The integration of the Malayan colonial economy into the world capitalist system was such that it served as a producer of raw materials, specifically tin and rubber, for the metropolitan capitalist centres of Europe and especially the industries of Britain. The exchange between these centres and the Malayan economy took the classic form in which manufactured goods were imported into Malaya in return for its primary exports. As such, the Malayan economy had little industrial basis of its own and little manufacturing production within a factory system. Any activities resembling such a production system were limited to the processing of raw materials and to commodity production which included food processing, clothing and footwear and light industries such as brick making, saw milling, cement production, foundries and engineering works. The Blythe Report (1938) revealed that industries such as saw milling, rubber processing and production of watches were already in existence in the 1930s.

A key feature in the factories manufacturing goods such as matches, rubber items, cigars and aerated water in the 1930s was the employment of many Chinese women (Blythe 1938). Massive female immigration in the 1920s and 1930s accounted for this feature, and included anti-marriage women displaced from silk filatures in China. Women from the Tung Kun county of China, fo example, usually ended up in factory work which they were already familiar with when they were in China.

During World War II, the local substitution of simple consumer items such as paper, shoes, food and cloth, and the manufacture of products in small industrial and commercial enterprises were set up to replace goods which had become scarce (Purcell 1967, p. 256). For the first time, a majority of consumption goods were produced locally to substitute for imported items and, although of a makeshift nature, some of these manufacturing activities became the basis for permanent industries in the post-war period (Purcell 1967).