Sogo shosha

Nihongo|Sogo shosha|総合商社|sōgō shōsha are general trading companies (GTCs) dealing with a wide range of products and materials.

The seven largest are Mitsubishi Corporation, Mitsui & Co., ITOCHU, Sumitomo Corporation, Marubeni, Toyota Tsusho and Sojitz. They collectively maintain approximately 1,110 offices in over 200 cities around the world and employ more than 20,000 highly-trained specialists who each average more than fifteen years of trading experience. While over 8,000 trading companies exist today in Japan, only a few hundred are engaged in foreign trade, and most are specialized trading companies (専門商社 "senmon shōsha") handling only a small variety of products. Only a few deal with a wide range of products and materials.

Sogo shosha supply large volumes of raw materials and distribute goods from large manufacturers to smaller distributors and to numerous retailers. What makes them unique are their size, scope, information-gathering capabilities, as well as their functional diversity. A sogo shosha is an economic organization whose functions consist of minimizing the risks involved in transactions through its ability to distribute the risk; reducing transaction costs through its ability to take advantage of economies of scale; and making efficient use of capital. They are Japanese traders, existing at the center of Japan's global economic effort, and serving as intermediaries for half of their country's exports and two-thirds of their imports.

In 1984, the largest sogo shosha, Mitsubishi Corporation, had gross revenues exceeding $69 billion. (Its profits, however, were only $190 million.) In 1988, Mitsui had gross revenues of $150 billion, employed 12,000 people worldwide, and had equity investments in 620 companies in Japan and 320 abroad.

Common misunderstandings

In the past, the gross revenues of sogo shosha have often been treated as equivalent to sales. On this basis, they appear to be among the largest corporations in the world. However, this is incorrect, and sogo shosha often state as much in their own English language documents. The main business model of sogo shosha revolves around commission obtained from acting as a "middle man." Therefore, true sales or revenues of a sogo shosha, comparable with figures produced for other types of company, are only a small fraction of its gross revenues. In 2004, "Fortune" stopped treating gross revenues as sales in its list of the world's largest companies.

External links

* [http://www.geocities.com/Athens/Delphi/9158/kwujmktg13.html Professor Paul Herbig -- Japanese Marketing lecture series -- Lecture #13:Sogo Shosha]