The Strategies of Integration on the Textile Companies in the Meiji Period :A Case Study the Kyoto Cotton Flannel Co. Ltd

The purpose of this study is to discuss the significance of the vertically and horizontal integration focus on the textile companies in the Meiji Period. It has been widely accepted that the process was initiated by those formed as spinning companies, which later acquired the weaving sector by mergers and acquisitions because of recession. This paper is to show an alternative way of vertical integration of spinning and weaving processes in cotton industry in early Meiji Japan through a case study of the Kyoto Cotton Flannel Co., Ltd(the Kyomen). Cotton flannel is a finished cotton textile napped on side made to imitate wool flannel. Full-fledged, factory-based machine printing in Japan started to develop when the Kyomen was established in 1895. The Kyomen actively transferred technology for raising the nap of the cloth, dyeing and processing to European. The industry faced various quality problems caused by inexperience in machine printing technique and copper roller engraving. This study provide evidence that the Kyomen was the first Japanese company which overcame these challenges. It was worthwhile to note that the Kyomen achieve vertical integration process by acquisition of Kyoto Spinning Company. Since then, it internalized the spinning process and became able to improve the self-manufactured cotton yarn to fit in printing and napping. It made it possible to improve the quality of cotton flannels. When the competition in this industry is fierce after the Russo-Japanese War, the Kyomen was developing aggressive horizontal integration in order to break out of dependence on the sales cotton flannels. Although the Kyomen failed to finance them and went bankrupt in 1909, it filled an importance role in the rise of the machine textile printing industry in Japan.