Why Didn't the Japanese Make Better Use of its Conquests?

The Wichita bureau has been thinking again:

I think it is pretty well established (or at least commonly believed) that Japan lost WWII because of logistics and the US’s industrial base was much bigger (and better mobilized). That got me to wondering: Japan had over run much of N. China from the 30s on and had been in much of Korea since 1905. It had a huge army still in Manchuria after the war ended.

It had lost a major battle with the Russians (led by Zhukov) in a Cannae like envelopment - a technique he used against the Germans. So it hadn’t pushed into Siberia or tried to take Vladivostok. They also controlled SE Asia (rubber, tin and some oil) and the Dutch East Indies (oil).

But it had a huge part of the most industrialized part of China. Why didn’t it wring more military equipment and stuff out of the Chinese? Were they so poorly organized? Were the Chinese keeping them so busy that they couldn’t build an industrial base? Didn’t they have the capital base to do it?

They fought the war with the equipment that they started with - and developed little new in the way of guns or planes. The army that Zhukov captured was largely equipped with old stuff - WWI era guns and little heavy stuff. And poorly clothed. (the victory on the eve of the German invasion made Zhukov's reputation with Stalin).

To which I respond:

Most interesting and I never gave it any thought before but I suspect has something to do with the fact that they were such bloody awful conquerors. They did everything they could to demean and alienate the new subject peoples. Lots of yellow faces were glad to see Japanese coming because they were not white faces. What they got was torture and humiliation. Like the Germans in Russia but entirely unlike the British (and before them, the French) in India--who built everything on co-opting the locals and collaborating with local elites. ... 

Possible second thought: Japanese war/social machine is steady and stable but moves extremely slowly. Slow to get in gear. And slow to get out: Japanese have been in trouble since 1990 but the machine keeps grinding as if there was nothing wrong

So, what are we missing?