive light truck that had been developed expressly for agricultural and commercial uses, was the Japanese pioneer in Australia. Often conceptually mistaken as being a motorcycle (owing to its three-wheeled design), different Mazda models sold in modest numbers (there were only eight sales in Melbourne during 1934) and were most commonly used as work vehicles on farms.16 There was general interest in Japanese-made Chiyoda and Sumida trucks, Kubota tractors, and commercial inquiries were made into the possible purchase of the Chiyoda and Fusō types of motor buses, but apparently heavy vehicles were not made available by the Japanese government for foreign export owing to military demands.17 The arrival of the Datsun, which was described as a “car for everyone” available in four different body types — two-door saloon, two-seater, and four-seater tourer, and coupe — raised considerable excitement in the press.18 Australian newspapers eagerly reported on the Datsun as the first export of “404 vehicles” were heading for Australia.19 At that time in Australia, the motoring ideal for the average family was a motorcycle for a married couple, with a sidecar being added after the birth of the first child. As the family grew, however, a passenger car was much more desirable than a motorcycle, especially given that the majority of Australians, against stereotype, needed a car for intra-city and suburban transportation. In addition, the build quality of Japanese vehicles, with their American-engineering heritage, was lauded as having “improved amazingly”.20
The initial establishment of what became the Nissan Motor Company is rather complicated. The Tokyo-based Kaishin Motorcar Works, founded in 1911, and the Osaka-based Jitsuyō Motor Company, founded in 1919, merged in 1926 to become the DAT Automobile Manufacturing Company in order to manufacture three and four-wheeled vehicles designed by William R. Gorham. Some seven years later, in March 1933, the Ishikawajima Motor Company (renamed Isuzu after 1934) and the DAT Automobile Manufacturing Company merged to establish the Automobile Industries Company. Then, in September 1933, the manufacturing rights for Datsun and all its parts were transferred from the Automobile Industries Company to the Tobata Casting Company, which had established an automobile department earlier in March of the same year. In June 1934, joint investment from Nihon Sangyō led the company to be renamed as the Nissan Motor Company.21
It is generally known that the Nissan Motor Company aimed to produce automobiles in “high volume” by importing major tool machinery, equipment, and foreign engineers from the United States of America.22 Looking at the number of large machines owned by Nissan at its Shinkoyasu Plant in Yokohama, as of March 1934, there were 850 units, and as the production of large vehicles commenced, the number of large machines increased to 1,049 units in 1936, and to 1,742 units in 1937.23 During roughly the same period there was a corresponding increase in Nissan’s production at Yokohama from 940 vehicles in 1934, to 3,800 vehicles in 1935, 6,163 vehicles in 1936, and then 10,227 vehicles in 1937.24 Even after 1937, the number of machines owned by Nissan continued to increase, from 2,379 units in 1938, to 2,899 units in 1939, and then 3,288 units in 1940 as the scale of vehicle production rapidly expanded.25
The Nissan Motor Company’s aggressive capital investment program was the idea of its first president, Aikawa Yoshisuke, who in many ways established the automobile manufacturing industry in Japan. Aikawa’s concept, based on American-style, private sector-led mass production (and initiative), was to improve domestic manufacturing technology by first mass producing small cars, and automobile parts for American manufacturers (such as Ford and Chevrolet),26 and then – as its “grand idea” – mass produce larger vehicles that could compete with American-made vehicles at a later developmental stage.27 On 3 November 1935, the Osaka jiji shinpō newspaper reported that:
The Nissan-manufactured Datsun is currently a sedan-type automobile with a selling price of 1,800 yen per vehicle, but if the Aikawa-style manufacturing and sales methods are realized, it is said that it is possible to reduce the selling price down to 500 yen……The manufacturing cost has been greatly reduced, and while the production schedule for this year is 10,000 vehicles, since Nissan are aiming to produce 20,000 vehicles next year, by that time each Datsun vehicle could sell for as low as 500 yen.28
Aikawa’s basic idea, largely modelled on American-style Fordism, was to reduce prices through mass production for the domestic automobile market. That notwithstanding, even if Nissan achieved lower prices through mass production, the domestic market at that time was relatively small. With a view to creating export markets, at first in Japan’s formal colonies, and then internationally, the Nissan Motor Company, through the auspices of the Aikawa-established Tobata Casting Company and its close commercial relationships, decided to let the Mitsubishi Trading Company take charge of their Datsun export business.
The Tobata Casting Company had a close relationship with the Mitsubishi Trading Company, as related above, owing to their export of cast iron pipes to the United States of America. Moreover, the Mitsubishi Trading Company and had signed a large purchase contract for automobile manufacturing machinery from the United States with them when the Tobata Casting Automobile Department was established in March 1933.29 Even after the establishment of the Nissan Motor Company in June 1934, the purchase contract remained in place, and a huge amount of American-made machine tools were purchased for the Shinkoyasu Plant. For example, during the second half of 1937 the Nissan Motor Company purchased machine tools that accounted for 8.73 million yen of the Mitsubishi Trading Company’s total machine tool sales of 12.34 million yen, which was more than 70% of the total.30 The Mitsubishi Trading Company, having proven itself to the Nissan Motor Company through its large-scale importation of American-made machine tools, then became the Nissan’s official export distributor at the end of 1934,31 when it established a new Datsun Export Section in order to export vehicles to East Asia, North America, Europe, and even Australia.32
Initially, the Mitsubishi Trading Company’s North American branch was engaged in drumming up car sales to the United States, but it soon attempted to penetrate the Central and South American markets via the United States. In December 1934, a sales plan for Datsun was announced in Chile with the sale price of the Datsun at 7,500 pesos, while the sale price of the American-made cars of the same class was 24,000 pesos. It can be easily seen that Datsun was highly competitive in terms of its sales price.33 Priced at 7,500 pesos, or at less than a third of an American equivalent, it seems that Argentinian retailers eagerly inquired about receiving Datsun exports.34 In the East Asian market as well, there was a plan to export 1,000 Datsun cars to Thailand at the end of 1934.35 What is more, Nissan had a plan to construct a knock-down assembly plant in Singapore by early 1935.36
Similarly, in the European market, references to Nissan’s deals with Germany and the Netherlands were also reported in early 1935, as were commercial inquiries from Denmark and Spain.37 There was an intriguing inquiry from the Netherlands, through the Mitsubishi Trading Company’s Berlin Branch, about the possible purchase of 500 Datsun vehicles in 1935.38 Owing to the limits of Nissan’s production capacity, however, only approximately 50 vehicles were expected to be ready for export (some 44 Datsun Model 13 vehicles had been exported to the Asian, Central and South American markets in June 1934).39 Moreover, it was difficult to sell automobiles in interwar Europe as Nissan lacked the basic assembly and maintenance infrastructure, and its competitive price advantages were eroded over the distances involved, and so for these reasons the export of Datsun cars to the European market was reluctantly abandoned.40
It must be said that the above dealings were reported as being at the stage of business negotiations, and most of these discussions did not lead to actual car sales, as in the example of the 500-vehicle inquiry from the Netherlands. That notwithstanding, the Nissan Motor Company’s Shinkoyasu Plant in Yokohama was completed April 1935 and had an annual production volume projected to be in the order of 5,000 vehicles, each with their chassis fully integrated or “married” to the body. Accordingly, Aikawa’s concept of mass production at Nissan Motor factories stirred great, global expectations for a competitively priced Datsun to become widely available in the late 1930s, especially among automotive enthusiasts, car dealers, and foreign importers.41 Historically, the production volume of the Datsun passenger car had been limited to just 10 vehicles in 1931. During 1932 it increased to 150 vehicles, it rose further to 202 vehicles in 1933, and 880 vehicles were manufactured in 1934. Nissan’s production volume increased dramatically once the Yokohama plant started operations, and full-scale production at the Osaka plant came online, with 1,631 vehicles coming off the assembly lines in 1935. Nissan’s Datsun passenger car production surged to 3,578 vehicles in 1936, and then 8,593 vehicles in 1937, its largest production year of the interwar period.42 In response to the smoothness of the above production increases, the Mitsubishi Trading Company ambitiously planned for full-scale passenger car exports to the United States, Central and South America, Asia, and Australia, while also preparing personnel, promotional materials, and sample “demonstration” vehicles for immediate dispatch.43
In Australia, Eastern Distributors Limited was established as a local car dealer in St. Kilda, Melbourne for the express purpose of selling Datsun passenger cars. An exclusive retail contract was signed between Eastern Distributors and the Mitsubishi Trading Company in early 1935. It must be stressed that the export of Datsun automobiles from Japan to Australia was not of Japanese factory-finished vehicles, but of knock-down kits (KDs or KDKs) in which the parts were exported, and then assembled locally. Protective tariffs were lower on unassembled, as opposed to assembled, chassis, and the international transport costs for unassembled chassis were also much lower, owing to the reduction in the package size of the freight. These two factors alone strongly encouraged the local assembly of any non-Australian automobile, and as a result the interwar Australian auto industry was, in effect, based around marrying foreign-made chassis to locally assembled bodies. Moreover, this kind of local production also supported “home-grown” manufacturers, who supplied the assembly lines of the foreign cars with Australian-made consumable components, such as batteries and spark plugs, tires and inner tubes, radiators, and hoses.44 In early 1935, the first 24 of a proposed delivery of 404 Datsun Model 14 vehicles were exported as an advance, or preliminary, export.45
Initially, after looking at the local situation and noting the dominance of British and American-made cars in the Australian automobile market, the Melbourne branch office of the Mitsubishi Trading Company in Australia was skeptical about Datsun’s prospects. The Machinery Department at the Mitsubishi Trading Company’s headquarters, however, had no such reservations and ambitiously aimed to expand its business activities in colonial (Manchuria) and international markets. The “active involvement” of the Machinery Department (at the head office) in promoting Datsun exports was based on its desire to strengthen Mitsubishi’s “business-to-business” relationship with Nissan and its focus on small passenger cars as exciting “new products” for export. By the 1930s, the size of Japan’s domestic automobile market had increased dramatically, with the Great Kanto Earthquake of September 1923 triggering an unprecedented demand for automobiles and, among other things, the development of domestic three-wheeled vehicles. It should also be noted that it was precisely at this time, in the latter half of the 1920s that the Ford Motor Company and the General Motors Company had “advanced” into Japan by establishing wholly American-owned subsidiaries.46 In addition, the potential transition in exports from durable consumer goods to automobiles, which were qualitatively different from the hitherto conventional “light-machinery” exports, was the catalyst that drove the Mitsubishi Trading Company to explore the acquisition of new emerging markets for Japanese machinery exports, such as those of South America, Southeast Asia, and Australia.
The Datsun’s competitors in the Australian market were the British manufacturers like Austin, and Morris. At that time, Austin was leading the world’s baby (or compact, in contemporary terms) car market with its Austin Seven: Datsun’s main international competitor. In Japan, Datsun was protected by discriminatory laws that eliminated the Austin Seven and the Morris Eight from the “small vehicle” classification that attracted tax exemptions and meant that the Datsun could be driven without a standard driver’s license.47 Protectionist policies, like those enjoyed by Japanese manufacturers in their domestic market could not, of course, be hoped for in the Australian market. If anything, the opposite was more likely to be true, that is the needs of British industry would be preserved and prioritized during the era of the Sterling bloc.
The Mitsubishi Trading Company and Eastern Distributors assumed the main competitive premise of the Datsun Model 14 was its low price, backed by the low exchange rate of the depreciating yen in the mid-1930s. The plan was to set the car’s price far below that of those of the British vehicles in order to secure a place for the Datsun Model 14 in the Australian market. The fore-warned British manufacturers, however, countered this by launching a cut-price offensive against the Datsun, effectively stalling its entry into the Australian market. In fact, by the time Eastern Distributors actually sold its first Datsun Model 14s, starting at £199 Australian in April 1935, it was more expensive than its British rivals! The strategic automobile pricing of the British manufacturers had a major impact on the Datsun’s commercial viability, or competitiveness, in the Australian market. After more than a year of argument, curiosity, and speculation about the Japanese automobiles in Australia’s newspapers, Austin and Morris effectively took the commercial ground from underneath the Datsun passenger car. It appears that the British manufacturers were prepared to sell at heavily discounted prices until their Japanese rival had been vanquished or was withdrawn from sale in Australia.48
As if that was not bad enough, there were problems with the assembly of the first batch of 24 Datsun Model 14 from the knock-down kits in which the automobile parts and components were exported. Indeed, vehicle construction was so problematic that in July 1935 Maeda Kaoru, a young 22-year-old engineer, was sent out from Japan to trouble-shoot problems arising from maintenance, repair, and warranty work. Strictly speaking, Maeda was not an automotive engineer, but more of an assembly technician or car mechanic, so while his theoretical knowledge was limited, his practical skill in assembling, and his experience in repairing Datsun was excellent. Despite the pricing and construction setbacks, the need to develop consumer confidence through competent after-sales service and maintenance was clearly recognized by both Nissan and the Mitsubishi Trading Company, and so the costs of sending Maeda to Melbourne were split equally between them.49
With public dissatisfaction and commercial tensions increasing, Japanese attention turned to their Australian partner, Eastern Distributors. Building a network of local dealerships was indispensable to the Mitsubishi Trading Company in its efforts to export Datsun to Australians, and the presence of local partners, familiar with the Australian market, was vital to its success. The realization of automobile exports, however, was led by the Machinery Department at the Mitsubishi Trading Company’s headquartered in Tokyo, and they were quick to label Eastern Distributors as “lacking competence (rikiryō-busoku)” owing to a growing number of complaints arising from the local assembly of Datsun’s knock-down kits. On the other hand, the Melbourne branch of the Mitsubishi Trading Company believed that inadequate quality control at Nissan Motors was the root cause of the Datsun’s problems and urged company headquarters to stand by its commercial relationship with Eastern Distributors. Owing to its lack of experience in the automobile trade (especially in the export of machinery from Japan to other countries), the Mitsubishi Trading Company failed to take sufficient and timely action, and as a trading company it must, therefore, take responsibility for many of the Datsun’s problems in Australia. We should also emphasize that the Mitsubishi Trading Company’s inability to quickly build relations and work effectively with Eastern Distributors was a critical failure.
Of course, all these years later, it is difficult to evaluate which branch office of the Mitsubishi Trading Company was most correct. Undeniably, “miscalculations” were made by both the Mitsubishi Trading Company and Eastern Distributors. The Mitsubishi Trading Company’s main miscalculation was that it did not have an accurate understanding of Eastern Distributors’ technological and commercial abilities. Put simply, Eastern Distributors were not capable of assembling and selling Japanese-made, Datsun knock-down kits, which were not as thoroughly engineered as American or British-designed cars. On the other hand, the Eastern Distributors’ miscalculation was to overestimate the amount of U.S. automotive technology used in Nissan’s production lines and, at the same time, to underestimate the Datsun as an automobile. The Datsun Model 14s assembled by Japanese auto-engineers at Nissan plants were fully functional (a point acknowledged by Eastern Distributors during their inspection tour of Japanese facilities), whereas the Datsun assembled in Australia were not. The machining tolerances of the Nissan Motors’ knock-down kits lacked the precision and interchangeability of their American or British-designed competitors. In other words, the assembly of a Datsun required a certain degree of skill and familiarity with the production methods of the automobile and Nissan Motors were shown to be unable to adequately prepare knock-down kits for export and local assembly. Generally speaking, Japanese companies found it difficult to grasp the “situation” in foreign markets when exporting overseas during the interwar period, and a “recognition gap in market information” hindered other Japanese firms involved with pioneering industrial exports to Australia.50
Concerns over the reputational damage caused to the Australian operations of the Mitsubishi Trading Company by importing “troublesome” automobiles were expressed as early as April 1935, when in assessing the operations of the Mitsubishi Trading Company’s Melbourne branch, Murakami Fukuichi commented on the growing number of complaints about the Datsun in this way: “Failures will continue on to become infamous……incidentally the Datsun Problem is having a significant negative impact on the general business of our company.”51 Murakami therefore advised that urgent action was required because the “Datsun Problem” related to the total evaluation of the Mitsubishi brand as a whole – right across the field – and he trenchantly urged company headquarters to discontinue its relationship with Eastern Distributors despite the “on the spot” objections of its Melbourne branch. Accordingly, matters were brought to a head with the Mitsubishi Trading Company deciding to cancel its once promising contract with Eastern Distributors at the end of 1935, in the same year that it was signed. In this way, the first export of Datsun passenger cars to Australia ended in just a matter of months.
On Friday 13 November 1936, the final chapter in the Datsun saga played itself out when Eastern Distributors, chaired by F.J. Crosbie, alleged in an £8,000 Australian lawsuit that the Mitsubishi Trading Company had sold them:
……unassembled motor cars……so inferior and defective in design, manufacture and quality, that they were useless, and the [Datsun Model 14] cars when assembled, were unsaleable.52
The judge found no breach of contract and struck out the Eastern Distributors’ claim for damages. By this time, the Mitsubishi Trading Company had completely withdrawn from selling Datsun cars and Mazda motor tricycles in Australia, despite holding the rights for export sales until December 1937.53 Nevertheless, reputational damage (and the bitterness of the impending war) was such that Nissan did not attempt to sell automobiles in Australia until 1966, thirty years later! And what had been heralded as a flood of cheap, Japanese autos ended in a bitter, public feud, and a costly legal farce.
Success is said to be a poor teacher, but what was learnt from the failure of the Mitsubishi Trading Company’s export of the Nissan Motor Company’s Datsun passenger cars to Australia in 1935? From a trading perspective, there were a number of troubling issues. Clearly, the Mitsubishi Trading Company did not cope well with the extra scrutiny involved as it transitioned from the export of durable consumer goods to automobiles. Inexperienced as it was in the car business, it did not recognize, or was unable to properly calculate, the competitiveness of the Datsun in its target export market and failed to establish a commercial foothold. Critically, the Mitsubishi Trading Company was sensitive to how its business and brand were perceived by consumers and the general public, and it having worked so hard to established itself in Australia (initially as a major wool buyer), it was institutionally unable to bridge the differences in opinion, on how best to deal with Eastern Distributors, between the head office in Tokyo and the branch office in Melbourne.
From an automotive perspective, however, there were a surprising number of positives. The Datsun Model 14 had performed “very well” on its initial tests in Australia during November 1934. In a grueling, 2,300-kilometer Melbourne-to-Adelaide return trip, it averaged just over 20 kilometers per liter at speeds of 48-65 kilometers per hour, with a faulty (Japanese-made?) spark plug being the only reported problem. Australian consumers were genuinely interested in what Japanese manufacturers had to offer.54 The importance of having local people on the ground, like Eastern Distributors, was reaffirmed, and there was an acknowledgement that the scale and scope of the problems with the Datsun Model 14 were much greater than Eastern Distributors could handle by itself. Indeed, Maeda, the young engineer dispatched to Melbourne, found Datsun’s knock-down kits difficult to work with, and identified problematic components and aspects of the car’s assembly (which were subsequently applied to Nissan’s automobile manufacturing efforts in Manchuria). Moreover, the Mitsubishi Trading Company’s interwar export of Datsun passenger cars to Australia was the first and largest of its kind, and Eastern Distributors was a pioneering – if very limited – case of a joint venture “startup” in the business relations between Japan and Australia.
We should also reflect on the fact that the Nissan Motor Company did re-enter the Australian market in May 1966, forming Nissan Motor Company (Australia) Propriety Limited, in order to take over a former Volkswagen factory in Mulgrave/Clayton, Melbourne and assemble Datsun, and later Nissan, vehicles.55 Similarly, Mitsubishi did return too – with its own cars – establishing Mitsubishi Motors Australia Limited (MMAL) in October 1980, and taking over the Chrysler Australia factory in Tonsley Park, Adelaide to operate its own vehicle assembly plant and provide new lineup of automobiles to the Australian market.56 Domestic automobile production all but ceased in Australia by 2017, with Nissan leaving much earlier in 1992, and Mitsubishi, which had steadfastly “stood alone” by refusing to take part in joint venture and model sharing operations, leaving in 2008.57 That notwithstanding, in the 2015-2020 period, Mitsubishi is consistently ranked as Australia’s fourth largest automobile retailer/supplier, behind only Toyota, Mazda, and Hyundai. As for Nissan, it is typically ranked two or three places lower than Mitsubishi in terms of market share, at the seventh or eighth position, in total Australian car sales.58 Finally, we should note that the market shares and sales performances of Japanese marques in Australia – particularly the pioneers, Mazda and Mitsubishi – outperform their comparative international standings. Moreover, their all-round brand reputations in Australia seem to be much more “healthier” than what they are in most other American, European, and Asian markets, including Japan.
Based on newly available sources, the present paper has investigated the circumstances surrounding the Mitsubishi Trading Company’s export of Datsun passenger cars to Australia during 1935. We found that Japanese exports to Australia made commercial sense, in terms of the shipping distances involved and Japan’s geographical proximity to other emerging markets in the Asia-Pacific region. Moreover, relatively low revenue duties on unassembled car chassis in Australia during the first half of the twentieth century encouraged the antipodean export trade, and the consideration of duties and tariffs was another important driver in the Mitsubishi Trading Company’s decision making. Critically, we must also consider the “artificially” low, and depreciating, exchange rate of the yen in the mid-1930s, which by 1935 was down some 40 per cent from its prime 1931 gold standard value. In effect, the way in which Japan went of the gold standard provided a generous subsidy to Japanese exporters.59 And finally, in answering why the Nissan Motor Company was able to enter the Australian automobile market, at a time when the global market was dominated by the preeminent American, British, and European marques, we note the role played by the ambitious and precocious Machinery Department of the Mitsubishi Trading Company’s headquarters in Tokyo in initially championing the project. Nevertheless, it was the Melbourne Branch of the Mitsubishi Trading Company that had identified the local partners, and quickly tried to cooperate with their new Australian partners, Eastern Distributors Limited. Indeed, the pioneering, if flawed, joint venture between the Mitsubishi Trading Company and Eastern Distributors would not be attempted again for many decades to come, but it did deliver some key, essential lessons, and provide valuable insight as to how the export of Japanese automobiles, and other light-and heavy-industrial products, might proceed and succeed in the future.
1 This work was supported by KAKENHI 22K01615. The authors especially wish to thank Mira Wilkins (Florida International University), Janet Hunter (LSE), Kikkawa Yo (Mitsui Bunko), Nakamura Naofumi (The University of Tokyo), Ōshima Hisayuki (Takachiho University), Alexandre Roy (INALCO-IFRAE), and Yagashiro Hideyoshi (Senshu University).
2 Geoffrey Jones, Merchants to Multinationals: British Trading Companies in the Nineteenth and Twentieth Centuries (New York: Oxford University Press, 2000), Geoffrey Jones, Multinationals and Global Capitalism: From the Nineteenth to the Twenty-first Century (Oxford: Oxford University Press, 2005).
3 Alain Verbeke, International Business Strategy: Rethinking the Foundations of Global Corporate Success, 2nd Edition (Cambridge: Cambridge University Press, 2013), Gareth Austin, Carlos Davila, and Geoffrey Jones, “Emerging Markets and the Future of Business History,” Harvard Business School General Management Unit Working Paper, 18-012 (2017).
4 See Jones, Merchants to Multinationals.
5 Simon James Bytheway, Investing Japan: Foreign Capital, Monetary Standards, and Economic Development, 1859-2011 (Cambridge, Mass.: Harvard University Asia Centre, 2014), 175-176, and Wakon gaishi: Gaishikei no tōshi to kigyō-shi oyobi tokushu-kaisha no hattatsu-shi 1859-2018 [Western capital, Japanese spirit: Foreign capital and special companies, 1859-2018] (Tokyo: Tosui Shobo, 2019), 25-27.
6 See Mira Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, Mass.: Harvard University Press, 1974).
7 See Robert Conlon and John Perkins, Wheels and Deals: The Automotive Industry in Twentieth-Century Australia (Aldershot: Ashgate, 2001), 85-86.
8 Ibid., 105.
9 George Maxcy and Aubrey Silberston, The Motor Industry (London: G. Allen & Unwin, 1959), 112-120, David Garel Rhys, The Motor Industry: An Economic Survey (London: Butterworth, 1972), 304.
10 Nakamoto Kazuhide, “Senzen-ki Igirisu jidōsha sangyō no hatten to shūchū” [Business development and mergers in the British Motor Industry before 1945], Keizai to keiei [Review of the economics and business administration, Sapporo University], vol.39, no.1 (October 2018), 53.
11 Conlon and Perkins, Wheels and Deals, 106.
12 The reports seem to trace back to an article entitled “£50 Machine for English Market” from London’s (still extant) Daily Mirror (5 April 1934).
13 For example, Courier-Mail (15 May 1934), 6, Sunday Times (12 August 1934), 8.
14 Argus (24 May 1934), 10.
15 Smith’s Weekly (17 November 1934), 14.
16 Sydney Mail (18 July 1934), 51, Smith’s Weekly (17 November 1934), 14.
17 Sydney Mail (18 July 1934), 51.
18 Courier-Mail (15 May 1934), 6.
19 Newcastle Morning Herald and Miners’ Advocate (6 October 1934), 13, Singleton Argus (8 October 1934), 4.
20 Daily Mercury (7 June 1934), 9, Sydney Mail (18 July 1934), 51.
21 Nissan jidōsha kabushiki-kaisha, ed., Nissan jidōsha sanjū-nenshi: Shōwa 8-nen–Shōwa 38-nen [30 years of Nissan Motor, 1933-1963] (Yokohama: Nissan Motor, 1965), 41.
22 Ibid., 41.
23 Ibid., 42-43.
24 Yokohama-shi Sōmukyoku shi-shi-hensanshitsu, ed., Yokohama-shi shi II, vol.1, part 2 [History of Yokohama city II, vol.1, part 2] (Yokohama: Yokohama City, 1996), 516.
25 Nissan jidōsha, ed., Nissan jidōsha sanjū-nenshi, 42-43.
26 Smith’s Weekly (17 November 1934), 14, Sydney Mail (18 July 1934), 51.
27 See Udagawa Masaru, Nissan no sōgyōsha Aikawa Yoshisuke [The founder of Nissan Motor, Aikawa Yoshisuke] (Tokyo: Yoshikawa Kōbunkan, 2017).
28 Osaka jiji shinpō (3 November 1935), Newspaper Clippings Collection (NCC) of Kobe University.
29 Nissan jidōsha, ed., Nissan jidōsha sanjū-nenshi, 38.
30 Okabe Keishi, “Mitsubishi shōji hokubei shiten to Nissan jidōsha” [The relationship between Mitsubishi Trading Company North America branch and Nissan Motor], in Senzen-ki Hokubei no Nihon shōsha [Japanese trading companies in North America during the pre-war period], eds. Ueyama Kazuo and Kikkawa Yo (Tokyo: Nihon Keizai Hyouronsha, 2013), 175.
31 Jiji shinpō (7 November 1934), NCC.
32 Mitsubishi Shōji ed., Ritsugyō bōeki roku [Corporate records of foreign trade enterprises] (Tokyo: Mitsubishi Shōji, 1958), 252.
33 Kobe yūshin nippō (6 December 1934), NCC.
34 Chūgai shōgyō shinpō (5 February 1935), NCC.
35 Jiji shinpō (7 November 1934), NCC.
36 Chūgai shōgyō shinpō (1 January 1935), NCC.
37 Chūgai shōgyō shinpō (5 February 1935), NCC.
38 For more information on the Mitsubishi Trading Company’s business and operations in Germany, see Okabe Keishi, “Ryō-taisenkanki Doitsu Mitsubishi shōji no tenkai to kikai torihiki” [The development of Mitsubishi shoji kaisha, G.m.b.H. and trading of machinery during the interwar period], Ryūkoku daigaku keieigaku ronshū [The journal of business studies, Ryukoku University], vol. 58, no. 2 (February 2019).
39 “1930s,” Nissan website, https://www.nissan-global.com/EN/COMPANY/PROFILE/HERITAGE/1930/, accessed 3 March 2023.
40 Mitsubishi shōji ed., Ritsugyō bōeki roku, 253.
41 Udagawa Masaru, Nihon no jidōsha sangyō keieishi [Business history of the Japanese automobile industry] (Tokyo: Bunshindo, 2013), 51. Note the quantity of Australian newspaper reporting.
42 Nissan jidōsha, ed., Nissan jidōsha sanjū-nenshi, 45. By way of comparison, the Ford Motor Company’s annual production at its Japanese subsidiary peaked at 17,244 vehicles in 1934, whereas the General Motors Company’s annual production at its own Japanese subsidiary peaked at 15,745 vehicles in 1929. See Simon James Bytheway, Nihon keizai to gaikoku shihon: 1858-1939 [The Japanese economy and foreign capital: 1858-1939] (Tokyo: Tosui Shobo, 2005), 182.
43 Mitsubishi shoji, ed., Ritsugyō bōeki roku, 252.
44 Conlon and Perkins, Wheels and Deals, 165.
45 Mitsubishi shoji, ed., Ritsugyō bōeki roku, 252.
46 See Bytheway, Investing Japan,175-176 and Wakon gaishi, 25-27.
47 Ōshima Taku and Yamaoka Shigeki, Jidōsha [The automobile] (Tokyo: Nihon Keizai Hyouronsha, 1987), 47.
48 Argus (24 May 1934), 10, Sunday Times (12 August 1934), 8, Weekly Gazette (6 December 1935), 6, Central Queensland Herald (4 February 1937), 67, et al.
49 Maeda had joined Nissan Motor’s Osaka factory in 1930 where he was immediately employed in car assembly after graduating from High-school, and Technical College, with excellent grades. See Murakami Fukuichi, “Datsun kujyō kaiketsu no ken” [The resolution of the Datsun grievance] (29 April 1935), National Archives of Australia (NAA): SP1096/1 C43.
50 As the example of Okura & Company’s role in supplying Japanese electrodes to Australian industry also show. See Bytheway, Simon James and Ōshima Hisayuki, “1930 nendai ni okeru nihon kōgyō seihin no Australia shijō kaitakushi: Ōkura shōji ni yoru Tōkai denkyoku seihin yushutsu no jirei” [Exploring the Australian market for Japanese industrial product sales in the 1930s: A case study of Okura & Company’s role in supplying Japanese electrodes to Australian industry], Shōgaku Shūshi [Journal of business, Nihon University], vol. 91, no. 2 (September 2021).
51 Murakami, “Datsun kujō kaiketsu no ken.”
52 Age (14 November 1936), 26.
53 “HISTORY(1920–1979),” Mazda website, https://www.mazda.com/en/about/history/1920-1979/, accessed 3 March 2023.
54 Smith’s Weekly (17 November 1934), 14.
55 “1960s,” Nissan website, https://www.nissan-global.com/EN/COMPANY/PROFILE/HERITAGE/1960/, accessed 3 March 2023.
56 Conlon and Perkins, Wheels and Deals, 8, “MMAL,” Mitsubishi Motors website, https://www.mitsubishi-mo tors.com.au/company/company-profile.html, accessed 3 March 2023.
57 Conlon and Perkins, Wheels and Deals, 146.
58 “Australian car market: Car sales, statistics and figures,” Cars Guide website, https://www.carsguide.com.au/car-advice/australian-car-market-car-sales-statistics-and-figures-70982, accessed 3 March 2023.
59 Courier-Mail (17 April 1934), 10. Note that the Australian pound had been devalued in 1929, a full two years earlier than Japan. These financial and monetary changes fed into the growing socioeconomic de-globalization which characterized the 1930s. See Simon James Bytheway and Mark Metzler, Central Banks and Gold: How Tokyo, London, and New York Shaped the Modern World (Ithaca: Cornell University Press, 2016), 163-167.