Even though the Sankyo Company was producing Harley "clones" at the Shinagawa factory, Harley-Davidson did not immediately pull out of Japan. Instead they instructed Child to build an entirely new company, Nishiman Harley-Davidson Sales and located it in Tokyo. Throughout the meltdown between the Motor Company and Sankyo, Child had remained on good terms with the Japanese which helped him to continue operations in Japan. He was even able to sell several hundred Milwaukee built Harleys to Sankyo. Unfortunately, within a year of starting the new company, Japan enacted an import tariff on motorcycles. This made it impossible for Harley to compete with Rikuo as their price was increased by 30% due to the tariff. In April of 1937, Child had no choice by to sell his remaining stock to Sankyo and return to the US.
Meanwhile, the Japanese Imperial Army was field testing the new Rikuo. They asked chief engineer Sakurai to demonstrate the new motorcycle in Manchuria for the Kanto-gun (division of the Imperial Army). The testing ground proved to be brutally cold, with temperatures well below zero. After an extremely cold night, Sakurai was unable to start the Rikuo as the oil had nearly frozen from the cold. The Army did not wait for Sakurai to get his motorcycle started, but instead left him behind while he furiously tried kick starting the motorcycle. Eventually he did get the Rikuo cranked, but after such a poor performance, the Army told Sakurai to come back when he had something they could use.
At this point, the Rikuo was renamed the Model 97. The timing could not have been better as war broke out with China that same year and the Army needed large numbers of Model 97's for the fighting in China. The demand was so large that the Shinagawa factory could not keep up and additional motorcycles had to be produced by a subsidiary company called Nihon Jidosha. The Model 97's built by Nihon Jidosha were slightly different from the Shinagawa models as they were based the Harley-Davidson VH model with a larger 80 cubic inch engine.
Production remained high until the end of WWII in 1945. By this time some 18,000 Model 97's had been produced by the two factories. They were used extensively in China, even being fitted with 6.6mm and 7.7mm machine guns to support infantry operations. The retreating Japanese Imperial Army also left behind a number of Model 97's which the Chinese are rumored to have copied, producing a Chinese clone of a Japanese clone of an American motorcycle.
Although much of Japan was devastated by the end of the war, the Shinagawa factory was still standing and ready to began production again... The story continues with Part 4.
