Sogo shosha
From Free net encyclopedia
Over 8,000 trading companies exist today in Japan, but only a few hundred are engaged in foreign trade. Most are specialized trading companies (専門商社, senmon shōsha), handling only a small variety of products. Only a few handle a wide range of products and materials. These companies are called "general trading companies" (総合商社, sōgō shōsha), hereafter referred to as "GTC".
The eight largest GTCs are Mitsubishi Corporation, Mitsui & Co., Sumitomo Corporation, ITOCHU, Marubeni, Toyota Tsusho, Sojitz, and Kanematsu. 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 GTC supply large volumes of raw materials and distribute goods from large manufacturers to smaller distributors and to numerous retailers. What makes them unique are their size, scope, information-gathering capabilities, as well as their functional diversity. A GTC is an economic organization whose functions consist of minimizing the risks involved in transactions through its ability to distribute risk; reducing transaction costs through its ability to take advantage of economies of scale; and making efficient use of capital. They are Japanese traders, existing at the center of Japan's global economic effort, and serving as intermediaries for half of their country's exports and two-thirds of their imports.
In 1984, the largest GTC, Mitsubishi, had gross revenues exceeding $69 billion. (Its profits, however, were only $190 million.) In 1988, Mitsui (the oldest of the GTCs) had gross revenues of $150 billion, employed 12,000 people worldwide, and had equity investments in 620 companies in Japan and 320 abroad.
Common misunderstanding about the size of these businesses
In the past the gross revenues of GTC have often been treated as equivalent to sales. On this basis they appear to be among the largest corporations in the world. This is not correct and the GTCs often state as much in their own English language accounts. The gross revenues of a GTC are the total value of all the transactions in which it participates, but it acts on an agency basis in many of these deals and it is not in line with international accounting practice to allocate the whole value of these transactions to the GTC's top line. The true sales or revenues of a GTC, comparable with figures produced for other types of company, are a small fraction of its gross revenues. In 2004 Fortune stopped treating gross revenues as sales in its list of the world's largest companies, leading to all of them falling far down the list. It now classifies Toyota Motor Corporation as the largest company in Japan, several times larger than any GTC.