Japanese trade giant has eye for profit in all the world
Tokyo — ''The world has 4 billion people and more than 160 countries,'' said Mitsuo Uemura. ''That is our market.''
Mr. Uemura is president of Sumitomo Corporation, one of Japan's top five sogo shosha, or general trading companies.
These companies, which buy and sell everything from ''noodles to missiles'' on the world market, are not unique to Japan. But they are far more developed here than anywhere else in the world, and as a group they account for 30 percent of Japan's gross national product. Internationally, they have spearheaded the island empire's aggressive export drive into far corners of the earth.
Sumitomo Corporation (which is not to be confused with Sumitomo Bank, a fellow member of the Sumitomo group, but separate from the trading company), is unusual among Japan's sogo shosha.
First, Sumitomo's domestic trading business still slightly exceeds its international business. Whereas its major competitors do about 60 percent of their business overseas, Sumitomo's domestic business last year accounted for 50 .8 percent of its total business.
Second, 80 percent of its total business is in metals, machinery, chemical goods, and fuels. It is weak in grains, food, and textiles - popular categories among its competitors.
Third, although fifth in terms of sales (10.9 trillion yen, or $44.46 billion last year) among the sogo shosha, Sumitomo has been consistently second or third in terms of profits for the past five years. (Income after taxes last year was 15.5 billion yen or $63.1 million.)
At a time when many of its competitors have been rushing into the world grain trade, Sumitomo remains largely uncommitted. ''Don't pursue easy gains - that has been one of Sumitomo's principle tenets since the last century and even before,'' Mr. Uemura said. ''We see no point simply in increasing volume without increasing profitability.'' And then Mr. Uemura, who seems to be fond of slogans , intoned his latest and favorite one, ''open eyes on all,'' meaning that one should keep one's eyes open on all the world.
The ''open eyes'' slogan won first prize two years ago in a company-wide contest celebrating the 35th anniversary of Sumitomo Corporation's founding. The Sumitomo group as a whole has a 400-year history, but its strength has been in mining and manufacturing. In the early years of this century, one director-generals said the group was not to imitate its competitors by going into trade.
That was part of the ''don't pursue easy gains'' syndrome. ''We only started the trading company after the war in desperation, as a form of unemployment relief for employees in enterprises ruined by the war,'' Mr. Uemura recalls.
Mr. Uemura himself, after graduating from Kyoto Imperial University in 1936, spent nearly 10 years with the Sumitomo holding company, until the firm was ordered dissolved under the US occupation authorities' policy of breaking up Japan's major zaibatsu, or trusts. He moved to the newly established trading company - then called Nippon Kensetsu Sangyo, or Japan Construction Industries - on Jan. 1, 1946, and has been with it ever since. (The company was renamed Sumitomo Trading Company in 1952 and Sumitomo Corporation in 1978.) He has been president since 1977.
Today Sumitomo finds itself at an interesting point in its history. On the one hand, it has practiced a fairly cautious policy of sales expansion, centered on areas like metals and chemicals where the Sumitomo group has been strong. At the same time, especially under Mr. Uemura, it has also built up the non-Sumitomo side of its business, overtaking other, established trading companies one by one to reach its a position of being fifth in sales and second in profits.
Mr. Uemura knows caution and prudence alone will not enable Sumitomo to rank with Mitsui and Mitsubishi as one of the big three instead of the big five. He has been encouraging his staff to think in terms of risk management and not to be deterred from pursuing promising opportunities by fear of failure.
Since becoming president, Mr. Uemura has simplified the administrative structure so that it consists of four trading groups and two management groups, each headed by a vice-president. Each head of a trading group can authorize expenditures up to 5 billion yen (about $20 million). Mr. Uemura meets weekly with these six - a far more intimate arrangement than involving the 20 or so people at managing-director level.
''I only see 5 or 6 percent of the paperwork that my predecessor had to contend with,'' Mr. Uemura says, ''but in terms of the money we spend overall, I'm confident I have control over 75 to 80 percent.''
A trading company, he says, must constantly be looking for new products to promote, must constantly have its eyes open to what will be the growth industries of the future. He personally travels to Europe and the United States to look at latest developments in biotechnology, integrated circuits, and new materials like ceramics or optical fibers. ''Open eyes,'' he says, lifting up a finger.
''I think it would be useful for the Americans or for the Europeans to have trading companies like ours,'' he says. ''People say that large manufacturers don't need our services, but even top manufacturers like Toyota or NEC (formerly Nippon Electric) find they can't do without us.
''After all, they are manufacturers. They can't have branches in every single country around the world. It just wouldn't be economical. We can take their products and market them in politically risky countries, for instance. We have the know-how and the worldwide connections to market products in large or small quantities. Of course, we are particularly close to Sumitomo group companies, . . . but today we derive only one-quarter of our income from handling Sumitomo products.
''And for the future? A least two-thirds of the world's people live in a very pitiable state. There is great disparity in wealth and in distribution of resources around the world. Our enduring function as trading companies of world scale is to help lessen these disparities, by making the often very complicated arrangements that make it possible to move goods from a country where they are in surplus to one where they are needed. As long as these disparities exist, there will always be work for us to do.''