A Study on the Relations between Toyo Menka Co. and Japanese Cotton Manufacturing Companies in 1930s Shanghai

Abstract

Cotton manufacturing companies were Japan's largest private-sector investors in China before W.W.II. In the development process of this cotton industry in China, Japanese cotton trading companies also played an important role. This paper seeks to clarify the relations between cotton trading companies and cotton manufacturing companies in Shanghai, mainly through a case study focusing on the business of the Shanghai branch of Toyo Menka Co.(Tomen). In 1930s Shanghai, Tomen's Shanghai branch maintained a dominant position in the cotton and cotton goods markets, in spite of difficulties experienced by its competitors (Nippon Menka Co. and Gosho Co.). Tomen's business success was based on its close relations with a few allied cotton manufacturing companies, including Shanghai Cotton Spinning Co., Kodai Cotton Spinning Co. and Toyota Cotton Spinning Co. The relationship with Shanghai Cotton Spinning Co. (Shanghai-bo) was paticularly important for Tomen, which held 58% of Shanghai-bo's stock and was its general agent. Tomen managed to maintain its dominant position in the cotton business even under fluctuating market conditions because of its relationship with Shanghai-bo. In another words, Shanghai-bo was not only a steady source of profit (dividends and commissions), but also a buffer to avoid risk from cotton market fluctuations, in the face of which other trading companies failed to keep their prominent market positions.