THIS PAPER DEALS with the catching up process of the Japanese chemical industry with those of the Western nations, especially with German and West German industry, in the time period 1925–1960, focusing on the post-war years 1955–1960, the early and decisive years of the Japanese petrochemical industry from the business history view point.

TRIALS FOR CATCHING UP

The first trial for catching up: 1925–1945

The modern coal chemical industry began to emerge in Japan at the latest around the turn of the century, when a variety of private companies including coal mining firms, gas companies, and electricity companies entered into this new field. It then found its decisive step in the unique conditions during the First World War, when the import of main chemical products from abroad became almost impossible, the export opportunities for the infant Japanese industry were opened abruptly, and the Japanese government took the initiative to foster the catching up process by enforcing laws for promoting the development of the domestic industry and by establishing a national owned and subsidized company, which became later privatized. This was the beginning of the first trial of the Japanese chemical industry toward the catching up to Western advanced industries, especially to German industry.

After the end of the war, those Japanese enterprises, private or statesubsidized, having faced the recurred competitive conditions in the world market, made every effort, including new product development through imitating Western products, to maintain their footholds on the Japanese market. The government also tried to protect the Japanese market for domestic producers by its tariff policy as well as direct import restriction and restriction against inward direct investment, although those policies were not comprehensive, but selective, and were enforced with time difference according to the sectors.

The German chemical firms, led by IG Farben, which was established in 1925, responded to the emerging Japanese competitors by bilateral market agreements with them on the base of international cartels by sectors, where IG Farben took the lead and the core member, and by rejecting in earlier years the repeated proposals from Japanese firms for technology transfer agreements.