Dutch Expansion in Asia of 1937 (Allied Defeat)

The Dutch Expansion in Asia of 1937 (Dutch: Nederlandse expansie in Azië van 1937), also known as the Dutch-Japanese War (Japanese: オランダ–日本戦争) and the War for Taiwan (Chinese: 台灣戰爭) began in early February 1937 after the Soviet-Japanese War in the year earlier that devastated the Japanese overseas armed forces.

Background
With the rise of Soviet power in the Far East and the downfall of the Japanese empire, the Netherlands decided to retake the empire's historical colony of Formosa and build a colony in Siam near the British colonial territories.

China joins
The Republic of China have been wanting to unite China since the successful revolution against the Qing dynasty. With the military of Japan significantly weakened, the Chinese government asked to join the Dutch war against Japan to retake Formosan territories. The Dutch agreed but needed China to attack Siam so that a colony can be set up in the Thai coastal territories.

German supplies for the Chinese and Dutch forces against Japan
With the Sino-German cooperation, Chinese forces are constantly resupplied with German-made equipment and weapons. The Germans and Chinese lend quality weapons to the Dutch to help defeat Japan in the Pacific Ocean. Ultimately, Hitler's goal is to have allies that could compete with the Soviet Union in the future and to destroy communism in Europe.

Japan and Siam sues for peace
On May 21, 1937, the leaders of Japan and Siam sued for peace after the heavy losses in the Pacific Ocean and mainland Siam. The Treaty of Taihoku was signed by Dutch, Chinese, Japanese and Thai representatives on May 28 and was active starting from June 1, 1937.

Formosa

 * Southern Formosa ceded to the Netherlands, the Colony of Formosa was formed on June 2, 1937.
 * Rest of Formosa returned to the Republic of China, Taihoku renamed Taipei becomes the key city.

Siam

 * Rayong ceded to the Netherlands, the Colony of Rayong was formed on June 10, 1937.

Aftermath

 * Significantly increased power of the Dutch Empire.
 * China restores most of Japanese-occupied territories with Manchuria as a Soviet protectorate.
 * Japan's independence guaranteed by the British Empire and Germany.