Mitsubishi Corporation

Sogo shosha are general trading companies (GTCs) dealing with a wide range of products and materials. The seven largest are Mitsubishi Corporation, Mitsui & Co., ITOCHU, Sumitomo Corporation, Marubeni, Toyota Tsusho and Sojitz. They maintain approximately 1,110 offices in over 200 cities around the world and employ more than 20,000 highly-trained specialists who each average more than fifteen years of trading experience.

The sogo shosha have three basic functions: seek export opportunities, secure necessary imported materials, and acquire technology for industrial development. Traditionally and still today, they are concentrated in high-volume, low-margin commodities. They handle the importing, exporting, and trading of over 20,000 items—including metals, machinery, energy, chemicals, textiles, foodstuffs, and general merchandise. The sogo shosha are actively involved in raw materials extraction, creation, and discovery, through multiple stages of production, fabrication, and distribution, downstream to the end user. Table 2 provides a list of the activities they perform. Barter and counterpurchase opportunities are made possible by their ability to accept other commodities in lieu of hard currency. Although labeled as general trading companies, the sogo shosha are involved in numerous activities beyond those of exporting and importing.

The Sogo shosha now account for about 10 percent of world export trade. They search all over the world, using their international offices to meet the needs of their customers. Possessing the power to create substantial amounts of credit, they have created a global network of offices, providing an infrastructure to control market reach abroad. Their operations also provides a communication network to link their domestic and foreign businesses. Their basic functions are to supply items to their markets more efficiently and effectively, to expand the market for their suppliers through increased efficiency and stability, and to cooperate in the maintenance of production. They act as market intermediaries for the domestic and international distribution of Japanese-manufactured goods. They possess foreign networks that can only function well when they are closely linked to the domestic distribution channels of diverse commodities and products. They serve as an information system to their keiretsu and bank.

STRUCTURE OF THE SOGO SHOSHA

Typically, as the head of the several companies that comprise a group, the trading company is the primary shareholder of operating companies in its group. The trading company commonly places several of its own officials on the boards of these companies, while senior officials of the largest companies in the group maintain seats on the trading company's board of directors. The sogo shosha differs from classical conglomerates, such as those in the United States and Europe, in that no single entity in the group owns more than a small percentage of any other company in the group. But taken together, the trading company and several of the other companies in its group may own a majority of shares in one of these companies, in effect, comprising a controlling interest. All the companies in a typical sogo shosha own aggregate majority shares in each other, forming a complex system of cross-ownership. As a result, companies in a sogo shosha cannot technically be considered subsidiaries in the classic sense. Some sogo shosha include as few as a half dozen companies, while other larger organizations might contain as many as 150 or more subordinate companies. This form of cross-ownership and board representation is not permitted in the United States, where strict antitrust laws preclude this type of control. Similarly, neither company's board may include more than one or two directors from the other company. In Japan, however, these are common features of a sogo shosha. The government maintains a powerful agency—the Japanese Ministry of International Trade and Industry—to regulate and coordinate the actions of the conglomerates. In addition, the conglomerates have established an executive council called the Keidanren specifically to prevent such actions and maintain industrial harmony. This "coordination" among major producers would clearly constitute collusion in the United States.The sogo shosha are male-dominated organizations whose staff are culled from the finest universities and placed on extensive socialization programs that include years of cultural preparation. By this process, a profound team mentality is established among the workforce. Employees of one company may deal with counterparts elsewhere in the organization free from cultural barriers and acclimated to a common code of conduct.

MARKETING FUNCTIONS OF THE SOGO SHOSHA

In 1889, the Mitsubishi Corporation, a sogo shosha, was created as the marketing arm of the Mitsubishi Group. When the sogo shosha were first organized, they mainly handled paperwork for imports and exports and provided transportation and storage services. But as their operations expanded, they began to increase their marketing activities. Traditionally, though, Japanese manufacturers have preferred a clear separation between manufacturing and marketing—leaving the marketing function to trading firms.

Japanese manufacturing firms, which are starting to prefer to control their own marketing operations, are more often concentrating their efforts on both the manufacturing and the