Luckily for the Navy, Italy joined the Anti-Comintern Pact that year. It was because of this that the Navy (which procured small arms independently of the Army) was heavily lacking in arms production, so they sought to secure arms from outside sources. Following what was known as the Marco Polo Bridge Incident in 1937, the Imperial Japanese Army invaded China and strained manufacturing heavily as the war was going on, priority for firearms manufacture was given to the Army, with other organizations such as the Imperial Japanese Navy not given such luxury.
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