October, 1936

The Ministry of Trade and Industry of Japan got to work right away. For Japan’s industrialization to continue new markets for Japanese goods must be opened. For this, Japan has many options.

Venezuela:

Oil rich Venezuela is an attractive market for Japanese businesses. Japan needs Venezuelan oil and has much to offer Venezuela. Japanese silk, a luxury product, will be highly desired by the new elites in the oil rich nation. Additionally, Japanese cotton products, made with cheap Japanese cotton and relatively cheap, compared to European exporters, labor should be able to enter the Venezuelan market. At the same time, oil exports will make Venezuelan labor expensive relative to Japanese labor, meaning that Venezuelan exports other than oil are unlikely to be imported into Japan.

Most importantly though, Venezuela is a prime export market for the key Japanese industry of shipbuilding. Venezuela has recently nationalized German oil interests, but possesses little to no shipbuilding capability. By opening our markets to Venezuela Japanese shipbuilding will benefit from Venezuela’s newfound need to transport their own oil.

The Legation Cities:

Japanese military police have gained de facto control of the Legation Cities. While the diplomatic situation prevents political control of the Legation Cities, economic control can be more subtly enforced. As Japanese military police control the harbors many actions will be taken to encourage Japanese imports.

Taxes on imported Japanese goods will be ignored or returned to the merchants and non tariff barriers to trade on non-Japanese goods will be unofficially raised. Goods from other nations will be found to be not consistent with regulations, their paperwork will go missing or be found out of order, etc. This will result in the wealthy Legation Cities functioning as a captured market ready to be flooded with Japanese goods, fueling Japanese industrialization.