Nearly 400-Year-Old Japanese Trading Company Asks: Who Am I?

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Masami Iijima
Mitsui & Co. Chairman Masami Iijima. Photographer: Akio Kon/Bloomberg

It earns more than Coca Cola Co., has operations in as many countries as Starbucks Corp., boasts a payroll almost as long as Google Inc. and has been around longer than Philadelphia. Yet many consumers outside of Japan probably haven’t heard of it.

This is the great Japanese trading house of Mitsui & Co., whose roots go back almost 400 years to entrepreneur Hachirobei Mitsui, who turned his dad’s sake and soy sauce shop into a company that sold whatever people needed at the time. Over the centuries, Mitsui group made everything from silk kimonos to skyscrapers, and spun off better-known brands like Toshiba and Sapporo Beer. It even funded a small cotton-loom business called Toyota that years later decided to make cars.

Now, the current incarnation of the trade house is having a bit of an identity crisis. With its stock limping behind the Tokyo benchmark index, its brand all but unknown outside Japan, and analysts struggling to even categorize the company, Mitsui is asking itself a coming-of-age question: Who am I?

In investors’ eyes, Mitsui is Japan’s top oil and iron-ore trader, with interests ranging from Russian gas operations to a coal mine in Mozambique. So they punished the stock as crude oil and metals prices tumbled.

This bemused Mitsui Chairman Masami Iijima.

“We are not a resource company,” he says in an interview at the company’s Tokyo headquarters. Yet in meetings with reporters and investors in New York and London last year, even Iijima, a 40-year veteran of the company, struggled to answer the question: What does your firm actually do?

Sogo Shosha

“You have to give a clear reply, but we’re running so many businesses it’s hard to make people understand what’s inside.”

That’s because Mitsui is one of Japan’s “sogo shosha,” the tangled trading firms that shaped Japan’s industrial ascent. The shosha of today -- including Marubeni Corp., Itochu Corp., Sumitomo Corp. and Mitsubishi Corp. -- are miners, salesmen, consultants, brokers, shippers and bankers all rolled into one.

The shosha claim to follow a unique business model forged over centuries. According to “The House of Mitsui,” a 1939 book by Oland D. Russell, the family behind the firm can even trace its lineage to the Fujiwaras, an ancient dynasty that claims its descent from the gods that created Japan.

Rather than leave the world to figure out what’s inside the modern Mitsui’s black box of businesses, however, Iijima decided in mid-2014 to launch the company’s first corporate-branding exercise.

Various, Different

The group compiled a team of hotshot mid-level managers under Kenichi Hori, managing officer at the Strategy Division. They spent three months in a room trying to define what Mitsui is and then presented their two-page report to the directors, who debated the document for another day.

In December, Mitsui unveiled the result to employees on its internal website and hosted seminars at major offices, asking attending staff to spread the word. Mitsui won’t share the document, but Hori says the main points of it describe the company as a place where smart people spot new trends and grow big profits from small experiments.

Pinning him down further is tricky. There’s no company anywhere like Mitsui, Hori says. Its interests are “various,” “different,” and “multiple.”

The only constant, he says, is change.

That change may bamboozle analysts and investors, but it’s helped the mercurial, shape-shifting enterprise survive. What began as a local store opened by a down-on-his-luck aristocrat, Sokubei Mitsui, in the early 17th century, has made it through two world wars, economic crises and even a forced break-up by the U.S. military-backed administration in 1947.

Oil and Ore

Parts of the dismantled group were revived in the late 1940s, with Mitsui & Co. among the largest green shoots. Others that inherited Sokubei’s mantle include Sumitomo Mitsui Banking Corp., The Japan Steel Works and world’s largest carbon fiber maker Toray Industries Inc.

During Japan’s boom, Mitsui’s reformed trading company did what it does best: found things that people needed and sold them, in this case oil, energy, metals and raw materials. When Japan’s economy went into a slump in the 1990s, China picked up the slack and Mitsui’s resources businesses continued to thrive.

Then, in late 2011, commodities prices started to turn down and many shosha shifted focus to retail, food, and services. The problem for Mitsui was that four decades of riding the raw materials train had left it with few major investments elsewhere.

Spinning Synergies

Jiro Iokibe at Daiwa Securities Group says Mitsui should accept that and focus on being a resources company. After all, even Iijima agrees the next upturn in the cycle isn’t far away.

But that’s not what Mitsui is, says Iijima.

“Our specialty is doing a lot of businesses and spinning out synergies from that,” he says.

For example, when Mitsui began developing U.S. shale-gas about five years ago, it used the move as a springboard into chemicals, pipelines and fuel sales to power plants.

“I see more and more companies moving to a shosha-style of business,” where each opportunity triggers others in new areas, Iijima says. He points to General Electric Co., whose chairman, Jeffrey Immelt, he considers a friend.

“They started with an Edison light bulb and they are in railways, infrastructure, IT and finance,” Iijima says.

Immelt says Mitsui has been a great partner to GE.

Brainstorming Ideas

“Iijima-san is very open and willing to take risks,” the GE chief wrote in an e-mail. “He’s good at brainstorming new ideas. I always enjoy seeing him.”

GE is selling the bulk of its finance holdings to concentrate on manufacturing. Still, at least it has a well-known global brand.

“There’s no point in calculating Mitsui & Co.’s brand value,” says Yuki Wada, chief executive of Interbrand Japan. “It’s in too many businesses.”

But branding is increasingly important to Mitsui, especially overseas where it needs to attract staff, Wada says. So Iijima contacted Kashiwa Sato, whose Samurai design studio counts Kirin beer, Honda cars and Uniqlo casual wear as clients, as well as legendary Japanese boyband SMAP, which has been churning out hits for more than 20 years.

Sato was surprised.

“Oh, of course I knew the Mitsui name,” Sato says in a minimalist meeting room at his Tokyo studio. “I had this sense that they did all sorts of things. Wasn’t sure what things.”

360 Degrees

The designer spent six months talking to Mitsui staff of all ages and seniority, at formal meetings and over drinks, about what they thought formed Mitsui’s core. (“People.”)

He found that even the logo on their business cards barely matched.

So he standardized the company’s century-old marque and added a new slogan: “360 degree business innovation,” designed to show that Mitsui brings together people from different places and knowledge areas to craft new ways to make commerce.

Both were unveiled in October at the Mitsui Club, a baroque-style mansion in a leafy Tokyo suburb built by the Mitsui family a century ago for receptions. The slogan adorns a new corporate video on the company’s website.

Interbrand’s Wada sighs when asked to assess the impact. “I was pretty disappointed. It doesn’t look like they changed much.”

Iijima says this is just stage one in the transformation, which will take years.

Meanwhile, the shape-shifting trading house is doing what it has always done, finding new ways to trade. Iijima says he’s looking for partners outside Japan to build an e-commerce business and offers are pouring in.

“We used to play our role behind the scenes,” Iijima says. “Now we have quite a few investments and we should raise the profile.”

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