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Itochu

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Itochu Corporation
Native name
伊藤忠商事株式会社
Itōchū Shōji kabushiki gaisha
FormerlyC. Itoh & Co., Ltd.
Company typePublic KK
TYO: 8001
TOPIX Large 70 Component
IndustryGeneral trading
Founded1858 (predecessor business)
1949 (present corporation)
FounderChubei Itoh
HeadquartersKita-ku, Osaka, Japan
Minato-ku, Tokyo, Japan[1]
Key people
Masahiro Okafuji (Chairman and CEO)
Keita Ishii[2] (President and COO)
RevenueIncrease ¥4,838 billion (Mar. 2018)
Increase ¥374.5 billion (Mar. 2018)
Total assetsIncrease ¥7,848 billion (Mar. 2018)
Total equityIncrease ¥2,662 billion (Mar. 2018)
Number of employees
102,762 including subsidiaries (Mar. 2018)[3]
Subsidiaries
Websitewww.itochu.co.jp
Osaka headquarters of Itochu (North Gate Building)
Tokyo headquarters of Itochu
Yanase HQ, largest retailer and importer of European and North American vehicles to Japan (Shibaura, Minato, Tokyo)
Former Osaka headquarters of Itochu (left building) in Chuo-ku, Osaka, Japan

Itochu Corporation (伊藤忠商事株式会社, Itōchū Shōji Kabushiki-gaisha, known in English as C. Itoh & Co. until 1992) is a Japanese corporation based in Umeda, Kita-ku, Osaka and Aoyama, Minato, Tokyo.

It is one of the largest Japanese sogo shosha (general trading companies). Among Japanese trading companies, it is distinguished by not being descended from a historical zaibatsu group, but by the strength of its textile business and its successful business operations in China.[3] It has seven major operational divisions specializing in textiles, metals/minerals, food, machinery, energy/chemicals, general products/real estate, and ICT/financial business.[4] Itochu was ranked 72nd on the 2020 list of Fortune Global 500 companies, with an annual trading revenue of US$100 billion.[5]

Itochu has been one of the most popular employers for graduates of top Japanese universities for over thirty years due to their high pay levels, stability and the diversity of opportunities available to employees.[6] In 2019 and 2020, Itochu was ranked the most popular employer for college graduates.[7]

History

Pre-war years

Itochu started in 1858, shortly after the opening of Japan to foreign trade, when Chubei Itoh (伊藤 忠兵衛, Itō Chūbei) began door-to-door wholesaling of linen in the regions between Osaka and Kyushu. Itoh founded the "Benichu" drapery store in the Honmachi district of Osaka in 1872. This site was renamed "Itoh Honten" in 1884 and became the Itoh Thread and Yarn Store in 1893, which was renamed "C. Itoh & Co." in 1914.[8]

Chubei Itoh II took over the company following his father's death in 1903. The company opened an office in Shanghai in the 1890s and started business in Seoul in 1905, but had severe difficulties with these first overseas forays. Itoh travelled to London in 1910 and began direct procurement and financing for the business in the London markets, which considerably improved its margins, as it had previously used more expensive intermediaries in Japan.[9]

Itoh's company grew considerably in the wake of World War I, with offices in the United States, India, the Philippines and China, and the firm began to handle machinery, automobiles and metals in addition to its core business of textiles. However, a recession in 1920 left the company deeply in debt, and unlike the major zaibatsu firms of the time, it had no captive bank to finance its business. In 1921, the company split in half, with one half forming what is now known as Marubeni. The company's performance improved in the 1930s, but as World War II began in the latter half of the 1930s, all trading companies' business became increasingly war-oriented.[9] In 1941, Itoh and Marubeni re-combined to form Sanko KK, which merged with two other companies to form Daiken Co., Ltd. in 1944.[8]

Post-war years

After World War II, the constituent companies of Daiken were spun off from each other in December 1949 as part of GHQ efforts to dismantle the war-era zaibatsu. Itoh re-listed on the Tokyo Stock Exchange in 1950.[8] On December 1, 1949, the company was incorporated.[1]

Itoh resumed business in the wake of the war by bartering Japanese textiles for foreign grain, and resumed trading in petroleum, aircraft, automobiles and machinery to meet UN forces requirements during the Korean War. After the war, Itoh absorbed many smaller trading operations that could no longer stand on their own. Itoh expanded its overseas mining and petroleum exploration activity in the late 1960s and early 1970s, followed by large-scale overseas industrial projects in the 1980s.[9]

Former Imperial Japanese Army staff officer Ryuzo Sejima joined Itoh in 1958 after spending 11 years in a Siberian prison. Four years later, he was promoted to director and became Itoh's head of corporate planning, implementing a military-style internal reporting system. He went on to serve as president and chairman of the company, having developed a powerful group of followers known as the "Sejima Machine." In 1970, Sejima and his younger protege Minoru Murofushi arranged a joint venture between General Motors and Isuzu, one of the first tie-ups between US and Japanese automakers.[10] In 1972 Itoh became the first Japanese trading company allowed to do business in the People's Republic of China.[8]

Itoh was headquartered near the site of Chubei Itoh's historical headquarters in Osaka until 1967, when it upgraded its Tokyo branch to the status of a co-headquarters.[8] In the 1970s, the company became part of the "Kawasaki Group" within the keiretsu of Dai-Ichi Kangyo Bank (now Mizuho Corporate Bank), eventually displacing Nissho Iwai as the keiretsu's dominant trading company. Itoh's affiliation with the keiretsu was significantly looser than other keiretsu-affiliated trading companies, and many firms within the DKB group did not use Itoh's services at all.[11]

Itoh absorbed Ataka & Co., the ninth largest general trading company in Japan, in 1977. Ataka had recently suffered major losses from an oil development project in the United States and had undergone restructuring at the direction of its main lender, Sumitomo Bank.[12]

From the early 1970s Itoh was a major supplier of synthetic yarn (polyester) to India's Reliance Industries Limited.[13] Over the years, the close collaboration between both companies culminated in the co-promotion of a world-scale Polypropylene Project with a capacity of 250,000 tonnes per annum at a total project cost of Rs. 525 Crores,[clarification needed] at Hazira in the State of Gujarat. With a $50 million cost for a 15 percent stake,[13] it was at that point, the largest investment in India by a Japanese firm.[14] Itoh also marketed products—under their own label—as diverse as a line of bicycles (mostly manufactured by Bridgestone), and computer printers. Itochu began to develop a strong information technology business in the 1980s through its subsidiary C. Itoh Techno-Science (CTC), which acted as a Japan distributor for Sun Microsystems, Cisco, Oracle and others.[10]

On October 1, 1992, C. Itoh & Co. Ltd. changed its English name to Itochu Corporation, a more direct transliteration of its Japanese name.[14] By the early 1990s Itochu had become the largest trading company in Japan, but losses from the Japanese asset price bubble, particularly domestic real estate investments, brought it down to third place by the middle of the decade.[9] In the 1990s Itochu made several investments in the media industry, including a minority stake in Time Warner and investments in cable and satellite delivery systems.[15]

Uichirō Niwa became president of Itochu in 1998, implementing cuts to unprofitable businesses and cutting back executive perks enjoyed by his predecessor Murofushi.[10] In 1999, Itochu became one of the first Japanese companies to move away from the traditional seniority-based pay scale, adopting a base pay scale based on responsibilities, impact and value of each position as well as a performance-linked bonus system.[16] Itochu also spun off CTC in 1999, only to see CTC quickly achieve a market capitalization more than twice that of its former parent company.[10]

Masahiro Okafuji became president of Itochu in 2010 and announced a strategy to make Itochu the first-ranked sogo shosha in areas other than raw resources, particularly in food products and machinery. Under Okafuji's leadership, Itochu implemented a general ban on work after 8 PM with an across-the-board "lights out" policy at 10 PM while encouraging that any necessary overtime be taken in the early morning hours, reducing the total amount of overtime across the company.[17] Itochu moved its Osaka headquarters to the North Gate Building adjacent to Osaka Station in 2011.[18]

Itochu entered into a cross-shareholding relationship with the Thai conglomerate Charoen Pokphand (CP) in 2014, and together with CP, agreed to invest over $8 billion in the Chinese state-owned conglomerate CITIC Limited during 2015, the largest investment ever made by a Japanese general trading company.[19] The transaction was also the largest acquisition in China by a Japanese company, and the largest investment by foreigners in a Chinese state-owned enterprise.[20]

In July 2016, short seller Glaucus Research Group published a report critical of Itochu's accounting practices, causing a stock price dip of around 10%.[21]

As of 2020 Itochu was one of the three largest global tuna traders along with Tri Marine of Italy and FCF of Taiwan.[22]

Berkshire Hathaway acquired over 5% of the stock in the company, along with four other Japanese trading houses, over the 12-month period ending in August 2020.[23]

Offices

ITOCHU's Osaka headquarters is located at the North Gate Building, 1–3, Umeda 3-Chome, Kita-ku, Osaka, Japan. Its Tokyo headquarters is located at 5-1 Kita-Aoyama 2-Chome, Minato, Tokyo, Japan.

ITOCHU also has seven branch offices in Japan,[24] sixteen offices and local subsidiaries in China,[25] 24 in Asia,[26] eight in the CIS,[27] four in Australia,[28] fifteen in the Middle East,[29] eight in Africa,[30] twelve in Europe,[31] ten in North America[32] and nine in Latin America.[33]

Business overview

Itochu's business is organized into six "companies."

Notable people

  • Mac Akasaka, rare earths trader, perennial candidate in Japanese elections
  • Ichirō Fujisaki, former Japanese ambassador to the United States, currently member of the Board of Directors of Itochu
  • Hiroyuki Nagahama, member of the House of Representatives and Environment Minister in 2012, worked for Itochu early in his professional career
  • Uichirō Niwa, president from 1998 to 2004, later Japanese ambassador to China
  • Ryūzō Sejima, chairman from 1978 to 1981, Kwantung Army staff officer during World War II
  • Toshiyuki Takano, retired diplomat, currently executive advisor to Itochu
  • Tsuneharu Takeda, former Imperial prince and later ambassador to Bulgaria, worked at Itochu from 1967 to 2005 and served as head of its subsidiaries in Australia and New Zealand.

References

  1. ^ a b "Corporate Profile". Itochu Corporation. Retrieved 11 December 2021.
  2. ^ "Message from the President & COO". Itochu Corporation. 1 April 2021. Retrieved 11 December 2021.
  3. ^ a b "伊藤忠商事(株) 企業情報". Yahoo Finance. Retrieved 10 June 2018.
  4. ^ "Our Business". ITOCHU. Retrieved 9 April 2021.
  5. ^ "Global 500: Itochu". Fortune. Retrieved 10 June 2018.
  6. ^ "就職人気ランキング、実は30年前と「変わらない」 安定、高給の金融、総合商社が上位占める". J-Cast News. 23 March 2014. Retrieved 21 April 2014.
  7. ^ "21年就職人気ランキング、ANA・JALトップ10陥落 伊藤忠商事、2年連続首位".
  8. ^ a b c d e "ITOCHU History". ITOCHU Corporation. Retrieved 18 April 2014.
  9. ^ a b c d "ITOCHU Corporation History". International Directory of Company Histories, Vol. 32. St. James Press, 2000. Retrieved 18 April 2014.
  10. ^ a b c d Guth, Robert A. (27 March 2000). "Japanese Silk and Steel Broker, Itochu, Turns to Tech to Survive". The Wall Street Journal. Retrieved 9 June 2015.
  11. ^ Suzuki, Shinichi. The Japanese Main Bank System: A Transaction Cost Approach. p. 111. ISBN 9780542875380.
  12. ^ Banno, Junji (1997). The Political Economy of Japanese Society: The state of the market?. Oxford University Press. pp. 35–36. ISBN 9780198280330. Retrieved 7 April 2015.
  13. ^ a b McDonald, Hamish (2010). Ambani & Sons. Australia: Lotus-Roli. pp. 59, 102. ISBN 978-8174368140.
  14. ^ a b "Annexure to Director's Report" (PDF). Reliance Industries LTD., Annual Report 1991-92. RIL. 1992. Archived from the original (PDF) on 2012-04-01. Retrieved 2011-11-05.
  15. ^ Brull, Steven (14 November 1994). "Foreigners Help to Open Japan Media : Bullying Bureaucracy". New York Times. Retrieved 30 April 2014.
  16. ^ Tolbert, Kathryn (4 June 1999). "Jobs for Life and Seniority Traditions Are Dropped for Western Models : Rules Change as Japan Inc. Downsizes". New York Times. Retrieved 30 April 2014.
  17. ^ Hanai, Yuki (26 April 2014). "仕事って何 「任されたら必ず改善や」 （岡藤正広 伊藤忠商事社長）". Nihon Keizai Shimbun. Retrieved 30 April 2014.
  18. ^ "ITOCHU Announces the Relocation of its Osaka Headquarters". ITOCHU Corporation. August 15, 2011. Archived from the original on March 4, 2016. Retrieved August 22, 2011.
  19. ^ "Itochu, CP to jointly invest 1 trillion yen in China's Citic Group". Nikkei. 20 January 2015. Retrieved 20 January 2015.
  20. ^ Fukase, Atsuko (20 January 2015). "Thaw in Japan-China Business Ties? Itochu's Citic Deal Towers Above Others". Wall Street Journal Japan Real Time. Retrieved 22 January 2015.
  21. ^ "UPDATE 2-Glaucus Research raises pressure on Itochu, calls for independent auditor". Reuters. 2016-07-28. Retrieved 2016-07-29.
  22. ^ "Choppy Waters, Forced Labour and Illegal Fishing in Taiwan's Distant Water Fisheries" (PDF). www.greenpeace.org. Greenpeace. Retrieved 3 April 2020.
  23. ^ "Warren Buffett takes 5% stake in 5 Japanese trading companies". Nikkei Asian Review. 2020-08-31. Retrieved 2020-08-31.
  24. ^ "Global Network> Japan". ITOCHU Corporation. Retrieved 24 April 2014.
  25. ^ "Global Network> China". ITOCHU Corporation. Retrieved 24 April 2014.
  26. ^ "Global Network > Asia". ITOCHU Corporation. Retrieved 24 April 2014.
  27. ^ "Global Network: CIS". ITOCHU Corporation. Retrieved 7 April 2015.
  28. ^ "Global Network: Oceania". ITOCHU Corporation. Retrieved 7 April 2015.
  29. ^ "Global Network: Middle East". ITOCHU Corporation. Retrieved 7 April 2015.
  30. ^ "Global Network: Africa". ITOCHU Corporation. Retrieved 7 April 2015.
  31. ^ "Global Network: Europe". ITOCHU Corporation. Retrieved 7 April 2015.
  32. ^ "Global Network: North America". ITOCHU Corporation. Retrieved 7 April 2015.
  33. ^ "Global Network: Latin America". ITOCHU Corporation. Retrieved 7 April 2015.
  34. ^ "Textile Company". ITOCHU Corporation. Retrieved 9 June 2015.
  35. ^ "ITOCHU Announces Acquisition of the Exclusive Right of Import and Distribution and the Master License of "Laura Ashley" Brand". Itochu Corporation. 14 September 2018. Retrieved 1 October 2019.
  36. ^ "Machinery Company". ITOCHU Corporation. Retrieved 9 June 2015.
  37. ^ "Toshiba, Hitachi and ITOCHU Win Order for ITS Package for Vietnam's Expressway". ITOCHU Corporation. 18 March 2014. Archived from the original on 13 September 2015. Retrieved 18 April 2014.
  38. ^ "Announces Awarding of Contract "Rolling Stock Modification and New Train Cars for SCL Phase 1" for MTR in Hong Kong". ITOCHU Corporation. 24 January 2014. Archived from the original on 12 April 2016. Retrieved 18 April 2014.
  39. ^ "ITOCHU to Participate in PPP New Generation Rollingstock Project in Queensland, Australia". ITOCHU Corporation. 29 January 2014. Archived from the original on 4 March 2016. Retrieved 18 April 2014.
  40. ^ "ITOCHU Announces Conclusion of Loan Contract for Sarulla Geothermal IPP Project in Indonesia". ITOCHU Corporation. 31 March 2014. Archived from the original on 4 March 2016. Retrieved 18 April 2014.
  41. ^ "2 Japanese companies aim to fund 30% of Turkish nuclear project". Nikkei Asian Review. Nikkei. 8 June 2015. Retrieved 9 June 2015.
  42. ^ "Metals & Minerals Company". ITOCHU Corporation. Retrieved 9 June 2015.
  43. ^ "Energy & Chemicals Company". ITOCHU Corporation. Retrieved 9 June 2015.
  44. ^ "Food Company". ITOCHU Corporation. Retrieved 9 June 2015.
  45. ^ "Corporate History". FamilyMart. Archived from the original on 28 March 2013. Retrieved 18 April 2014.
  46. ^ "Japan's Itochu to buy Dole Food businesses for $1.7 billion". Reuters. 18 September 2012. Retrieved 18 September 2012.
  47. ^ "Memorandum of Understanding for Comprehensive Strategic Partnership Signed with China's Largest Food-Related Company COFCO : News Releases | ITOCHU Corporation". Archived from the original on 2014-04-19. Retrieved 2014-04-18.
  48. ^ "The Export Grain Terminal on the west coast of United States (EGT) | ITOCHU Corporation". Archived from the original on 2014-04-19. Retrieved 2014-04-18.
  49. ^ "ICT, General Products & Realty Company". ITOCHU Corporation. Retrieved 9 June 2015.
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