SOGOSHOSHA Japanese Trading Companies and KEIRETSU interlinked corporate ownership

changes were last made to this web page 2014 July 29

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Sogoshosha - Japanese Trading Houses  www.economist.com/node/21554552  "While much of Japan is stagnant [2012] , the likes of Mitsubishi and Mitsui have become prime movers in the world's natural-resources boom." Since the Fukushima nuclear disaster Japan's sogoshosha have been busy developing opportunities to import more natural gas into Japan and they are developing joint ventures and alliances around the world where natural gas and shale gas are located

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Sogoshosha - Japanese Trading Houses many Canadian mining companies have relations with Japanese sogoshosha such as Mitsibishi, Mitsui, Marubeni and Sumitomo . "Canada has one of the largest mining supply sectors globally with more than 3,200 companies supplying engineering, geotechnical, environmental, financial and other services to mining operations."  mining.ca/resources/mining-facts

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April 2013 Joint Venture for LNG Liquefied natural gas project in B.C. Shell Canada Energy (Shell), PetroChina Corporation, Korea Gas Corporation (KOGAS) and Mitsubishi Corporation Dec 2012 Equity Joint Venture GDF Suez (wjnd solar) provincial utilities and Mitsui 2011 Joint venture to develop copper mine in Chile Sumitomo with Quadra FNX of Canada (now called KGHM International)

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"Keiretsu ... the name given to a form of corporate structure in which a number of organisations link together, usually by taking small stakes in each other and usually as a result of having a close business relationship, often as suppliers to each other. The structure, frequently likened to a spider's web, was much admired in the 1990s as a way to defuse the traditionally adversarial relationship between buyer and supplier. If you own a bit of your supplier, reinforced sometimes by your supplier owning a bit of you, the theory says that you are more likely to reach a way of working that is of mutual benefit to you both" The Economist magazine online   economist.com/node/14299720

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Chapter 17 Page 608 Export Trading Companies Sogoshosha and Keiretsu

. The World's largest ETCs, Export Trading Companies are dominated by the Japanese and Korean firms - some of which date from before World War II. In this course we will refer to them by their Japanese name "Sogoshosha". In Japan, the Sogoshosha are associated with corporate groups called Keiretsu. eg. Mitsubishi Trading company with Mitsubishi Bank, Mitsubishi Automotive, Mitsubishi Heavy Industries, Mitsubishi Electronic, etc. WTGR . "According to the Japan Fair Trade Commission (JFTC), almost 20% of Japan's capital was held by six major corporate groupings (Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Dai-Ichi Kangyo [DKB]) and their subsidiaries in Japan"  http://pubs.acs.org/hotartcl/chemtech/97/jun/keir.html Cross-shareholding ratios of major keiretsu   Keiretsu JFY Mitsui Mitsubishi Sumitomo Fuyo Sanwa DKB Average of six major groups 1989 46.1 59.7 83.7 34.7 17.6 17.8 43.3 1991 46.1 61.0 85.3 36.0 18.2 18.4 44.1 1992 45.8 61.2 85.3 36.0 18.3 17.3 44.0 from  http://pubs.acs.org/hotartcl/chemtech/97/jun/keir.html   . What this chart means is that the degree to which the keiretsu members own each other, is very high. This degree of cross ownership is not matched in the North American or European corporate environment. WTGR

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a diagram of the interconnected links of the main Sumitomo companies in the Sumitomo Keiretsu . from Gerlach, Michael L. Alliance Capitalism: The Social Organization of Japanese Business. Berkeley:  University of California Press,  c1992 1992. http://ark.cdlib.org/ark:/13030/ft5s2007g8/

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Export Trading Companies Keiretsu

"The keiretsu system is a driving force behind Japan's industrial success" Herbig Prof. Herbig explains " Japanese keiretsu such as Fuyo, Dai-Ichi Kangyo, Mitsubishi, Mitsui, Sanwa, and Sumitomo generate nearly one-quarter of Japanese business revenues. This system is not simply a superior form of business operations; it is a system that fits Japanese culture....It is the team concept that makes this system part of Japanese corporate culture. While Americans have been complaining that the keiretsu violates U.S. antitrust laws, the fact is that it is rooted in economic cooperation, which lowers transaction costs, and in collaborative research efforts, which expedite development of new technologies. When an organization gains membership in a keiretsu, both financial and non-financial benefits accrue. These benefits include reduced risk through mutual support and the control of stock voting power, cooperation in marketing and product development, guaranteed markets and sources of supply, ties with a trading company that supplies needed raw material imports and handles export trade, and a bank to supply financial resources. Trading firms also arrange for transportation, insurance, warehousing, and financing." Prof. Herbig suggest Keiretsu are relevant not just in Japan "Are keiretsu relationships a uniquely Japanese business practice? International keiretsu-style practices have received positive evaluation, particularly in the auto parts industry. For example, the “Big Three” U.S. auto makers have begun favoring long-term contracts with selected parts producers instead of short-term agreements they are accustomed to making. Associations of suppliers have been formed to help maintain communications between auto makers and parts producers. European car makers are also following in the United States' footsteps. This growing tendency for keiretsu-style practices to be adopted internationally indicates that the advantages of this cooperative business style have come to be recognized worldwide and not just in Japan." Description of Keiretsu was found on the site of Professor Paul Herbig  www.tristate.edu/faculty/Herbig.html Tri-State University, Indiana   Japanese Marketing lecture series   www.geocities.com/Athens/Delphi/9158/kwujmktg23.html   (link no longer good in 2013)

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Export Trading Companies Sogoshosha

"Sogo shosha were first established in the late nineteenth century" Prof. Herbig explains "Sogo shosha were first established in the late nineteenth century, shortly after Japan opened her doors to the outside world....The desire to develop foreign trade that was independent of foreign control led to the emergence of firms specializing in foreign transactions, the precursors of the sogo shosha....Sogo shosha came to perform multiple functions, including procuring modern equipment, new technology and raw materials; financing purchases; and arranging for the shipment and exporting of the final products."

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The Sogoshosha an example Mitsui - formerly incorporated just after WWII but in fact a company more than 300 years old Mitsui is the oldest
Mitsubishi is the biggest	http://www.mitsubishi.or.jp/e/h/his.html - history of the origins of the company

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