Japan's trading firms widen horizons
Japan's sogo shosha (general trading companies) are graduating from being purely Japanese companies to ones of global scale. The Marubeni Corporation, Japan's fourth-largest sogo shosha, is a pacesetter in this trend.
''Seventeen to 18 percent of our trade is with third countries,'' said Matsujiro Ikeda, president of Marubeni. This means, for instance, exporting US grain to some country other than Japan, or helping a developing country buy machinery from a non-Japanese source.
What is a sogo shosha? More than just a trading company, they organize and coordinate world trade, and often take a hand in building the industries that produce the goods themselves.
''In the old days,'' said Mr. Ikeda, ''Japan's slogan was 'catch up with the West.' Our national economy was growing by 10 percent a year, and our own sales were going up by 20 percent a year. Those days are over. But we cannot afford to stop growing. Because of lifetime employment, we cannot lay off our employees.'' (Marubeni has about 8,000 employees around the world. Some 25,000 more are local nationals.)
''Nor, in view of the times, can we easily increase profitability. So we must expand. But where? Japan may not be growing, but some developing economies are expanding by 7 or 8 percent a year.
''But we cannot go into these countries as we did in the old days, just as a Japanese company. We have to think in world terms. What country produces the best machinery for a particular purpose? Where can we get the most advantageous financing? We are turning ourselves into an international industrial coordinator. Much of the trade we do never appears in Japanese trade figures, because it has nothing to do with Japan. This is one concrete way in which we can help alleviate trade frictions between Japan and other developed nations.''
As an example, Mr. Ikeda cited a fertilizer plant being built at Port Harcourt, Nigeria, with equipment coming from the M.W. Kellogg Company of the United States, as well as from Japanese companies. Marubeni is now participating in more than 150 joint ventures around the world. The company also trades more than 10,000 products, usually operating on a slender profit margin.
(In the fiscal year that ended in March, the company's total trade came to $ 48.1 billion. Gross trading profit was $1 billion and net income, $6.6 million.)
''After all, manufacturers would not use us unless it is cheaper for them to do so than to try to market their products themselves,'' Mr. Ikeda said. ''Our forte is management, sales, and trade. We do not want to manage labor, and as for technology, we rely on the manufacturer concerned to supply that.
''As the world economy remains unstable, large projects of the kind we are increasingly involved in entail substantial risks. Ataka (then Japan's tenth-largest sogo shosha) went bankrupt in the mid-1970s because it lost its oil gamble in Canada. Mitsui (Japan's second-largest sogo shosha) is having severe problems over its huge petrochemical project in Iran. We think that multinational consortia are one way to spread the risk.''
Ikeda admitted that, like other Japanese companies with foreign offices and interests, Marubeni has problems with local staff because of differences in business practices. In Japan, lifetime employment engenders lifelong loyalty, ''but in the United States, people think nothing of leaving if they find a better job elsewhere - sometimes even for a tiny difference of $5 a week. So it is difficult to promote such employees all the way to the top.''
Nevertheless, several subsidiaries are headed by local employees, and Ikeda expects the trend to continue. Asked how long it might take for Marubeni to transform itself into a true multinational, with non-Japanese staff and directors at the headquarters, Ikeda shook his head and smiled. ''There are so many obstacles - language, customs,'' he said.
Marubeni practices decentralized decisionmaking, because ''it is impossible for top management to know all about every single product we handle.'' Managing directors have discretion to extend up to about $12 million in credit. Decisions are a combination of top-down and bottom-up, with plenty of give-and-take at each stage. ''Our decisionmaking process is slower than the American one, but our implementation is faster. Often, with American companies, problems start after a decision is made. That seldom happens with us.''