Marubeni K.K.

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Marubeni K.K.

3, Hommachi 3-chome
Higashi-ku, Osaka 541
Japan
(06)266-2111

Public Company
Incorporated: December 1, 1949 as Marubeni Co., Ltd.
Employees: 10,170
Sales: ¥ 14.31 trillion (US$ 79.51 billion)
Market Value: ¥ 417.4 billion (US$ 2.319 billion)
Stock Index: Düsseldorf Frankfurt Amsterdam
Luxembourg Tokyo Osaka Nagoya Kyoto
Hiroshima Fukuoka Sapporo Niigata

In 1872 a young merchant named Chubei Itoh established a small store in Osaka to serve as an outlet for his commercial trading business. A symbol for the store was created which placed the word beni (Japanese for “red”) inside a circle, or maru. In 1883, as the Itoh trading company expanded, the Marubeni store was made its head office.

Over the next twenty years, C. Itoh & Company took over an increasing number of duties from foreign trading agents and established its own international trading network. The company experienced particularly strong growth after Japan asserted its military dominance in the region by defeating Chinese armies in 1895 and the Russian navy in 1905. At the outbreak of World War I, C. Itoh & Company took advantage of several opportunities in international trading, created when companies in Europe redirected their energies toward production of war material.

Japan allied itself with the Entente later in the war, and when Germany was defeated in 1919 Japan was awarded German colonies and commercial rights in Asia. Within two years, however, uncontrolled economic expansion caused a serious recession which threatened hundreds of companies with financial collapse. C. Itoh & Company was forced to reorganize in 1921. The company itself was renamed Marubeni Shonten, Ltd., and several divisions belonging to its larger subsidiary C. Itoh Trading became a new company called Daido Trading. Marubeni was mainly involved in textile trading, but expanded over the course of the decade to include a wider variety of industrial and consumer goods.

In the early 1930’s a group of right-wing militarists within the Japanese armed forces initiated a rise to political power based on subversion and terrorism. As strong opponents of Communism, these militarists were natural allies of the Nazi and Fascist governments of Germany and Italy. After taking control of the government they declared a “quasi-war economy” in preparation for the Japanese conquest of East Asia and the western Pacific.

Large Japanese conglomerates known as zaibatsu (Mitsui, Mitsubishi, and Sumitomo) and companies such as Iwai, C. Itoh, and Marubeni were viewed by the militarists as self-interested institutions of laissez-faire capitalism. One widely recognized goal of the militarists was the nationalization of these companies. At the time, however, nationalization was not possible. These companies were responsible for virtually all the weapons, machinery, and provisions needed to maintain the Japanese occupation of Korea, Manchuria, and China, and to conduct subsequent military campaigns.

In 1941, as part of an effort to increase the scale and raise the efficiency of Japanese industries, Marubeni was merged with C. Itoh Trading and Kishimoto & Company to form a larger firm called Sanko Kabushiki Kaisha. On December 1 of that year Japanese forces attacked British colonies in Asia, and on December 7 attacked American forces in the Philippines and Hawaii.

Initially, Sanko performed better than most Japanese companies in the war economy. Later in the war, however, Japanese forces failed to consolidate their gains and the war turned in favor of the United States. Additional demands were placed on the economy in general and companies such as Sanko in particular. In 1944, the year the Japanese mainland became exposed to American bombing raids, Sanko was forcibly merged with Daido Boeki and Kureha Spinning to form a new company called the Daiken Company. Chubei Itoh II, the son of Marubeni’s founder, was placed in charge of Daiken as its president.

The companies which formed Daiken, indeed even those which formed Sanko, were forced to perform under such extraordinary circumstances that none of them had an opportunity fully to integrate their operations with the other companies. Daiken existed more as an industrial group than a company.

When the war ended in the late summer of 1945 most of the country’s industrial capacity had been destroyed. An Allied occupation authority under General Douglas MacArthur initiated a plan for reconstruction and the general reorganization of Japanese industry. Large conglomerates, particularly the zaibatsu, were divided into hundreds of independent companies in an effort to eliminate monopoly practices and encourage greater competition. In 1949 Daiken, which was not a zaibatsu, was redivided into Kureha Spinning, C. Itoh & Company, Marubeni, and a small manufacturer of nails called the Amagasaki company. Marubeni was given authority to conduct international trade. Under the leadership of President Shinobu Ichikawa, the company utilized its strength in textiles to finance diversification into non-textile items such as food, metals, and machinery.

When the Korean War broke out in June of 1950, Marubeni became one of thousands of Japanese companies whose services were urgently needed by the United Nations forces. Marubeni reacted quickly to new opportunities created by the war and, as a result, experienced faster growth than many other companies. The war also transformed Japan’s role as a postwar ally of the United States; it was decided that Japan should be developed into an industrial nation.

The Korean War ended in 1953, and many U.N. supply contracts with Japanese companies were terminated. This caused a serious recession in Japan and forced many companies, including Marubeni, to reorganize its operations and management. Nonetheless, the company declared itself fully recovered from both World War II and the recession in 1955.

On February 18, 1955, Marubeni merged with Iida & Company, an established name in Japanese business which operated several large department stores under the name Takashimaya. In order to emphasize its equality with Iida, the Marubeni Company changed its name in September to Marubeni-Iida.

The Ministry for International Trade and Industry (MITI), the Japanese government’s coordinating body for the nation’s industries, selected Marubeni-Iida to handle trading activities for Yawata Iron & Steel and Fuji Iron & Steel (merged in 1970 to become Nippon Steel). As a result of this decision, Marubeni occupied a leading position in the field of silicon steel and iron sheets, which were being consumed in greater quantities by the growing Japanese appliance and automobile industries.

Marubeni-Iida’s newly established machinery trade group was awarded several contracts over a short period during the late 1950’s, firmly establishing the company in the area of engineering. These contracts included a nuclear reactor for the Japan Atomic Energy Research Institute, a fleet of aircraft for the Japanese defense agency, and a number of factories which produced components for the electronic industry.

Marubeni-Iida entered the petrochemical industry in 1956 when it helped a leading chemical fertilizer and aluminum company called Showa Denko secure chemical production licenses from American companies. The company fostered relationships with other chemical companies and later became a leading importer of potassium and phosphate rock.

In the ten years from 1949 to 1959 Marubeni had reduced its concentration in textiles from 80% of sales to 50%. During the 1960’s Marubeni-Iida acted as a supplier of materials for Japanese companies as well as a marketing agent for their products. In addition to textiles, metal products and chemicals, Marubeni-Iida was active in trading light and heavy machinery and rubber products.

In 1965 Marubeni-Iida merged with the Totsu Company, a leading metal and steel trading firm which was closely associated with Nippon Steel. The merger substantially increased the company’s size and strengthened its position in metals. With the addition of Totsu’s 1380 employees to Marubeni-Iida’s 8000, the new company became a sogo shosha, a large general trading firm like the former zaibatsu companies. In order to cope with its new position as one of Japan’s primary instruments for industrialization and growth, the new Marubeni-Iida initiated a general reorganization of its management and planning systems.

When the reorganization was executed in 1968, the company made greater efforts to develop raw material sources overseas, including petroleum products, coal, metal ores, industrial salt, foodstuffs, and lumber. During this time Marubeni-Iida improved its transportation and marketing networks and also improved upon the coordination of its various trading activities.

President Nixon’s decision to remove the U.S. dollar from the gold standard in August 1971 resulted in a worldwide disruption of currency values known as the “Nixon shock,” or in Japan, shokku. The value of the dollar dropped steeply, which made it more difficult for Japanese companies such as Marubeni-Iida to export products to the United States. The company’s operations were so adversely affected that it was again forced to reorganize. The company entered promising new lines of business, emphasized its more profitable existing operations, and divested itself of unprofitable slow-growth enterprises. The following January the company’s name was changed to the Marubeni Corporation.

In August of 1973 Marubeni acquired Nanyo Bussan, a trading firm which handled copper, nickel, chrome, and other metals from the Philippines. The acquisition increased Marubeni’s share of the nation’s copper imports from 0.8% to 7%, and refractories (hard to melt metals) from 0 to 30%. The addition of Nanyo Bussan to Marubeni further diversified the company’s operations and strengthened its position in metals.

In February of 1976 it was reported that Marubeni illegally diverted commissions from the sale of Lockheed aircraft to officials of the Japanese government. Marubeni was accused of bribing officials for their support of Lockheed sales in Japan. Marubeni, Lockheed’s agent in Japan, initially denied any complicity in the scandal. Marubeni’s chairman Hiro Hiyama, however, resigned in an effort to preserve the company’s integrity. The former vice chairman of Lockheed, Carl Kotchian, testified that Hiyama advised him to bribe the Japanese officials, in accordance with “Japanese business practices.” Hiyama later denied Kotchian’s testimony. By July prosecutors arrested nearly 20 officials of Marubeni and All Nippon Airways, including Hiro Hiyama, who was accused of violating Japan’s foreign exchange control laws.

The Lockheed scandal came only three years after Marubeni was accused of profiteering in rice by hoarding supplies on the Japanese black market. Marubeni was seriously damaged by its unfavorable public image; over 40 municipalities cancelled contracts with Marubeni, and several international ventures were terminated.

Marubeni’s president, Taiichiro Matsuo, who had served in the government’s Ministry for International Trade and Industry, assumed the chairman’s responsibilities. After declaring that it no longer represented Lockheed, the company implemented a reform of its management structure to improve upon checks and balances at the executive level. In a move toward decentralization, many of the president’s administrative responsibilities were redistributed to a board of senior executives.

Marubeni recovered quickly from the Lockheed scandal. In 1977 the company’s trading volume was double the figure in 1973. As the third largest of Japan’s sogo shosha, Marubeni consolidated its international trading network, and expanded its business in the United States, Australia, Brazil, Britain, West Germany, and Sweden. Marubeni also opened or expanded offices in the Soviet Union, the People’s Republic of China, the Middle East, and Africa. The company later came to operate offices in over 100 foreign countries.

Through the early 1980’s Marubeni was involved in the development of coal mines in the United States and Australia, a copper mine in Papua New Guinea, and non-ferrous metal mines in Australia and the Philippines.

When President Ferdinand Marcos of the Philippines was forced into exile in the United States in February of 1986, he brought with him 2300 pages of documents which were seized by the U.S. government. Officials of the U.S. Congress later revealed that some of these documents detailed illegal payments by Japanese companies to President Marcos and several of his friends and associates. Once again, Marubeni was identified as a major participant.

Called into question was the Japanese “aid-for-trade” policy which promises aid to foreign countries on the condition that Japanese companies perform the work. However, while the Lockheed scandal brought down the government of Kakuei Tanaka and involved several suicides, the Marcos scandal was expected merely to cause damage to Japanese-Philippines relations. For Marubeni it was an unwelcome revelation which further compromised its public image.

Additionally, Diamond’s Japan Business Directory noted in 1986 that Marubeni has recently suffered a ¥ 900 million appraisal loss due to the company’s close association with the financially troubled Sanko Steamship Company. Marubeni also has an outstanding “bad” claim of more than ¥ 4.3 billion. These are regarded as serious impediments to the company’s performance, deserving close attention.

Marubeni is a member of the Fuyo Group, an industrial organization consisting of 29 companies, including Hitachi (electronics), Nissan (automobiles), Canon (cameras), Showa Denko (chemicals), Kubota (farm machinery), and Nippon Steel. The Fuyo Group (Fuyo is another way of referring to Mount Fuji) was created by several corporate leaders in the early 1960’s to promote friendship, share information, and “study projects of mutual interest.”

Like the former zaibatsu companies, whose operations are centered around a bank, the Fuyo Group is associated with the Fuji Bank. Unlike those companies, however, the Fuyo Group has a relatively short history. Its members are brought together more by prospects for mutual benefit than by historical affiliation. As a result, the Fuyo Group is less rigidly constituted. Representatives of the Fuyo Group members meet in a series of monthly meetings, or kai (the Fuyokai, Fujikai, and Fusuikai, as well as a general discussion panel), where planning strategies are formulated.

Marubeni’s partners in the Fuyo Group are a source of financial support through their business, providing a diverse mix of products as well as stable producer and consumer markets. As one of the largest general trading companies in Japan, Marubeni is essential to the Japanese economy and may therefore enjoy considerable support from the government.

Principal Subsidiaries (and affiliates)

Amatei, Inc.; Benny Steel Co., Ltd.; Sanyo Co., Ltd.; Tomiyasu Co., Ltd.; Marubeni Construction Material Lease Co., Ltd.; Yamatogawa Kokan Co., Ltd.; Ohtsuka Steel Trading Co., Ltd.; Marubeni Metals Corp.; Hitachi Electrical Steel Co., Ltd.; Tokyo Electrical Steel Co., Ltd.; Osaka Electrical Steel Co., Ltd.; Nagoya Electrical Steel Co., Ltd.; Nisshi-Nippon Steel Center Co., Ltd.; Marubeni Machinery Sales Co., Ltd.; Dengensha Manufacturing Co., Ltd.; Okano Valve Mfg. Co., Ltd.; Shinnihon Reiki Co., Ltd.; Macs Co., Ltd.; Marubeni Construction Machinery Sales, Inc.; Benytone Corp.; Marubeni Tekmatex Corp.; Kaji Iron Works, Ltd.; Crimson Line, Ltd.; Koyo Line, Ltd.; Japan Overseas Leasing Corp.; Marubeni Machinery & Engineering Corp.; Asano Engineering Co., Ltd.; Marubeni-Setsubi Co., Ltd.; Shinnihon Doboku Co., Ltd.; Marubeni Fudosan Co., Ltd.; Marubeni Industrial Textiles Co., Ltd.; Marubenitex Corp.; Miyako Knit Co., Ltd.; Toy ama Fishing Net Mfg. Co., Ltd.; Sanyo Textile Co., Ltd.; Marubeni Iryo Co., Ltd.; Kyoto Marubeni Co., Ltd.; Marutaka Keito Co., Ltd.; Marubeni Seni Yohin Co., Ltd.; Panther Co., Ltd.; Marubeni Shigyo Co., Ltd.; Minatoya Paper Trading Co., Ltd.; Koa Kogyo Co., Ltd.; Marusumi Paper Mfg. Co., Ltd.; Marubeni Pack Co., Ltd.; Fukuyama Paper Co., Ltd.; Nikko Oil Mills Co., Ltd.; Shinshindo Baking Co., Ltd.; Central Japan Grain Terminal Co., Ltd.; West Japan Grain Terminal Co., Ltd.; South Japan Grain Terminal Co., Ltd.; Marubeni Shiryo Co., Ltd.; Nippon Chunky Co., Ltd.; Okayama Chunky Broiler Co., Ltd.; Ohmiya Ham Co., Ltd.; Marubeni Livestock & Meats, Ltd.; Dairy Queen (Japan) Co., Ltd.; Katakura Chikkarin Co., Ltd.; Marubeni Foods Corp.; Nissan-Marubeni Shoji Co., Ltd.; Toyo Sugar Refining Co., Ltd.; Beniko Corp.; Ebikoh Corp.; Marubeni Reizo Co., Ltd.; Marukoh Fisheries Co., Ltd.; Minami Kyushu Food Products Co., Ltd.; Hinomaru-Nissui Co., Ltd.; Maruseikokosan Corp.; Marubeni Oil Terminal Co., Ltd.; Marubeni Energy Corp.; Nisseki-Marubeni Co., Ltd.; Shin Nippon Liquefied Gas Co., Ltd.; Ohita Terminal Industries, Ltd.; Marubeni Plastic Products Co., Ltd.; Solvay-Marubeni Chemicals Co., Ltd.; Marubeni Electronics Co., Ltd.; Marubeni Hytech Co., Ltd.; Kokusai Tymshare, Ltd.; Marubeni Information Systems Co., Ltd.; Network Service Co., Ltd.; Japan Voicemail, Inc.; Marubeni Software Co., Ltd.; Nippon Steiner Co., Ltd.; Marubeni Mokuzai-Kenzai Co., Ltd.; Overseas Transport Service Co., Ltd.; Marubeni Credit Corp.; Levene Co., Ltd.; Marubeni Insurance Center Co., Ltd.; Vittel Japan Co., Ltd.; Marubeni Auto-Leasing Co., Ltd.; Marubeni Sports Co., Ltd.; Marubeni Ameria Corp.; Marubeni Australia Ltd.; Marubeni Benelux, S.A. (Belgium); Marubeni Brasil, S.A.; Marubeni Canada, Ltd.; Marubeni Deutsh-land, GmbH (West Germany); Marubeni France, S.A.;

Marubeni Hong Kong, Ltd.; Marubeni Iberia, S.A. (Spain); Marubeni Iran Co., Ltd.; Marubeni Italia S.p.A. (Italy); Marubeni Mexico S.A. de C.V.; Marubeni New Zealand, Ltd.; Marubeni Panama International, S.A.; Marubeni Peru, S.A.; Marubeni Scandinavia A.B. (Sweden); Marubeni UK, Plc.; Marubeni Venezuela C.A.; Heung Hwa Industry Co., Ltd. (South Korea); P.T. Sermani Steel Corp. (Indonesia); Total Steel of Australia Pty, Ltd.; Crest Steel Corp. (USA); Archer Pipe & Tube Co., Inc. (USA); Pioneer Metals Co., Ltd. (Nigeria); Heng Leeng Maruken Metal Leasing Pte, Ltd. (Singapore); Bleim Steel Co. (USA); Marubeni Brasileira de Mineracao Ltda. (Brazil); Marubeni Coal Pty., Ltd. (Australia); Marubeni International Petroleum Co., Ltd. (Hong Kong); Marubeni International Electronics Corp. (USA); Uniphone Ushasama Sdn. Bhd. (Malaysia); Marubeni-Komatsu, Ltd. (U.K.); UMW Acceptance & Credit Sdn. Bhd. (Malaysia); P.T. Komatsu Indonesia; N.V. Nissan Belgium, S.A.; Motores Hino de Guatemala, S.A.; Suzuki, S.A. (Guatemala); Nissan Motor del Peru, S.A.; Pilipinas Hiño, Inc. (Philippines); Pilipinas Nissan, Inc. (Philippines); Filipinas Transport Industries, Inc. (Philippines); Nissan Mexicana S.A. de C.V. (Mexico); Eye Lighting Industries Pty., Ltd. (Australia); Marubeni-Citizen Cincom, Inc. (USA); Deutsch-Japanisches Center, GmbH (West Germany); Marubeni Benelux Development, S.A. (Belgium); Marubeni Brasil Representacoes e Participaceos Ltda. (Brazil); Shanghai International Realty Co., Ltd. (People’s Republic of China); Taipyung Development Co., Ltd. (South Korea); Marubeni Saudi Arabia Co., Ltd.; Dampier Salt, Ltd. (Australia); SELEMEX, S.A. (Mexico); P.T. Pralon Corp. (Indonesia); Korea Petrochemical Industry Co., Ltd. (South Korea); Agricultural Chemicals (Malaysia) Sdn. Bdn.; Columbia Grain, Inc. (USA); Exportadora e Importadora Marubeni-Colorado, S.A. (Brazil); MAGRISA Marubeni Agro Industrial, S.A. (Brazil); Bering Sea Fisheries, Inc. (USA); North Pacific Processors, Inc. (USA); Togiak Fisheries, Inc. (USA); LYL Rubber Sdn. Bdn. (Malaysia); California Woodfiber Corp. (USA); Daishowa-Marubeni International, Ltd. (Canada); Capital Veneers Sdn. Bdn. (Malaysia); Canobolas Wood Topmaking Pty., Ltd. (Australia); Marnan Wood Industries Pty., Ltd. (Australia); Kobes do Brasil Industria a Comercio, Ltda. (Brazil); Unitika do Brasil Industria Textile Ltda. (Brazil); P.T. Kurabo Manunggal Textile Industries (Indonesia); P.T. Kuraray Manunggal Fiber Industries (Indonesia); P.T. UNITEX (Indonesia); Textile Industriales de Centro America, S.A. (Costa Rica); Dusit Textile Co., Ltd. (Thailand); Erawan Textile Co., Ltd.; Tokai Dyeing Co., (Thailand) Ltd.; Wateree Textile Corp. (USA).