A Case of Business Failure: The Netherlands Trading Company (NHM) in Japan, 1859 to 1881

Abstract Late December 1880 the Nederlandsche Handel-Maatschappij N.V. (Netherlands Trading Company Ltd. hereafter: NHM) closed its last remaining sales office in Japan. The NHM was probably one of the largest and most successful Dutch trading houses from the mid-1850s. Why did the NHM fail and decided to pull out of Japan? I will argue that the failure was mainly due to the loss of old and profitable networks after the Meiji Restoration of 1868 and the inability of the NHM to establish the same kind of links with the new Japanese government. The exit of the NHM mirrors the decline of Dutch economic relations with Japan after 1859. The once prominent position of the Dutch was lost to other western countries, notably Great Britain, the United States, France and Germany. The failure of the NHM can hardly be attributed to only exogenous or endogenous factors. The revolutionary changes introduced after the Meiji Restoration could not have been foreseen by any businessmen. The NHM sales offices may have failed in Japan, but the company as a whole continued to prosper in the Dutch East Indies and other markets. Business history is mainly concerned with investigating and explaining the successes of entrepreneurs and shows relatively little interest in business failures creating an unbalanced view of the history of business. The history of the NHM in Japan provides an opportunity to investigate a case of business failure and the many factors that influence entrepreneurship. Entrepreneurs often try out new products and probe new markets. When the results are disappointing they pull out. Failed investments can provide valuable lessons and a company may try to enter the same market again as the NHM successfully did in the 1920s, opening offices in Kobe and after the Second World War in Osaka and Tokyo.