In the 1930s the Japanese government began enforcing cultural nationalism. This also lead to a strict censorship and control of published media. Many animators were urged to produce animations which enforced the Japanese spirit and national affiliation. The movies were shown in News-Cinemas as an opinion-forming limbering filler and were very famous, in fact (after Japan had its own support of movie material through the newly-founded Fujifilm) News-Cinemas boomed and together with it the animation industry reached a peak in officially shown movies. At that time many small studios were closed or fused to bigger studios until only three big studios remained on the broad market.
Disney had a strong influence on the animators at that time, but due to commercial issues Japanese animations at that time didn't have a high production standard, but were rather pale imitations of Disney productions (repeating scenes and gags, after recording of sound and so on). Disney also used sound film very early but that was too expensive for most Japanese studios until the mid 30s.
Until the 30s the Japanese movie industry was dominated by the cinemas, who commissioned animations from small studios or single animators. Due to the fusing and enlarging of animation studios bigger projects were possible, but the necessary money didn't come from the Monbusho or a big cinema combine. Many animations were instead commissioned by the military, showing the sly, quick Japanese people winning against enemy forces.
In 1941 Princess Iron Fan would become the first Asian animation of notable length ever made in China. It was followed by Japan's Momotaro's Divine Sea Warriors in 1945. Due to economic factors, it would be Japan which later emerged with the most readily available resources to continue expanding the industry.