|A shop in modern Tokyo offering coffee and tobacco|
|Photo credit: by kolisu, (C)ひとりたび向上委員会|
|Used under a Creative Commons licence.|
In modern Japanese, loan words or gairaigo are written in katakana, and native words are written in hiragana or kanji. See What is katakana used for? for details. Historically the Japanese thought kanji should be used as much as possible, and loan words were given kanji. For example the word for "coffee", kōhii (コーヒー), from Dutch "koffie" was given the kanji 珈琲.
The first Europeans to meet the Japanese were the Portuguese, in the sixteenth century. From them the Japanese adopted words such as tabako, "tobacco", given kanji 煙草. From the seventeenth century, the Dutch were the only country allowed to trade with Japan. From them the Japanese adopted words like biiru, which was given the kanji 麦酒. Many of the kanji used for the loan words were taken from Chinese.
From the late nineteenth century, with the opening of Japan to countries other than Holland, the Japanese started to adopt words from English, such as kurabu, "club", sometimes written as 倶楽部. The practice of attaching kanji to loan words has gradually died out, but kanji or hiragana versions of the older loan words are still common. Thus it's common to see tabako written in hiragana, たばこ, rather than in katakana.
Attaching kanji to non-Chinese words is called ateji (当て字). More examples of ateji can be found in the articles Which Japanese words come from Portuguese? and Which Japanese words come from Dutch?, as well as in Why is America called bei?
Some words which were originally Japanese have also had ateji given to them, so that kanji unrelated to the pronunciation of words is used to write them. For example, himawari, "sunflower", may be written as 向日葵, literally "face", "sun", "flower", and mukade, "centipede", may be written with the kanji for "hundred" and "legs", 百足.
Ateji attached to Japanese words are very common in the names of plants and animals. Possibly due to the difficulty in remembering how to write names unrelated to the pronunciation of words, the current convention in Japanese is to write plant and animal names in katakana rather than using ateji. See How are animal and plant names written in Japanese?
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