Knowledge transfer, acting through capital, technology and people, is typically accompanied by globalisation. This paper examines a case of such transfer, paying attention to some theoretical implications of the political economy of Japanese business. It looks at the corporate culture, production systems and industrial relations of a British firm (herein ‘D’) which was taken over by a Japanese textile trading company (S), and in particular at the change from a line system to a flexible group system in production, representing a paradigmatic change from Fordism. Under Japanese ownership, managerial control increased, though without degrading working conditions; how far this ‘miracle’ will go remains to be seen. This paper thus examines the dialectical process of capitalist knowledge transfer, suggesting that it will provide opportunities for innovation in management, but within the strictures of capitalist development.