In Japanese planning for the eventual World War II in the Pacific, the Strike-South Faction favored invasion of Southeast Asia and the Pacific, as opposed to the Strike-North Faction goal of moving into the Soviet Union. Strike-South advocates recognized that their action would bring them into direct conflict with the Western colonial powers, specifically the United Kingdom, the Netherlands, France and the United States.
It was first suggested by the Palace and Imperial Japanese Navy members of the Satsuma Clan and House of Fushimi. In the Imperial Japanese Army, it was supported by the Control Faction. It had backing from industrialists who saw resources and markets, and, by religious leaders that believed that the first Emperor, Jimmu, came from the south.
Japanese operational planning
At first, Japan, at least while the Second Sino-Japanese War was in progress, would try to avoid conflict with powers other than Britain. Even with a constrained situation, however, there was very little Japanese experience with the area, or the logistics required.
Japan hoped, especially after the fall of France, to work diplomatically with Vichy France, even before the Tripartite Pact was signed, both to cut off supplies to Chiang Kai-shek and to establish airbases in French Indochina, needed to strike further south and east.
Georges Catroux, French governor of Indochina, did close the border with China. A Japanese verification group, headed by Major General Issaku Nishimura entered Indochina on June 25. On the same day that Nishimura arrived, Vichy dismissed Catroux, for independent foreign contact. He was replaced by Vice Admiral Jean Decoux, who commanded French naval forces in the Far East, and was based in Saigon. Ducoux and Catroux were in general agreement about policy, and considered managing Nakamura the first priority.  Ducoux had additional worries. The senior British admiral in the area, on the way from Hong Kong to Singapore, visited Ducoux and told him that he might be ordered to sink Ducoux's flagship, with the implicit suggestion that Ducoux could save his ships by taking them to Singapore, which appalled Ducoux. While the British had not yet attacked French ships that would not go to the side of the Allies, that would happen at Mers-el-Kabir in North Africa within two weeks; it is not known if that was suggested to, or suspected by, Ducoux. Deliberately delaying, Ducoux did not arrive in Hanoi until July 20, while Catroux stalled Nishimura on basing negotiations, also asking for U.S. help. 
Many of the leaders wanted to avoid conflict with the United States, which had much less of a presence in Asia and Oceania, basically only the Philippines. Admiral Isoroku Yamamoto, however, while cautioning against war, demanded a preventive attack against the U.S. were there to be a Strike South. Reacting to the initial Japanese presence in Indochina, on July 5, the U.S. Congress passed the Export Control Act, banning the shipment of aircraft parts and key minerals and chemicals to Japan, which was followed three weeks later by restrictions on the shipment of petroleum products and scrap metal as well. 
Ducoux, on August 30, managed to get an agreement between the French Ambassador in Tokyo and the Japanese Foreign Minister, promising to respect Indochinese integrity in return for cooperation against China. Nevertheless, without High Command agreement, the Japanese 5th Division moved to the French border, and, on September 6th or 7th, a disobedient battalion commander moved 2 kilometers into Indochina, and sent back. Apparently, the 5th Division had been encouraged by the Army Operations Staff chief, Kyoji Tominaga, who was more concerned with Strike-South than with the China situation.
Nishimura, on September 20, gave Ducoux an ultimatum: agree to the basing, or the 5th Division, would enter. Japan entered Indochina on September 22, 1940. An agreement was signed, and promptly violated, in which Japan promised to station no more than 6,000 troops in Indochina, and never have more than 25,000 transiting the colony. Rights were given for three airfields, with all other Japanese forces forbidden to enter Indochina without Vichy consent. Immediately after the signing, a group of Japanese officers, in a form of insubordination not uncommon in the Japanese military, attacked the border post of Dong Dang, laid siege to Lam Son, which, four days later, surrendered. There had been 40 killed, but 1,096 troops had deserted. 
With the signing of the Tripartite Pact on September 27, 1940, creating the Axis of Germany, Japan, and Italy, Ducoux had new grounds for worry: the Germans could pressure the homeland to support their ally, Japan.
Japan apologized for the Lam Song incident on October 5. Ducoux relieved the senior commanders he believed should have anticipated the attack, but also gave orders to hunt down the Lam Song deserters, as well as Viet Minh who had entered Indochina while the French seemed preoccupied with Japan.
Indochina after the German conquest of France
Roosevelt formalized aid to China in 1940 and 1941, President Franklin D. Roosevelt gave credits to the Chinese Government for the purchase of war supplies, as it put economic pressure on Japan.
The United States was the main supplier of the oil, steel, iron, and other commodities needed by the Japanese military as it became bogged down by Chinese resistance but, in January, 1940, Japan abrogated the existing treaty of commerce with the United States. Although this did not lead to an immediate embargo, it meant that the Roosevelt Administration could now restrict the flow of military supplies into Japan and use this as leverage to force Japan to halt its aggression in China. After January 1940, the United States combined a strategy of increasing aid to China through larger credits and the Lend-Lease program with a gradual move towards an embargo on the trade of all militarily useful items with Japan.
Through much of the war, the French colonial government had largely stayed in place, as the Vichy government was on reasonably friendly terms with Japan. Japan had not entered Indochina until 1941, so the conflicts from 1939 to the fall of France had little impact on a colony such as Indochina. The Japanese permitted the French to put down nationalist rebellions in 1940. 
- David Bergamini (1971), Japan's Imperial Conspiracy, Morrow, p. 1090
- Merion and Susie Harris (1991), Soldiers of the Sun: the Rise and Fall of the Imperial Japanese Army, Random House, pp. 275-276
- Dommen, Arthur J. (2001), The Indochinese Experience of the French and the Americans, Indiana University Press pp. 47
- Gilbert, Martin (1989), The Second World War, Stoddart, p. 107
- Dommen, p. 48
- Gilbert, p. 108
- Harris and Harris, p. 277
- Dommen, p. 50-51
- United States Department of State, Japan, China, the United States and the Road to Pearl Harbor, 1937–41
- Hammer, Ellen J. (1955), The Struggle for Indochina 1940-1955: Vietnam and the French Experience, Stanford University Press,p. 94