Taiwan soon proved to be Japan's most profitable colony. The Japanese took a careful survey of land ownership throughout Taiwan, so that units of land measurement could be standardized and tax collection could be enforced more efficiently. A population census was taken in 1905, and the Japanese soon embarked on a study of Taiwanese aborigines. Standardization of the measurements of commercial goods and a standardized money system were implemented. Once these preliminary steps were taken, the Japanese authorities proceeded to monopolize the industries of salt, camphor, opium, tobacco, and alcoholic beverages in Taiwan. To facilitate the introduction of industrialization to the island, the transportation facilities were expanded to include railway lines, steamships, and highways. Agricultural production increased, and the Japanese were soon able to export rice and sugar from Taiwan, to satisfy the growing need for these products in Japan. The development of the sugar industry under Japanese rule progressed at a dramatic rate, but the expansion did not progress smoothly. Most Chinese farmers preferred to grow rice, which could be stored for private consumption, as well as for later sale, whereas sugar can could not. Small Chinese cooperative farming enterprises were taken over by a modern, government-supported Japanese sugar company. Thus, although modernization and economic growth in Taiwan eventually proved to be an economic asset to Japan, these changes were achieved at great expense to the native (primarily Chinese) population.

     In 1895 when the Japanese first acquired the colony of Taiwan, the Japanese government envisioned the creation of an empire in which the colonial people would serve as loyal subjects to the Japanese emperor. However, upon their arrival in Taiwan, the Japanese encountered a diverse society, including aborigines, and a clearly defined Chinese population. Chinese settlement patterns and traditional Chinese customs were integrated in villages throughout the island; there was even a small class of literati present, that functioned as a support for schools, teachers, and the candidates who sat for the imperial examinations.

     The Japanese determined at an early stage in the planning of the colony that education of the Taiwanese would serve as a valuable tool in shaping a peaceful, industrious population. In order to achieve cooperation, allegiance, and possible assimilation of the Taiwanese with their Japanese rulers, the Taiwanese would have to be educated in the Japanese way. The Japanese began to build an educational system modeled upon the Meiji educational system of Japan. In Meiji Japan, elementary schools served as one of the first steps in the introducing new, western ideas of occupation and lifestyles to the general population.

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