Past studies of economic history of Taiwan during the period of Japanese colonialism generally ignored the problem of regional differences and unequal development. This paper focuses on the position and features of eastern Taiwan in the economic history of Japanese colonialism in Taiwan, and the special status and role of Japanese capitalists on Taiwan’s colonial frontier. Until the beginning of Japanese colonial rule, eastern Taiwan lagged behind other parts of the island in terms of its development. The types of the company that operated there, the products they produced, and the nature of capital invested there were different from those of other parts of Taiwan, and exhibited many peculiarities common to the colonial frontier. We can divide the development of companies in eastern Taiwan into two phases. The first was the pre-1930 era. Prior to the 1930s, and due to the threats posed by the aborigines, as well as poor transport infrastructure, frequent natural disasters, and a lack of labour, few domestic Japanese business magnates were attracted to the area as they had been with western Taiwan. During the Meiji and Taishō periods, Taiwan-based Japanese businessmen came to the East, and became the leading force behind the development of companies there. The second phase started with the outbreak of war between China and Japan in1937. The War created new opportunities for the development of industries in the previously backward East. With policies enacted in response to war-time industrial needs, the policy of “aboriginal management” was largely successful, the needed infrastructure completed, and encouragement from state and industry, eastern Taiwan developed rapidly. Domestic Japanese business magnates invested in eastern Taiwan where they dominated most of the important war-time industries. In particular, Japan’s rapidly expanding chemical industry was first established in eastern Taiwan. Hualian became a key centre for emerging heavy industries at this time. And it was from this era onwards that the development of business in Taitong and Hualian was transformed.