The Spanish and Portugese both visited Japan, beginning in the mid 16th Century, and did some early trading. This was during the time various Shoguns, or warlords were vying for preeminence. It is likely that the Japanese' first exposure to "western" string instruments occurred around that time. When they began to copy the style of the Spanish guitar and manufacture their own is another question. My guess is that the industry really sprang up in response to a 20th century demand for pianos, violins, guitars, etc.