THIS CHAPTER DEALS with the technology and management transfer from the German to the Japanese chemical industries during the 1920s and 1930s. Before 1945, I.G. Farbenindustrie Aktiengesellschaft (hereafter referred to as I.G. Farben), the giant German chemical firm, exported goods such as dyestuffs and nitrogenous fertiliser to Japan, and licensed its synthetic ammonia process to Japanese companies. It also made direct investments in Japan, both in manufacturing and in sales outlets. Through these three forms of international business activities – export of products, licensing, and direct investment – I.G. Farben transferred to the Japanese chemical industry, intentionally or not, its production technology and managerial skills. Its technology and management transfer also produced far-reaching effects on other facets of the Japanese chemical industry, including its distribution system. In fact, I.G. Farben was one of the two German companies which affected business management in Japan most profoundly, the other being Siemens in the electrical machinery industry.

This article divides the period under study into the 1920s and the 1930s, the two decades when the Japanese market took on significantly different characteristics. This will be followed by a brief overview of the activities of I.G. Farben during the two decades, with a review of the technology and management transfer which was effected by its business activities. Throughout, the focus is on production technology, marketing policy, the distribution system, and personnel management. Financing issues are omitted due to the shortage of available information.

It is necessary to begin with a brief outline of the Japanese market for chemical products from 1910 through the 1920s. In pre-First World War years, the major German chemical companies were already exporting their products to Japan on a considerable scale. Dyestuffs were an important export item, particularly synthetic indigo, which was especially favoured in the Orient. Each company had its Japanese agent; BASF established its agent in 1881 and Bayer changed its agent in 1891. By 1913, immediately before the First World War, the Japanese market had become very important for German dyestuff producers. In that year Japan ranked as the eighth largest export market for German dyestuffs, importing 15.83 million marks’ worth of the products, or 4.9 percent of total German dyestuff exports of 321.20 million marks.