As with many things in our modern era, World War II.

In the early years of 35mm photography, Germany companies Leitz and Zeiss were the big dogs in optics and lens design. Their Leica I (for Leitz camera) was released in 1925 to immediate acclaim and incredible popularity, leading to a handful of copycats. Most notably Zeiss's Contax, and Kodak's Retina. The Retina was notable for introducing the 135 film cartridge we know and love. However, the cartridges worked just fine in the Contax and Leitz was quick to adopt them in their Leica line as well, maintaining German dominance in the western market. In the East, fledgling Japanese manufacturer Precision Optical Industry Co. Ltd. produced a clone of the Leica camera called The Kwanon, using optical components produced by Nippon Kogaku K.K. The first company would later come to be known as Canon, after their Kwanon cameras, and the latter would later call themselves Nikon. Exakta, another German company, would also be one of the first to introduce the reflex camera we associate with modern cameras.

After WWII, Germany's camera industry was in ruins. Most of the industry, including Zeiss and Exakta, was based around Dresden. Not only was this city one of the hardest hit by the war, it was caught in the Eastern Zone, severely limiting trade potential. To add insult to injury, Russia carted off much of Zeiss' surviving manufacturing equipment to produce their own clone of the Contax. Leica survived in the West, but struggled to innovate due to a lack of resources and talent. They survived by releasing slightly updated versions of their pre-war cameras and subsisted on brand recognition for many years.

Meanwhile, our Japanese companies in Tokyo were similarly set back by the war. However, favorable trade agreements with the US allowed Canon, Nikon, and Asahi (later Pentax) to sell their cameras to eager American consumers with money to spend. This sped the recovery of the Japanese camera industry and led to innovation that vastly outstripped that of the Germans, making them the dominant brands we know today.