Itochu - The Strongest Merchant Beyond the Zaibatsu Corporations

““In South Korea, Samsung has something called the ‘119 Campaign.’ When employees socialize, it’s only for the first round of drinks. Only one type of alcoholic drink is allowed. And everything is done by 9 p.m. In Korea, mixing soju and beer is sometimes called a “bomb.” What it means to “stick to one kind of alcohol” is basically: don’t mix drinks. At our company, we rarely mix drinks, so we decided that social gatherings would only go as far as the first round, and end by 10 p.m.”

“At twenty-nine, in 1871 (Meiji 4), it was the year with the greatest changes for merchants like Chubei. In July, the abolition of the feudal domains and establishment of prefectures was implemented. The following year, 1872, the ban on permanent sale of farmland, set by the Edo shogunate, was abolished, which allowed land trading. Next, the yen was introduced as a new currency, and the postal system also began. Two years earlier, barriers (sekisho) were abolished, making overland transportation less cumbersome than during the Edo period.”

“In 2017, four years after the introduction of morning-style work, Okafuji implemented a management policy that one would hope other company presidents would imitate as well. It is support for employees who are fighting long-term illnesses and, sadly, for those who have lost their lives. When he became president, an employee in the textiles division was battling cancer. That employee sent an email to Okafuji expressing gratitude for “the extremely long leave period, high coverage rate of medical expenses, and organizational support.” The end of the email said: “In my mind, Itochu is the best company.” However… The employee who sent the email passed away a month later at the young age of 56. Okafuji, who rushed to the funeral, sobbed uncontrollably without worrying about those around him, and made a vow in front of the altar. “Now, what I can do is to make this company, which you said was the best and a good company, an even more wonderful company, and report back to you in the near future.”

“Kobayashi, who has experience as an escort, carries two huge suitcases and travels alone. One of the suitcases is a care package for local employees. Inside are large amounts of rice, yokan, and a handwritten message from Okafuji. A subordinate once said, trying to sound knowledgeable, “Vice President Kobayashi, it would be more efficient to send those.” Kobayashi scolded him. “There is meaning in me personally carrying heavy things.” Even now, Kobayashi boards planes carrying over 20 kg of rice, then transfers to cars, trains, boats, and hires rundown taxis to reach the remote offices. Just because he is a vice president of a general trading company doesn’t mean he can simply socialize at fancy golf clubs.”

“From the time of opening, all staff, including Chubei himself, lived in the store. Not only apprentices called ‘koyaku,’ but also veteran employees left their families in their hometown of Omi and lived a communal life to dedicate themselves to work. They could only return home during summer and winter vacations, and only during the slow season in business could they finally go back to their family homes.”

“Looking at Japan’s trade at the end of the Edo period and the Meiji Restoration: 79.4% of exports were raw silk. Next were tea (10.5%) and silkworm-egg paper (4.0%). Silkworm-egg paper was paper onto which silkworms had laid eggs, exported in response to Europe’s demand for healthy silkworms. On the other hand, imports were woolen textiles (40.3%), cotton textiles (33.5%), weapons (7.0%), ships (6.3%), and cotton yarn (5.8%). (Reference: “Study of Late-Edo Trade History” by Takashi Ishii, Nihon Hyoronsha)”

“When companies grow large, it’s difficult to imitate others’ successes, even if you see that their performance has improved. Looking back at Okafuji’s messages since he took office, he did not make bold declarations like “We will become number one in the industry” from the start. He used carefully thought-out strategies even in PR both internally and externally.”

“the true assets of a trading company are its people. Unlike manufacturers, trading companies neither have large factories nor a large workforce. The only way to grow the company is to invest in and develop people.”

“The teachings of Jodo Shinshu instilled ethical convictions in Chubei. His virtues of thrift, diligence, and sincerity were fostered by daily devotion to his faith as a follower.”

“For Mitsubishi Corporation and Mitsui & Co., importing natural gas, oil, coal, and iron ore and supplying them to steel and power companies has been a major pillar of their profits. On the other hand, since Itochu was originally a “textile trading company,” it could not rely on resources as a major source of profit. For this reason, it had to go around businesses in non-resource fields such as textiles and food, and make do by steadily generating small profits. They have honed their wisdom to gather small profits. That is why, with changing circumstances, they leaped to the top. They adapted to an era in which resource prices fluctuated wildly and the presence of heavy and large-scale industries declined.”

“why did so many Omi merchants emerge who left their region and went to other provinces from Omi, Shiga Prefecture? Why was it from Shiga Prefecture, and not urban centers like Kyoto or Osaka? Several sources give three reasons. (1) It was a key transportation route. (2) The region was rich in products. (3) There was an accumulation of commercial activity. From looking at a map, it’s clear it was a key transportation route. Major highways such as the Nakasendo, Hokurikudo, and Tokaido passed and intersected from the east to the southern tip of Lake Biwa. And there was water transport. The water transport on Lake Biwa, which takes up one-sixth of Shiga’s area, had been utilized since medieval times. Both land and water made it a key transportation route.”

“In the president’s office, the three characters “Ka-Ke-Fu” are framed and displayed. They stand for “earning (profits), cutting (wastes), protecting (from losses).” He regarded “Ka-Ke-Fu” as the principle of business of the Omi merchants he admires, and has put it into practice. Instilling in employees the awareness to keep an eye on both offense and defense in business is what propelled Itochu to the top of the trading industry.”

““There’s no need for a president to deal with such petty things.””

“In the fiscal year ending March 2021, Itochu surpassed the long-standing industry leader, Mitsubishi Corporation, in three indicators: net profit, stock price, and market capitalization.”

“Okafuji decided not to rely on resources, but to nurture people. As a trading company, he simply did what should be taken for granted.”

“The work of general trading companies can be broadly divided into two: the first is trading, that is, product intermediation and wholesaling; the second is investing in businesses.”

“After becoming number one in non-resources, Itochu was called one of the two powerhouses and finally boldly declared, “As a trading company, let’s aim for the triple crown: number one in net profit, stock price, and market capitalization.””

“Generally, it is vaguely believed that the ancestors of humankind wiped out the Neanderthals. However, according to “And Then There Were None But Humans” (Clive Finlayson, translated by Naoko Uehara, Hakuyosha), the two did not directly confront each other; rather, the ancestors of humans simply happened to be in the right place at the right time and thus survived by chance.”

“For example, the number of people subscribing to newspapers decreases every year. However, major new businesses to replace the core newspaper sales do not emerge within newspaper companies. They also run culture centers and publishing businesses, but their sales are small compared to newspaper sales. Despite working hard and utilizing their wisdom, the results do not easily follow. But this is not unique to the newspaper industry.”

“In any industry, it is not only extremely difficult, but almost impossible in practice, to stop the profitable business from past to present and shift to an unknown new business. Of course, Itochu also has a track record in resources and machinery. But the company grew big mainly through the painstaking, small-scale businesses of textiles and food. That’s why it was good.”

“A company is nothing more than the sum of its people’s abilities. Let me use an example from the Warring States period: though the Takeda cavalry was small in number, they routed their opponent and won… In the end, it’s about how to boost employee morale.”

“Since Itochu is a trading company, it has employees working overseas. Locations like New York, London, and Shanghai serve as hubs, so many people work there. On the other hand, in cases of personnel in charge of resources, food, lumber, etc., sometimes they work completely alone — in so-called “one-man offices” in remote areas. These are cases where they leave their families in Japan and go on foreign assignments alone. They live at natural gas or metal mining sites more than 10 hours away from major cities, with no opportunity to meet other Japanese people. Even if the president or an executive visits from Japan, they won’t travel all the way into the jungle for a meeting. There are quite a few people who are always working remotely. That, too, is the nature of work at a trading company.”

“Prevention is also important, not just treatment. I want to strengthen initiatives for preventing cancer as well.”

“At Itochu, “no matter how many children there are, we pay until all of them complete graduate school.” Shouldn’t this be a policy every company adopts? It’s not about the money, but about spirit. Because this is equivalent to saying: “No matter what happens, we will support you and your family.””

“Only someone like him, who constantly chants “Think market-in, not product-out,” would implement such a measure.”

“In “A Social History of Food” (Shintaro Mogi, Soseisha), there is a description of the meals provided to 80 employees working at the Echigoya kimono shop during the same period (1886). Echigoya Kimono Shop is today’s Mitsukoshi Isetan. It’s also the origin of Mitsui & Co. This was a retail shop, not a wholesaler.”

“Itochu’s history began in Ansei 5 (1858). In this year, Chubei Ito led two employees and started the “mochi-oroshi” business. “Mochi-oroshi is selling by manufacturer-to-retailer traveling wholesale, different from peddling” (cited from ‘100 Years of Itochu Corporation’). Mochi-oroshi means wholesale business interposed between manufacturers and retailers, or in other words, trading company activity.”

“In his book “The Charm of Drifting Accounts” (Shincho Shinsho), writer Akira Yoshimura describes the efficiency of ship transport.”

“[たち](private://read/01k0zrfkq8xdny7vjg48yyc8en/nav.xhtml#ch1_sigil_toc_id_7) “Omi merchants are those who had their main residence (headquarters, main house) in Omi Province (present-day Shiga Prefecture) and traveled to other countries as itinerant merchants. Along with Osaka merchants and Ise merchants, they are counted among the three great merchant groups of Japan.””

“According to “Reading Japanese History Anew from Omi” (Akira Imatani, Kodansha Gendai Shinsho)”

“The second reason is the products. They had high-quality hemp cloth. Until cotton became widespread, hemp was the main clothing material for commoners and was especially valued in the warmer west of Japan. Other representative products included rice. Called Goshu rice, it was considered delicious in the Kinai area. There were also mosquito nets made from hemp (Omi mosquito nets), tatami mats, many kinds of salted fish from Obama in Fukui Prefecture… Omi’s products were items that sold well wherever they were taken.”

“At that time, Japan earned money by exporting raw silk, and used that money to import textiles, machinery, and weapons. The only Japanese products that had global competitiveness were raw silk, tea, and silkworm-egg paper.”