The business environment continued to deteriorate following World War I, with Japan falling into a postwar depression and Japanese heavy industry reeling from the Washington Naval Treaty and the Great Kanto Earthquake. In the face of the Showa Financial Depression, Suzuki & Co., Ltd. fell to bankruptcy, with Iwai & Co. Ltd. and Japan Cotton Trading Co., Ltd. also suffering the Showa Financial Depression and the Great Depression.
Suzuki & Co., Ltd. underwent rapid expansion, dramatically increasing their borrowing from the state-owned Bank of Taiwan. The bank’s excessive lending to Suzuki & Co., Ltd. developed into a political issue. In 1927, the company eventually succumbed to bankruptcy in the face of the Showa Depression. Subsequently, about 40 members of Suzuki & Co., Ltd., including Seiichi Takahata, established Nissho Co., Ltd., seeking a chance to get back on their feet.
Katsujiro Iwai, the founder of Iwai & Co. Ltd., foresaw the coming of a long-term recession after the end of World War I and cautioned his employees “not to speculate” and to “remember that ‘it is far better to do few things well.’” Although the company marked a record of 25 consecutive fiscal terms (1920 - 1932) without paying out dividends, it was able to overcome the tough financial situation thanks to Iwai’s management philosophy. Iwai introduced the spirit of Zen to corporate management and founded the “Nagaoka Zen Juku” in the city of Nagaokakyo, Kyoto.
Japan Cotton Trading Co., Ltd. took the initiative by expanding into the Chinese market. The company also diversified its products, buying rice-polishing factories in Burma (currently, Myanmar). Amidst the Showa Financial Depression and the Great Depression, President Matazo Kita worked with great determination to restructure the business, in order to overcome the difficult financial situation and avoid making the same mistakes as Suzuki & Co., Ltd. After restructuring, President Kita further diversified the business, in terms of both regions and products, in an effort to strengthen the business’s foundations.
In 1943 when the Pacific War broke out and wartime control grew more stringent, the military instructed certain companies to alter their names: Iwai & Co. Ltd. changed its name to Iwai Sangyo Co. Ltd;Nissho Co., Ltd. changed its name to Nissho Sangyo Company; and Japan Cotton Trading Co., Ltd. changed its name to Nichimen Co., Ltd.