The argument of "labour intensive industrialization" in East Asia, which has been raised by Kaoru Sugihara and Kenneth Pomeranz, seems to rest on the "peasant economy" as a concept. In deed, the plural employment strategy of peasant household has often been regarded as the typical examples of the "industrious" behaviour that characterizes "labour-intensive industrialization". In other words, the argument has emphasized the agrarian bases of the "labour-intensive industrialization" in East Asia. The notion of industrialization, however, intrinsically implies the process of de-agriculturization. How can we extend the notion of "labour-intensive industrialization" originally based in an agrarian setting to the non-agrarian sphere? The paper explores this question by analyzing the foundation of the small scale industries in 19th and 20th century Japan, during the transformation of the economy's base from peasant economy to urban agglomeration. The weaving and the export-oriented "miscellaneous" industries, particularly toy industry, will exemplify the argument. Besides the centralized factory system, the development of the dispersed production system based on the household economy including a certain level of skill formation played the significant role in the industries. Reiterating the relatively high proportion of small and medium enterprises in the industrial organization, as well as the high self-employment rate among the working population in the contemporary Japan, the analysis is expected to show an another path of industrialization in East Asia.