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From the Non-European Tradition to a Variation on the Japanese Competitiveness Model: The Modern Japanese Paper Industry Since the 1870s

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The Evolution of Global Paper Industry 1800¬–2050

Part of the book series: World Forests ((WFSE,volume 17))

Abstract

In this chapter we focus on the development of the “modern” Japanese paper industry, which was introduced from the West to produce yoshi (Western machine-made paper) in the 1870s. Japan’s traditional papermaking (or washi) culture, introduced from the East, has a long history. In the beginning, the central government’s demand for paper supported the development of the modern paper industry, as it needed yoshi for the announcement and documentation of its modernization policy. Subsequently, the private sector promoted industrial development over the following 130 years, except during the wartime economy. The modern paper industry in Japan has always been characterized by rapid growth, low import dependency, and cartelization. The “Big Three” dominated the market after their merger in the 1930s, but the GHQ’s democratization policy welcomed new industry entrants after the Second World War. Various innovations, including the vertical integration of pulp and papermaking processes and the establishment of coastal manufacturing bases to utilize imported material, were the sources of growth after the Second World War. Japan became the second largest papermaking country in the world for almost three decades beginning in the 1970s, but globalization, the emergence of new developing countries, and the tide of M&A has transformed this industry.

This chapter was partially supported by a grant-in-aid for Scientific Research, (A) 23243055, (C) 17530266, (C) 19530308. The Japan Society for the Promotion of Science gave one of the authors the opportunity to present an earlier version of this study at the 15th International Economic History Congress at Utrecht University, August 2009. People in Nippon Paper Group, Inc., Daio Paper Corporation, Japan Paper Association, and Paper Museum (in Tokyo) gave helpful advice on promoting this study. We also thank Hisayuki Oshima for providing valuable data on intercontinental freight charges. We are also grateful to the participants of our session at Business History Society 2010 in Sapporo and especially Prof. Toshiyuki Shinamiya.

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Notes

  1. 1.

    http://www.jpa.gr.jp/en/ (Japan Paper Association).

  2. 2.

    The price of newsprint paper in 1911 was 113.9 yen per 2,000 lb (=907 kg), while the freight charge from Europe to Japan by secret cartel was 40 yen. For details, see the appendix in Nippon Yusen (1927) and Suzuki (1967), p. 125.

  3. 3.

    In 1974, for example, Japan’s forest accumulation was 2.1 billion square meters, comparable to Sweden’s. Oji Paper (1987), p. 54.

  4. 4.

    For detailed information on the long history of the domestic paper industry in premodern Japan, see Section 2 in Kurosawa and Hashino (2010).

  5. 5.

    “Letting the pulp stock water settle on the mold and allowing drainage of water through the screen thus forming a sheet of paper.” Paper Museum (1998), p. 8. See also Furuhata (2001), p. 72 and Sakamoto (2001), p. 50.

  6. 6.

    Washi was introduced to other countries by Europeans who visited Japan in the Edo Period. After the mid-nineteenth century, washi was exhibited at World Expositions in Europe and in the US and was well received. For example, the Treaty of Versailles marking the end of WWI was signed with English ink on washi, accommodating a request for the world’s best paper and ink. See Yagi (1940), p. 47.

  7. 7.

    The papermaking division of the Printing Bureau of the Ministry of Finance produced washi using a combination of traditional paper mulberry and Western papermaking techniques. The paper was exhibited at the Paris Expo and was subsequently exported in large amounts. Later, an imitation of this product using wood pulp as material appeared in Austria under the name “Japanese Vellum” was imported into Japan under the trade name “Simili Japanese Vellum” in around 1900 and became popular. In 1913, Kyushu Seishi Co., Ltd., a Japanese yoshi manufacturer, made an imitation of Japanese Vellum with sulfite pulp that became popular in Japan as craft paper. See Paper Museum (2004), p. 17.

  8. 8.

    The market share of machine-made washi temporarily surged to 28%, in the midst of material scarcity immediately after WWII. It declined to a little more than 10% in the 1960s. As a result of the merging of the yoshi and washi product categories and the diversification of all paper products, the classification “machine-made washi” became less and less appropriate. Hence, after 1967, it was reclassified as either “paper” or “paperboard.” See Yearbook of Pulp and Paper Statistics (Ministry of International Trade and Industry and Minister Secretariat Office for Research and Statistics) for each year.

  9. 9.

    The average daily circulation of the eight major newspapers in Tokyo was then about 72,300 copies (Miyamoto and Yui 1973, p. 93). In the 1880s, the publication of boys’, women’s literature, and other specialized magazines continued, and the publishing of fiction also gained momentum. Publishers began appearing one after the other (ibid., pp. 99–100).

  10. 10.

    The survey on forest utilization commissioned by the Sakhalin Agency in 1911 proposed a plan to set up 11 pulping plants in Sakhalin to produce 143,000 ton of pulp annually, which formed the basis for a subsequent national forest utilization plan. See Suzuki (1967), p. 179.

  11. 11.

    Even Tokyo Dento Kabushiki Kaisha (now TEPCO), then one of Japan’s largest companies, had a paid-in capital of 400 million yen, and the largest spinning firms, such as Kanebo and Toyobo, were capitalized at around 30 million yen. See Miyamoto and Yui (1973), p. 149. The description below is based on pp.149–153 of Miyamoto and Yui (1973) unless otherwise specified.

  12. 12.

    However, public support during the prewar period was not nonexistent. In 1937, a prefectural papermaking industrial research institute was founded in Shizuoka, one of the largest centers of the paper industry in Japan. Daishowa Paper (1991), p. 55.

  13. 13.

    In 1937, eight imported pulp-dependent domestic paper firms (such as Mitsubishi Paper) jointly applied for permission to process virgin wood and operate a pulping business, but this was rejected by the government because of its policy of priority for rayon. Daishowa Paper (1991), pp. 62–67.

  14. 14.

    The craft pulp production capacity in 1938 was 63,000 ton for Oji Paper Co., Ltd., 7,500 ton for Daishowa Paper Mfg. Co., Ltd., 7,500 ton for Takasaki Paperboard, and 2,000 ton for the others. Oji enjoyed a dominant position. Daishowa Paper (1991), p. 55 and pp. 62–67.

  15. 15.

    Unlike Sakhalin (occupied since 1905), Taiwan, Korea, and Manchuria were of limited importance in the history of papermaking and pulping in Japan. Pulp production began in Korea and the Yalu River area of Manchuria via the Oji Paper, Co., Ltd. and others after 1918. Expectations for forest-rich Manchuria were high, but pulping and papermaking in other places had to wait until 1938 and even after. Five companies involved themselves in these projects. However, the lumbering and sourcing costs of pulp materials were high in Manchuria because of its lack of social infrastructure, and it never did achieve a key position as a sourcing base before being lost after Japan’s defeat. Daishowa Paper (1991), p. 69.

  16. 16.

    This description is based on Daishowa Paper (1991), pp. 57–91.

  17. 17.

    After the change from wooden to cardboard boxes, the shift to a mass consumption society, and the “packaging revolution,” the percentage of paperboard of total paper products production jumped from 15% (1945), to 24% (1950), to 40% (1960), and eventually to 47% in 1966. However, it then started to decline due to the shift to other packaging materials such as plastic and the diversification of demand for yoshi, among other reasons. It has been hovering around 40% since the 1980s. See Suzuki (1967), appendix pp. 14–19 and the Yearbook of Pulp and Paper Statistics (Ministry of International Trade and Industry and Minister Secretariat Office for Research and Statistics) for each year.

  18. 18.

    The main product was low-grade printing paper made from ground pulp and recycled paper. See Daishowa Paper (1991), p.124.

  19. 19.

    The share of rice straw among paper materials diminished from 11.2% in 1955 to 3.6% in 1965. See Toyo Keizai (1966), p. 266.

  20. 20.

    Oji Paper (2001c), pp. 158–159, p. 359. The coastal location had already been determined but only for product shipment, and the materials were sourced domestically. In the chemical industry, 1958 marks the beginning of one of the coastal chemical complexes (in Iwakuni and Niihama).

  21. 21.

    In 1968, Daishowa Paper Mfg. Co., Ltd. established joint ventures in Malaysia and Australia to purchase rubber and eucalyptus chips on a long-term contract. Their competitors followed suit. See Daishowa Paper (1991), pp. 317–320; Oji Paper (2001b), p. 334.

  22. 22.

    The first case of this type of FDI was Alaska Pulp, set up in 1953. That was followed by other plants, such as Honshu Seishi (N-BKP, Canada in 1967), Jujo Paper Co, Ltd. (RGP, Canada in 1968), Daishowa Paper Mfg. Co., Ltd. (N-BKP, Canada in 1970), and Sanyo-Kokusaku Pulp Co., Ltd. and Oji Paper Co., Ltd. (RGP, New Zealand in 1971).

  23. 23.

    The most representative one is Celulose Nipo Brasireira S.A. in 1970, a joint venture with the Brazilian national policy concern CVRD (Companhia Vale do Rio Doce). This project was financed by the Japanese government in the form of ODA. Nine major Japanese pulping firms and the Itochu Corporation invested in this project for the development of a eucalyptus plantation and the construction of the world’s largest L-BKP plant based on Japanese technology. Japan procured 75% of the pulp produced there. Oji Paper (2001b), pp. 176–177.

  24. 24.

    Oji Paper (2001b), p. 230.

  25. 25.

    The import duty on newsprint paper was 5.5% in 1972, reduced in phases to 0% in 1990. The duty on coated paper was lowered from 10 to 4.1% and that for paperboard was reduced from 10 to 2.5%. In 2004, the tariffs on paper and paperboard were completely lifted. See Oji Paper (2001b), pp. 248–249.

  26. 26.

    The first example of this was the thermosensitive paper plant of Kanzaki Speciality Papers, Inc. that opened in Massachusetts in 1986. Later, more such FDIs could be seen in Europe and China, though few. See Oji Paper (2001c), p. 376.

  27. 27.

    Unlike in Europe, weight reduction in Japan was initiated at the request of newspaper companies. For this purpose, Oji Paper initiated Japan’s first mass production of TMP (thermomechanical pulp) in 1976. See Oji Paper (2001c), pp. 166–168.

  28. 28.

    In 1999, eight of the top ten paper and paperboard manufacturers were integrated pulp and paper manufacturers. Among the 64 plants of these top 10 companies, 28 are integrated plants, including pulping and papermaking processes. On the other hand, paperboard companies tend to depend on recycled paper and use a very limited amount of virgin pulp. Out of 452 paper and pulp factories, only 54 are integrated, and those owned by SMEs use purchased pulp or recycled paper as material. See Oji Paper (2001a), pp. 78–79.

  29. 29.

    In 1949, Mishima Industry (predecessor of Toyo Pulp) and Kanzaki Paper Co., Ltd. started pulp production. Daishowa Paper Mfg. Co., Ltd. became self-sufficient in pulp in 1952 and built a pulping plant. See Oji Paper (2001c), pp. 141–150.

  30. 30.

    As a result of the cyclic recession in the synthetic textile industry and increased paper consumption after the mid-1950s, DP only accounted for 9% of all pulp output in 1964. See Toyo Keizai (1966), p. 151.

  31. 31.

    Of the 1975 pulp output, 82% accounted for home consumption. 15 specialized pulping mills accounted for only 2.3%. See Toyo Keizai (1978), p. 151 and p.154.

  32. 32.

    However, the successors of Oji maintained various forms of affiliation. For instance, in 1972, five Oji successor companies jointly set up the Nippon Paper Pulp Research Institute. See Oji Paper (2001b), p. 147.

  33. 33.

    In 1976, Oji Paper Co., Ltd., the biggest paper firm in Japan, had a paper market share of 14.9%. The top three companies jointly held a share of 37%, and the top five had 48.6%. However, the newsprint paper industry maintained the greatest degree of oligopoly, in which the market share of the top one, top three, and top five companies were 29.5, 66.6, and 83.7%, respectively. In this period, Tomakomai Plant for newsprint paper and Kushiro Plant of Honshu Seishi for paperboard were the world’s largest in their respective business areas, but they are two of the very few exceptions. See Toyo Keizai (1978), p. 67.

  34. 34.

    Daio Paper Corporation (1995). See also its webpage, http://www.daio-paper.co.jp/company/index.html

  35. 35.

    Rengo (1995). See also its webpage, http://www.rengo.co.jp/english/about_us/outline/index.html

  36. 36.

    See the webpage of Gyo-kai Doko search.com (trend in the industry) http://gyokai-search.com/3-kami.htm

  37. 37.

    According to the 2008 figures, the operating margin for Oji Paper Co., Ltd. was 3.2% and that for Nippon Paper Industries Co., Ltd. was 2.7%.

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Authors and Affiliations

  1. Graduate School of Economics, Kyoto University, Kyoto, Japan

    Takafumi Kurosawa

  2. Graduate School of Economics, Kobe University, Kobe, Japan

    Tomoko Hashino

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  1. Takafumi Kurosawa
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Correspondence to Takafumi Kurosawa .

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    Juha-Antti Lamberg

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Kurosawa, T., Hashino, T. (2012). From the Non-European Tradition to a Variation on the Japanese Competitiveness Model: The Modern Japanese Paper Industry Since the 1870s. In: Lamberg, JA., Ojala, J., Peltoniemi, M., Särkkä, T. (eds) The Evolution of Global Paper Industry 1800¬–2050. World Forests, vol 17. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-5431-7_6

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