WARREN BUFFETT’S JAPAN TRADE US investment helps sogo shosha meet digital challenges By Koji Nozawa and Mitsure Obe
At a FamilyMart convenience store in Tokyo, shoppers grab fresh bananas and pay using their smartphones. A familiar scene, but few would know that one company is orchestrating almost the entire transaction—from growing the bananas to owning the store and even developing the smartphone payment system. The company, Itochu Corporation, is one of Japan’s venerable sogo shosha or trading houses—a quintessential feature of the country’s corporate landscape, sprawling across dozens of business sectors. Itochu not only owns FamilyMart Co., Ltd., which it recently took full control of in a ¥580 billion ($5.5 billion) transaction. It also produces bananas and pineapples on the island of Mindanao, in the southern Philippines, as the owner of Dole Food Company’s Asian fresh food business, and ships them to Japan, South Korea and—an anticipated growth market—China. Chief Executive Officer Masahiro Okafuji has been deter mined to strengthen Itochu’s non-resources businesses. “I decided to attack areas related to household consumption,” he said in an interview with Nikkei.
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Itochu also owns a 25-percent stake in a unit of Thai conglomerate Charoen Pokphand Group, 10 percent of Chinese financial conglomerate Citic Group Corporation Ltd., 33.8 percent of British fashion house Paul Smith, and 40 percent of Japanese apparel maker Descente Ltd., as well as iron ore and coal mines in Australia. US INVESTMENT Itochu and its sogo shosha peers attracted global attention when well-known US investor Warren Buffett’s Berkshire Hathaway announced in August that it had acquired slightly more than five percent of:
Itochu Mitsubishi Corporation ■ Mitsui & Co., Ltd. ■ Sumitomo Corporation ■ Marubeni Corporation ■ ■
Berkshire has said it may boost its stake in each company up to 9.9 percent and is eyeing opportunities for the trading houses to strike partnerships with its own businesses. It was a rare boost for a sector that has been unloved by investors for whom the conglomerate is out of fashion, and which also runs many old-economy businesses hit by the inevitable fallout from the Covid-19 pandemic.
