Mitsui

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Mitsui Headquarters
The Mitsukoshi Department Store in the Nihonbashi section of Tokyo

Mitsui Group is one of the largest corporate conglomerates (keiretsu) in Japan and one of the largest publicly traded companies in the world. It was founded during the Japanese Enpō ("Prolonged Wealth," 1673–1681) era (nengō) by Mitsui Takatoshi (1622–1694), who expanded the family business by opening a store in Edo (Tokyo) called "Echigoya," where ready-made clothing could be purchased for cash instead of being made-to-order.

In the seventeenth century, the Mitsui family established close ties with the Tokugawa shogunate and began operating a system of money exchanges. They received a series of concessions that allowed the company to expand into many areas of business. The Mitsui keiretsu took an active role in the modernization of Japan during the Meiji period, expanding trade overseas, developing mineral resources and manufacturing, and establishing a vast banking, shipping and transportation network. During the United States occupation of Japan following World War II, the Mitsui zaibatsu was dissolved.

In the 1950s, Mitsui reorganized as a loose conglomerate of companies sharing a common financial, logistical, and technical infrastructure. The Mitsui group comprises several dozen companies, most of which are large, multinational corporations based in Tokyo or Osaka with offices and subsidiaries overseas. Some are engaged in joint ventures with foreign companies. Mitsui & Co. maintains a global network of 160 offices in 69 countries, and has 565 subsidiaries and associated companies worldwide. Mitsui is involved in cement, petrochemicals, commerce, construction, energy, engineering, finance and insurance, food, machinery, mining, nonferrous metals, real estate, and shipping industries.

Contents

The Mitsui Group was a pioneer in globalization, establishing operations in many countries and creating a system of banks and transportation to facilitate international trading. Throughout their business activities, Mitsui Group companies incorporate a distinctive Corporate Social Responsibility (CSR) policy emphasizing environmental and social accountability.

History

Tokugawa period

Surugacho (Suruga Street) (1856), from One Hundred Famous Views of Edo, by Hiroshige, depicting the Echigoya kimono and money exchange store with Mount Fuji in background. Currently, the Mitsui Main Building (三井本館), which houses Sumitomo Mitsui Banking Corporation, Mitsui Fudosan, The Chuo Mitsui Trust and Banking Co. and Mitsui Memorial Museum, is located on the right side of the street. Mitsukoshi department store is on the left side.
Mitsui Main Building and Nihonbashi Mitsui Tower

Mitsui Group was founded during the Enpō ("Prolonged Wealth," 1673–1681) era (nengō) by Mitsui Takatoshi (1622–1694), the fourth son of the owner of a shop called Echigoya (越後屋)) in Matsusaka, Mie prefecture. His father brewed sake, sold miso, a fermented soybean paste, and ran a pawn shop. Later, the family opened a second shop in Edo (Tokyo). When he was 14 years old, Takatoshi moved to Edo, where he was joined by his older brother. His brother, jealous of the business ability that Takatoshi had demonstrated since his early youth, sent him back to Mie when he was 28 years old. After 24 years, Takatoshi's elder brother died and he was able to take over Echigoya. In 1673, he opened a new branch,[1] a large gofukuya (kimono shop) in Nihonbashi, a district in the heart of Edo.

Traditionally, gofukuyas had made clothing to order; a salesperson visited the customer (typically a person of high social class or a successful businessman) at his home, showed samples of cloth, took an order, and was paid when the finished product was delivered. Mitsui Takatoshi implemented a new system, manufacturing ready-made items which could be purchased directly at his shop for cash. The shop began providing dry goods to the government of the city of Edo, though cash sales were not yet a widespread business practice. Eventually, the gofukuya division separated from Mitsui, and became Mitsukoshi.

The success the shops in Edo allowed Mitsui Takatoshi to expand into moneylending and other financial services. During this period, regional feudal governments had begun to pay taxes to the central Edo government in cash, but thieves and bandits made the transportation of cash dangerous in middle feudal Japan. In 1683, the shogunate granted permission for money exchanges (ryōgaeten) to be established in Edo[2] for the payment of taxes. The Mitsui "exchange shops" facilitated transfers by accepting goods and cash at regional centers in exchange for notes that could then be redeemed for cash in Edo.

On July 1, 1876, Mitsui Bank, Japan's first private bank, was founded with Takashi Masuda (1848–1938) as president. Mitsui Bank, which following a merger with Taiyō-Kobe Bank in the mid 1980s became part of Sakura Bank, survives as part of the Sumitomo Mitsui Banking Corporation).

Starting in 1691, members of the Mitsui family were appointed chartered merchants (goyo shonin) by the shogunate, and gained considerable political influence. Mitsui-ke (House of Mitsui) became the largest Japanese merchant house of the Tokugawa period (1603–1867).

Meiji period

During the Meiji period (1868–1912), when the government was encouraging rapid economic development, Mitsui’s close ties with politicians became a great asset. The Mitsui conglomerate became involved in many fields of operation and came to dominate Japanese banking, trading, and mining. In 1892, Mitsui opened a branch in India to facilitate the expansion of its trade with India and Southeast Asia.[3]

In 1909, the family council that had been established in the early eighteenth century to oversee Mitsui’s operations was replaced by a family-controlled holding company. During the early twentieth century, Mitsui rapidly grew into one of the largest zaibatsu in Japan.

After World War II

Mitsui was the largest zaibatsu by the end of World War II, comprising some 270 companies. The U.S. occupation authorities split it up, dissolving the holding company and selling the stock of the former subsidiary companies to the public. When the Mitsui companies began to re-associate in the 1950s, Mitsui lagged behind its rivals Mitsubishi Group and Sumitomo Group in reorganization. Mitsui Bank, which should have been the mainstay and principal provider of capital for the group, had declined in size due to the collapse of the Imperial Bank of Japan, making the conglomerate less cohesive. Instead of being controlled by a family-dominated holding company, the new Mitsui was characterized by informal collaboration in policy-making among the presidents of the various companies, supported by financial interdependency.

Many companies that were once part of the Mitsui Group became independent or tied to other conglomerates. Toshiba, Toyota Motors, and Suntory, once part of the Mitsui Group, became independent, and the Toyota Group became a conglomerate in its own right. Ishikawajima-Harima Heavy Industries is now part of the Mizuho Group, and many companies in the Mitsui-Sumitomo Financial Group are now more closely tied to the Sumitomo Group than the Mitsui Group. In April, 2008, Mitsukoshi merged into Isetan, a major department store with a close tie to the Bank of Tokyo-Mitsubishi UFJ, to form Isetan Mitsukoshi Holdings in April 2008.

Mitsui today

The Mitsui group comprises several dozen companies, most of which are large, multinational corporations based in Tokyo or Osaka with offices and subsidiaries overseas; some are engaged in joint ventures with foreign companies.

Mitsui is in involved in the cement, petrochemicals, commerce, construction, energy, engineering, finance and insurance, food, machinery, mining, nonferrous metals, real estate, and shipping industries. Companies currently associated with the Mitsui family include Mitsui & Co.; Mitsui Construction Co.; Mitsui Engineering and Shipbuilding Co., Mitsui Mining & Smelting Co., engaged in the smelting and processing of zinc, copper, and other nonferrous metals; Mitsui Mining Co., which produces domestic coal, coke, and cement; Mitsui OSK Lines Ltd.; Mitsui Petrochemical Industries Ltd; Mitsui-gold; Mitsui Real Estate; Tri-net Logistics Management; Mitsui Chemicals; Mitsui Mutual Life Insurance Company, one of Japan's major life insurers; and Pacific Coast Recycling. Mitsui Group also has substantial interest in CVRD and Caemi Mineracao e Metalurgia, which owns 70 percent of Mineracoes Brasileiras Reunidas (MBR).

Mitsui & Co. maintains a global network of 160 offices in 69 countries, and has 565 subsidiaries and associated companies worldwide.[4]

Mitsui Bussan Kaisha

Mitsui Bussan Kaisha, a major component of the Mitsui group, is one of Japan's largest general trading companies (shogo shosha). The company was established as the trading subsidiary of the Mitsui zaibatsu in 1876. In the 1950s, several of the small trading firms that emerged from the dissolved zaibatsu subsidiary regrouped around the Daiichi Trading Company (Daiichi Bussan Kaisha) and the company took its present name in 1959. Mitsui Bussan Kaisha acts primarily as an agent for other companies, handling orders and arranging shipping for thousands of industrial, agricultural, and consumer goods and commodities, and coordinating the domestic and overseas activities of affiliated companies.

Mitsui Steamship Company

MOL Prestige container ship, 2006.

Mitsui Bussan, established in 1876, obtained exclusive rights to export and market the coal mined at the state-run Miike mines. It chartered boats and transported coal on its own account. In 1878, it bought a steamship, and in 1888, it bought the mines. Mitsui Bussan became an industrial carrier and the shipping section was established in 1898. In 1904, the shipping section expanded to become the Shipping Department and moved to Kobe. The company then owned 9 ships aggregating 36,752 DWT, and on the eve of World War I the fleet totaled 15 ships with 74,635 DWT, increasing to 30 ships totaling 127,141 DWT in 1919. The third general manager, Teijiro Kawamura, expanded the business of the department during World War I; in 1914, it began a tramp service carrying the company's own cargo and that of other companies. In 1917, it constructed a shipyard and set up the shipbuilding department and in 1920, it opened a semi-liner service from Dalian via Kobe to Seattle, operating a liner service on outbound voyages, but stopping to collect cargo at other ports on the return voyage.

Mitsui Bussan's Shipping Department built two sister ships in 1924. One was equipped with reciprocal oil-burners, the other had diesel engines and was the first ocean-going diesel ship in Japan. The department put these ships on the North American route and compared their performance. Akagisan Maru, the diesel ship, proved superior, and Mitsui concluded a manufacturing and marketing license agreement with Burmeister and Wain Co. (B & W), who had manufactured the engine, in 1926. In 1928, Mitsui opened a Bangkok route, in 1931 a Philippines route, in 1932 a Dalien to New York route, and in 1935 a Persian Gulf route. From 1933, the Shipping Department became known as Mitsui Line. In 1937, it owned 35 ships aggregating 227,044 DWT. The shipbuilding department became independent as the Mitsui Tama Shipyard in 1937, and in 1942, the former Shipping Department too became a separate company, Mitsui Steamship Co., Ltd. (MS).

During and after World War II, all MS ships were under the control of the government. At the end of the war, only 17 of MS's vessels remained. MS then began a vigorous expansion of its fleet and routes to re-establish its pre-war network. MS constructed 38 vessels between 1950 and 1964, and its operating tonnage became the largest in Japan. One of its ships, Kinkasan Maru, delivered in 1961, was the first bridge-controlled ship in the world, the result of an initiative to better organize ships’ crews and improve the working conditions of engineers.

Soon after the shipping industry reorganization of 1964, in which Japanese shipping companies were restructured into six groups, world shipping moved toward containerization. Mitsui Steamship Co., Ltd. merged with Osaka Shosen Kaisha (OSK) Lines, Ltd. to form Mitsui O.S.K. Lines, Ltd. (株式会社 商船三井; MOL), and began container services on the California route, joining a space-charter consortium of four Japanese operators. By 1974, MOL was operating nearly 300 vessels. In the early 1970s, MOL built and launched specialized ships to carry ore, automobiles and liquid natural gas.

Sumitomo Mitsui Banking Corporation

In July, 1876, Mitsui bank was established as Japan’s first private bank, with a starting capital of ¥2 million. Sumitomo Bank was established in November, 1895, as a private enterprise. Both banks experienced numerous mergers and reorganizations, and were listed on the Tokyo and Osaka stock exchanges in May, 1949. In April, 1990, Mitsui Bank and Taiyo Kobe Bank merged to form Mitsui Taiyo Kobe Bank, renamed Sakura Bank in 1992. In April, 2001, Sakura Bank and Sumitomo Bank merged to form Sumitomo Mitsui Banking Corporation, with a capital stock of ¥1,276,7 billion. In December, 2002 Sumitomo Mitsui Banking Corporation (SMBC) established a holding company named Sumitomo Mitsui Financial Group, Inc. (SMFG) through a share transfer, and SMBC became a wholly-owned subsidiary of SMFG. In July, 2008, Sumitomo Mitsui bought a 2.1 per cent stake in Barclays Bank for £500m. Sumitomo Mitsui is the major financial institution of the Mitsui group, its activities centering on securities and foreign exchange.

Other members of the combine include Mitsui Real Estate Development Company, Ltd., a leading home builder and developer of office and commercial buildings in Japan; Mitsui Mutual Life Insurance Company, one of Japan's major life insurers; Mitsui Mining & Smelting Company, Ltd., engaged in the smelting and processing of zinc, copper, and other nonferrous metals; and Mitsui Mining Company, Ltd., which produces domestic coal, coke, and cement.

Mitsui Chemicals

Mitsui Chemicals (三井化学株式会社, Mitsui-Ikagaku Kabushiki-gaisha) has business interests in Japan, Europe, China, Southeast Asia and the U.S. and employs approximately 13,000 people worldwide. The company mainly deals in performance materials, petro and basic chemicals and functional polymeric materials. With the growth of opportunities in India, Mitsui Chemicals has decided to establish its first polypropylene compounding plant in India at "Japanese Investment Park" Neemrana phase III.

Mitsui & Co. (U.S.A.), Inc.

Mitsui & Co. (U.S.A.), Inc. (Mitsui USA) is the largest wholly-owned subsidiary of Mitsui & Co., Ltd. Incorporated in the state of New York in 1966, it engaged in business investment, project development and management, and capital goods leasing and technology transfer, in addition to traditional businesses of a sogo shosha (general trading company) such as import, export, off-shore trade and domestic wholesale.

Mitsui USA’s strategy is to expand existing and new core businesses by creating and operating group companies in specific industries, and supporting them with in-house services such as information and research, financial arrangements, risk management, and transportation logistics. Mitsui USA has 11 operating divisions including iron and steel products, energy and mineral resource, infrastructure projects, machinery, information business, organic chemicals, plastics and inorganic chemicals, foods and retail, consumer service and business development, transportation logistics, and financial markets. Its headquarters are in New York City, and it maintains 11 branch offices and nearly 70 group companies in various industries across the U.S.

Mitsui USA’s motto is “Your Global Business Partner®.” Its strength is comprehensive business engineering, creating innovative business models to support domestic and global marketing, trade facilitation, project development and management, and planning and implementation of SCM (Supply Chain Management) and DCM (Demand Chain Management).[5]

Company philosophy

Mitsui Group’s mottos, "Mitsui is People," and "Challenge and Creation," elevates the role of employees in the companies’ success, and encourages them to be creative and innovative. Mitsui has met the challenge of operating in many different cultural and political environments by carefully studying business practices in each country and implementing a policy that emphasizes ethics and legal compliance.

Corporate social responsibility and environmental policies

Throughout their business activities, Mitsui Group companies incorporate a distinctive CSR (Corporate Social Responsibility) policy, which emphasizes environmental and social accountability, and respect for stakeholders and the community. Mitsui companies are committed to respecting and following the laws and regulations of the countries in which they do business, including those pertaining to customs, antitrust, anti-boycott, international trade controls, employment, and the environment, and to maintaining high ethical standards.

Mitsui industries actively seek to develop more energy-efficient products, and to reduce the impact of their activities on the environment by correctly collecting, separating and disposing of waste; following safety procedures to prevent accidents and chemical spills and contain their damage in mines and in the oceans; and recycling. Company policy emphasizes buying and using products certified by Eco Mark, a program supported by the International Organization of Standardization (ISO) that identifies products suitable for preservation of the environment. Mitsui itself produces environment-friendly cleaning products and services. Shipping containers that have outlived their usefulness at sea are refurbished to be used as storage units, garages, offices, shops, and even living spaces. Mitsui companies are committed to educating their employees to preserve the environment, both in their business and personal lives.

Mitsui Group companies actively engage in their communities through corporate giving, scholarships and support for the arts. The Mitsui USA Foundation, established in 1987, extended its support to cross-cultural organizations and New York cultural institutions, such as The Metropolitan Opera. Today it supports approximately 50 projects across the U.S., with half of its budget going to educational programs such as college scholarships, study abroad, forums, international affairs fellowships, and high-school international student exchanges to Japan to encourage international understanding and strengthen U.S.-Japan relations.[6]

The Institute for Financial and Economic Research (金融経済研究所= 金研: Kinken) of the former Mitsui Bank donated the Mitsui Collection to the University of Pittsburgh East Asian library, containing over 64,000 volumes of books and journals on economic theory, fiscal policy and company history, making it available to scholars worldwide

Companies with close ties to the Mitsui Group

  • CantorCO2e
  • Sony
  • Ito-Yokado
  • Sagami Railway
  • Tokyo Broadcasting System
  • Kanebo
  • Oriental Land
  • N.serve Environmental Services GmbH

See also

Notes

  1. John Hall, Japan: From Prehistory to Modern Times (1970), 290.
  2. Shinjō, Hiroshi, History of the Yen: 100 Years of Japanese Money-Economy (1962), 11.
  3. Mitsui India, History. Retrieved October 4, 2008.
  4. Mitsui.com, Company Profile. Retrieved October 4, 2008.
  5. Ibid.
  6. Mitsui.com, Community Outreach. Retrieved October 4, 2008.

References

  • Hall, John Whitney. Japan: From Prehistory to Modern Times. In Delacorte World History. New York: Delacorte Press. 1970. ISBN 0-2970-0237-6.
  • Roberts, John G. Mitsui Empire; Three Centuries of Japanese Business. New York: Weatherhill, 1973. ISBN 0834800802.
  • Shinjō, Hiroshi. History of the Yen: 100 Years of Japanese Money-Economy. Kobe: Research Institute for Economics & Business Administration, Kōbe University, 1962.

External links

All links retrieved November 10, 2014.

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