Daiwa and Shimano; Mirroring Leaders in Japanese Angling Industry

There are two giants in the Japanese angling industry; Daiwa and Shimano. They are significant players in the global market. They are the best producers of highest quality fishing reels. I assume this is the fact and almost every angler knows about them.

But have you thought about what made them who they are now? Or you may ask why both of these giants were born in Japan?

In this blog, I will try to give some clues to answer these interesting questions, introducing their histories and products, in the context of historical and social factors.

History of Daiwa

Strictly speaking, Daiwa is not the company name. It is the brand name of fishing products, produced and sold by Globeride Inc. They changed their company name in 2007, from Daiwa Seiko to Globeride. Before this change, the statement “Daiwa was producing Daiwa reel” was correct, and it made the name, even now, be remembered as a company name.

It was 1955 that this company was started, producing the reels for export. It was called Matsui Factory, because the founder’s family name is Matsui. In 1958, it changed the name to Yamato Seiko Co., Ltd.. Their main business had been the manufacturing of fishing reels. 

As they grew their business, they moved to a new factory,in 1962,  in Higashikurume-city, Tokyo, where the company is located currently. Soon after, it opened the first rod factory. 

Since its core business was export of fishing reels, it was natural to establish their own company in the U.S.. In 1966, they founded Daiwa Cooperation, in Los Angeles. 

It was 1969 that the word Daiwa in the fishing industry popped out. They changed their name to Daiwa Seiko Co., Ltd. To explain the background of this change, I need to explain the way of writing the company name in Japanese. The original name was Yamato Seiko (or Yamato Precision Industry), which uses the Japanese Kanji letter 大和. This kanji can be read as daiwa. It means that the original kanji inspired them to call themselves as daiwa, which eventually turned out to be its company name. 

In 1970 they further established their new factories in Japan, and added a point of production in Taiwan in the following year. Their foreign country expansion continued to establish their own offices or companies in Australia and U.K. in 1970’s. 

In 1980, the significant move was made by Daiwa. They acquired the fishing retail company. Until then, they were always standing on the manufacturer's side, or in other words only on the sourcing side for retailers. But in this year, they took a big step to hold retail shops while they were the manufacturer. This stance had not been changed since then, and Daiwa (currently Globeride) owns the retail chain store, Casting in their daughter company portfolio. 

In 1984, they made their company in Rouen, France. And in 1990, they jointly started their operation in Germany. They kept their tempo of opening offices in foreign countries; 2004 in Hong Kong, 2005 in Korea and in China. In terms of production facilities, they opened their Thailand factory in 1995, and one in  Vietnam in 2005. 

During the 2010’s, they opened offices in Singapore, in Italy and in Malaysia, and added their Chinese production point as their own facility. And in 2019, they opened their company in Russia, as well.

History of Shimano

It was about 100 years ago that Shimano was founded. In 1921, Shimano Ironworks was founded in Sakai city, Osaka. The first product was the freewheel for bicycles. 

Since then, the bicycle parts business grew to have 300 employees in 1940. And they brushed up their manufacturing techniques and they started pursuing the cold forged production techniques, which was coming from West Germany, in 1957. In 1965, they established the Shimano American Corporation, as their first foreign company of their own.

It was 1970, about 50 years after the company was established, that the fishing division was made in Shimano. Their corporate purpose was to contribute to people's healthy lives through leisure activities and it led the Osaka company to add fishing in their product line-up. Their first fishing tackle product was a spinning reel, called DUX.

During the 1970’s, mainly for their bicycle business, they opened their companies in Germany, Singapore. And in 1980’s the opening of, Canadian (1983), U.K. (1988), and the Netherlands company (1989.) Following these, a Malaysian company and Italian company (both in 1990) and an Indonesian company in 1991, an Australian company was established in 1992. 

In 2001, they opened the companies in China, Czech and France, followed by Taiwan one in 2002. Scandinavian companies were in operation in 2005. And in 2007, a Brazilian company and a Polish company were founded. During the 2010’s, their activity expanded to found their companies in Cambodia,  Philippines, Uruguay, and Argentina. Further on, they made a company in Spain in 2020.

Reflecting the history of Japanese economy

These companies are just like a typical example of a Japanese company which experienced economic booms.

Let us see the history of the Japanese economy after the Second World War, or after Japan declared defeat in 1945, along with the development of these two companies.

The Japanese economy grew rapidly and steadily after the war. Since the growth was steady and kept the rapid tempo, it is called a miracle. If you are interested in this miracle, you can view this article of Berkeley Economic Review, summarizing the miracle in English.

This growth was mainly driven by the cheaper Japanese Yen, which was a big advantage for the Japanese exporters. In other words, many Japanese companies carry out production activities in Japan, and sell them in foreign countries. 

This growth started with the simple processing trades, and it became the process of the heavy industry by the 1960’s. Along this, it turned to complex machines and electronic appliances as an exporting goods. It was exactly this timing that both Daiwa and Shimano emerged, as exporters of their products. For Daiwa that was with the fishing reel, and for Shimano it was the bicycle parts.

The biggest market for Japanese exporters were the US, and the amount for the US was occupying about 30% of the total export in 1970.

If you are interested, you can view the 1971 report of the economic situation written by the Economic Planning Agency of the Japanese government, in this link. 

Also for the two companies, it was the timing that they entered into the US market, establishing their own companies there. Then, backed up with the weaker Japanese yen, their exports kept increasing.

Then a turning point for them came with the changing policy on exchange rate. In 1971, the exchange rate system changed from the fixed ratio to a floating exchange rate system. As the Japanese economy was getting stronger, the cross border trade profit got bigger and it meant that the deficit on the US side was considered to be a serious shackle in the US economy. It was one of the pressures to raise the price of the Japanese yen. It brought the trade conflict in the car industry and semiconductors. Some of you may remember news photographs that US auto union members demonstrate to destroy Japanese cars with hummers in their hands.

Then, seemingly, around the beginning of 1970 Daiwa and Shimano turned their strategy of expansion to other countries. For Daiwa, it was Australia, UK and Taiwan. For Shimano it was in Germany and Singapore. 

It was around this time that Shimano was coming into the fishing industry. I think around 1970 was a significant year and a big milestone for both companies. 

It was the first economic growth and the growing phase of these two companies. Then the path to the second economic boom is starting. Now we will look at this period with the economy and people’s leisure activities.

The reason why these two giants were born 

As described it was 1970 when Shimano entered the fishing industry. Around that time, people became richer and gradually had some money to spend for their leisure activities. 

The disposable income had increased steadily after the war. Though the comparison is fragmented, the disposable income in 1950 was JPY18,954 and it increased to JPY 39,703 in ten years. And it further increased to JPY 59,557 in 1965, and it went up to JPY 103,634 in 1970, JPY215,509 in 1975.

Along with this increase, people spend money on their hobbies. The move of Shimano was the action from this booming domestic economy. 

Then, fishing was one of the most popular leisure activities. According to the White paper on leisure activities of 1989, for the age group of 50 and higher had fishing as their selection of activities they want to do (source.) It may mean that the fishing activities were quite well acknowledged when they were younger, i.e. in 1960’s and 1970's.

This article summarizes the changes of leisure activities among Japanese very well (Japanese only.)

Now, these two companies enjoyed the rich fishing environment, geographically, demographically, culturally and economically. It strengthened their technology in their products. 

A lot of anglers were fishing in various kinds of water, as there are a lot of fresh water areas for Japan’s mild temperate climate, as well as that it is surrounded by the sea. Additionally, the country lies for 4,000 kilometers from its north end to the south, to have a wide variety of fish species.

People there love to eat fish and this drove them to go fishing, more than that the fishing is just for a game. These people became richer and spent higher money for their fishing tackles, to make the fishing industry bigger.

These pieces got together to bring these two companies to be two giants in the industry.

The way to the economic bubble and the fishing boom

Another economic growth following was often described as a bubble. Heading for this, the fishing industry saw a record high market size. 

As the Japanese entered the 1980’s, the global economy treated Japan as one of the biggest economies in the world. It involved Japan in the change of global economic policy, the Plaza Accord in 1985. It triggered prices in Japan higher, which let many enjoy the rising stocks and property prices to make gains. (This interpretation may not be correct, though. There are multiple factors involved.)

It propels people to spend more on leisurely or luxurious items. This is exactly the timing that Daiwa launched the Tournament brand spinning reel as a luxurious flagship in 1989, and Shimano produced the first Stella, the flagship spinning reel model, which was in 1992. (For your interest, the reel named Exist was introduced in the market in 2005, with the real four concept.)

In 1997 the Japanese fishing market size reached 370 billion Japanese yen. 

During this booming period, among Japanese fisherman, lure fishing became popular and it turned to game fishing. Bass (or the largemouth bass) fishing became popular and many people started catch and release. With it, many lure brands were born which shine as JDM lure brands currently. 

In this period, Daiwa started importing lures from western countries, and purchased the domestic retail chain store, while Shimano kept their stance as a supplier. Their high 

After the Japanese bubble

After the bubble burst, both companies targeted their sales in foreign countries to sell more, while their productions outside Japan were reinforced. As an instance of it, Daiwa made their production point in Vietnam, in 2005. 

After the economic bubble, Japan has experienced 3 decades without any significant economic growth.  Along with that, the domestic fishing market shrinked to 180 billion Japanese yen, in 2012. Though it saw the increase around the covid pandemic for the increase of outdoor activities and it sprang back to 280 billion, the decreasing trend is still continuing. We can see the decreasing fishing population is driving this market change (my blog post explained it.)

As the Japanese domestic market is showing this shrinking trend, Daiwa and Shimano are continuing to expand their earnings in foreign countries. In 2023, Daiwa’s 56% of revenue was from the domestic market and 44% was from outside Japan (source.) Shimano was getting about 66% from the overseas market in the fiscal year of 2023 (source.)

Following these two companies, we can see the changes of the Japanese economy. If you know a lot about the auto industry, you may notice that these changes in the Japanese fishing markets happened 3 to 5 years after big industries faced the changes. 

From here, we can see what will be happening soon in the Japanese fishing industry. Do you want to discuss its future? If yes, please let me know. I am happy to do it.