Number

No.2024-01

Month of Issue

July 2024

Title

When Multinational Corporation Met Non-Market Risk in China -Japanese and British Steamship Companies in 1920s

Author(s)

Wu Duoxiao

Affiliation(s)

Graduate School of Economics , Kyoto University

Keywords

Non-market risks; Shipping Industry; Economic nationalism; Multinational corporations; Gunboat Diplomacy

Abstract

This paper examines how Japanese and British multinational corporations (MNCs) addressed non-market risks in China during the 1920s, focusing on the shipping industry. Utilizing historical documents, the study analyzes the strategies of Nisshin Kisen Kaisha, China Navigation Co., and Indo-China Steam Navigation Co. during the May Thirtieth Movement and the Wanhsien Incident. It reveals that Nisshin's defensive strategy, influenced by Japan's conciliatory diplomatic policies, led to favorable outcomes, including a temporary monopoly on the Sichuan route. In contrast, the aggressive approaches of the British companies, shaped by gunboat diplomacy, exacerbated anti-foreign sentiments and resulted in operational suspensions. The paper argues that in regions with rising nationalism, a defensive strategy may be more effective for MNCs in mitigating non-market risks and maintaining favorable business conditions. This research contributes to the understanding of historical MNC strategies and offers insights into managing contemporary non-market risks.