The purpose of this article is to examine the direct investment of Japanese cement companies in Manchuria. In second half of the 1920s, the Japanese cement industry was experiencing cutthroat competition, and many companies were in financial difficulties. As a result the companies in that industry established a cartel, the 'Cement Rengokai', and placed price, production and sales under its control. But in spite of this effort, the situation continued to deteriorate. Oddly, the scale of investment in plant and equipment far and away surpassed the scale of demand. The reason for this was the cartel's method of control. Originally, cement companies competed by building additional plant. Further, control was based firstly on production capacity. Secondly, the cartel divided the Japanese market into eight blocks. If a company didn't have a plant in an important block, for example Chukyo and Kyushu, this put the company at a disadvantage. Consequently, each company competed with others to build additional plant in order to expand their profit. As a result, the cartel's control measures brought about new and serious competition in the cement industry by expansion in plant. The 1931 'Major Industries Control Law' prohibited plant expansion to ease this competition. But, on the other hand, this law deprived cement companies of their means of competition. This time Japanese cement companies turned their attention to the Manchurian market. In Manchuria, cement demand was expected to increase greatly to equip infrastructure, and the 'Major Industries Control Law' did not apply to Manchuria. As a result, companies competed through expansion in plant in Manchuria. In Japan, the main competition was between those companies in the cartel (Asano, Iwaki, Ube and others) and Onoda Cement Corporation (an outsider). This competition extended to Manchuria. Onoda and the cartel companies each built plant in rapid succession. Onoda built new plants in Anshan and Shanton. The cartel companies established the Daido Cement Corporation. After the Government of Manchuria prohibited the establishment of new plants in 1935, these companies purchased existing companies without operations, such as the Manshu Cement Corporation and Harpin Cement Corporation. Manshu Cement was purchased by the cartel and Harpin Cement was purchased by Onoda. As a result, the cement industry in Manchuria faced even more cutthroat competition than in Japan. Finally, after 1937, new controls were tried covering not only Japan but also Manchuria.
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