Mitsubishi Corp. CEO: A time for trading companies to grow
TOKYO (The Japan News/ANN) - Mitsubishi Corp. is among Japan’s foremost general trading companies, and the work that it does has changed significantly with the times. What is a trading company, and how will such firms evolve in the future? In this installment of Leaders, a column featuring corporate management and senior executives, The Yomiuri Shimbun put such questions to company President and Chief Executive Officer Takehiko Kakiuchi.
I do not have a clear answer to the question “What is a trading company?” Trading companies change with the times, and they go all in wherever it serves those times.
Mitsubishi Corp. was one of the zaibatsu conglomerates that was dissolved after the war, and it started over in 1954 as a totally new company. There are no founders and no major shareholders. Like anywhere else, the people who passed the entrance exam joined the company, and the employees have all worked together to grow the company. I want to maintain our existing growth mechanisms going forward.
It is necessary to recognize that we do not know what will become of the profitable departments that seem like winning businesses for our company today. The pace of change will rapidly accelerate.
Employees often ask me, “What kind of company will we be in the future?” My answer to them is “I don’t know.” What do the times demand? We all ponder this question together, including the younger employees. I believe it is management’s job to provide both opportunities and environments for employees to grow. As for what will happen 30 or 40 years from now, it’s anyone’s guess.
Originally, our company started off doing trading, such as selling raw materials to group companies and business partners, and acting as a middleman between manufacturers and their customers. Later, to bolster our trading business, we invested in some of our business partners, and so on. Today we call such operations an “investing” business model.
However, this by itself has its limits. We changed course from not just investing, but working toward the prosperity of the companies we invest in by becoming deeply involved with their management. This is our “managing” business model.
[A specific example of the managing business model is when it made the major convenience store company Lawson, Inc. its subsidiary in 2017.]
Making them our subsidiary is a signal that “Mitsubishi Corp. will provide even greater support than before, and we are confident that Lawson will expand further.” Lawson will handle the existing convenience store business, while our company will add new services and features no one could have ever imagined at a conventional convenience store. Merging the actual brick-and-mortar stores with business utilizing the internet is one conceivable course.
Traditionally, trading companies focus on transactions between businesses, what is called “B2B,” but things like liquefied natural gas and copper are ultimately connected with the consumer. No company lacks connections to the consumer.
We have a keen interest in the automotive industry. A century after the appearance of automobiles, they have entered a tumultuous period. There is a shift toward motors and batteries for the power train, and they are grappling with the concept of self-driving. New businesses will emerge one after the other.
Cars will be a mobility tool, and may even become living spaces. We want to be a company that generates new value through our involvement. In that sense, we have invested in Mitsubishi Motors Corp. as a shareholder.
Picking a winning team
When I was a child, I behaved like the “leader of the gang.” I often got injured, and I remember always having my parents get called to my school and being scolded.
I got into Japanese archery in my university days. Perhaps I had some beginner’s luck starting at university age, but I could hit the target right from the start. I did archery through all four years at university. I even served as the captain of the archery club.
Collegiate archery has team competitions as well as individual competitions. You take 160 shots, with eight people taking 20 each, and the captain picked the team members to participate in the competition in those days. Who do you pick in order to win? That may well have been a priceless experience for me, and it also applies to management.
[After joining Mitsubishi Corp., Kakiuchi was assigned to the food division, which deals with things like grain and livestock.]
I was in the livestock division when I returned to Japan after spending five years in Australia during my 30s, and my experience there left a major impression on me.
There is a pork processing company in the United States called Indiana Packers Corp. (IPC), and I was in charge of rebuilding it. At the time, they were perpetually in the red. My job was to determine whether it was possible to revive the company, or if we should quit the business. On my own, I contemplated how to revive the company, and I decided, “There is a good enough chance of success.”
In the end, I was right. When we set to shoring up their business, they were on the path to getting back on their feet a few years later. Today, they are a fixture in U.S. livestock industry.
What I learned there was the importance of analyzing things carefully and working persistently. There were many people in the company who were opposed, so accountability was also important. I value the word “sincerity,” in the sense that if you hear me out, you will come around to my way of thinking.
Take risks to shake things up
In addition to enterprise management, I believe that working to shake up industries is an important job of trading companies. That is what the times demand. If necessary, we buy stocks, and we also sell them. We can dispatch staff or sketch out a plan for restructuring.
[Mitsubishi Corp. was the principal shareholder of Itoham Foods Inc. and Yonekyu Corp., the No. 2 and No. 7 meat processors, and it merged them in April 2016. Their ham and sausage business surpassed NH Foods Ltd. to become No. 1 in the industry.]
I met then company President Kenichi Ito, who is a member of the founder’s family, while I was staying in Australia. I was the one in charge when we were building a meat plant there in a joint venture with Itoham.
He also provided technical support for reviving IPC. Because of this relationship, he was understanding about the merger with Yonekyu, and ultimately turned over his shares to us.
The merger has produced major results, such as mutual exploitation of factories and know-how. What do you make at which factories? Just by reassessing such things, you can accomplish incredible streamlining. They can also share a distribution network, so it is easy to add up the merits. However, this cannot be achieved without coming together.
In the case of Lawson as well, Daiei allowed us to buy the shares they owned. It is a company formed by joining together many convenience stores.
While many industries in Japan could do with restructuring, it never makes headway. There is no sense in over-competing in a mature market. We want to take risks in the effort to shake things up. I believe that this would raise the baseline for the Japanese economy as a whole.
Currently, our company has invested in around 1,300 companies. We have created a system to view nearly any industry and identify where new seeds of growth are. We can quickly catch on to which direction the world is going. I hope to preserve this collective capability.
■ Takehiko Kakiuchi / President and CEO of Mitsubishi Corp.
Born in 1955. Native of Hyogo Prefecture. Graduated from the Kyoto University School of Economics in 1979, and joined Mitsubishi Corp. He has extensive experience in the food sector, including the feed and livestock unit and the living essentials division. Also involved with the acquisition of a major Norwegian salmon and trout farming concern, in addition to a pork processing business in the United States. Became a senior vice president in 2010, and was elevated to executive vice president in 2013 before assuming his current post in April 2016.
■ Key Numbers: Six fields
The business activities of Mitsubishi Corp. span a wide range, and it cites the six fields of food raw materials, motor vehicles, LNG, retail, gas and power generation, and mineral resources as its future earnings drivers. Its consolidated balance sheet for March 2018 showed a final profit of ¥560.2 billion, the top among trading companies for the second year in a row, and reached a new high for profits for the first time in 10 years. As of March 2018, the company had 192 overseas offices and a total of 77,476 employees.