Itochu

Itochu dates the start of its business to 1858, shortly after the opening of Japan to foreign trade, when Chubei Itoh (伊藤 忠兵衛, Itō Chūbei) began door-to-door wholesaling of linen in the regions between Osaka and Kyushu. Itoh founded the "Benichu" drapery store in the Honmachi district of Osaka in 1872. This site was renamed "Itoh Honten" in 1884 and became the Itoh Thread and Yarn Store in 1893, which was renamed "C. Itoh & Co." in 1914.[6]

Chubei Itoh II took over the company following his father's death in 1903. The company opened an office in Shanghai in the 1890s and started business in Seoul in 1905, but had severe difficulties with these first overseas forays. Itoh travelled to London in 1910 and began direct procurement and financing for the business in the London markets, which considerably improved its margins as it had previously used more expensive intermediaries in Japan.[7]

Itoh's company grew considerably in the wake of World War I, with offices in the United States, India, the Philippines and China, and the firm began to handle machinery, automobiles and metals in addition to its core business of textiles. However, a recession in 1920 left the company deeply in debt, and unlike the major zaibatsu firms of the time, it had no captive bank to finance its business. In 1921, the company split in half, with one half forming what is now known as Marubeni. The company's performance improved in the 1930s, but as World War II began in the latter half of the decade, all trading companies' business became increasingly war-oriented.[7] In 1941, Itoh and Marubeni re-combined to form Sanko KK, which merged with two other companies to form Daiken Co., Ltd. in 1944.[6]

After World War II, the constituent companies of Daiken were spun off from each other in December 1949 as part of GHQ efforts to dismantle the war-era zaibatsu. Itoh re-listed on the Tokyo Stock Exchange in 1950.[6]

Itoh resumed business in the wake of the war by bartering Japanese textiles for foreign grain, and resumed trading in petroleum, aircraft, automobiles and machinery to meet UN forces requirements during the Korean War. After the war, Itoh absorbed many smaller trading operations that could no longer stand on their own. Itoh expanded its overseas mining and petroleum exploration activity in the late 1960s and early 1970s, followed by large-scale overseas industrial projects in the 1980s.[7]

Former Imperial Japanese Army staff officer Ryuzo Sejima joined Itoh in 1958 after spending 11 years in a Siberian prison. Four years later, he was promoted to director and became Itoh's head of corporate planning, implementing a military-style internal reporting system. He went on to serve as president and chairman of the company, having developed a powerful group of followers known as the "Sejima Machine." In 1970, Sejima and his younger protege Minoru Murofushi arranged a joint venture between General Motors and Isuzu, one of the first tie-ups between US and Japanese automakers.[8] In 1972 Itoh became the first Japanese trading company allowed to do business in the People's Republic of China.[6]

Itoh was headquartered near the site of Chubei Itoh's historical headquarters in Osaka until 1967, when it upgraded its Tokyo branch to the status of a co-headquarters.[6] In the 1970s, the company became part of the "Kawasaki Group" within the keiretsu of Dai-Ichi Kangyo Bank (now Mizuho Corporate Bank), eventually displacing Nissho Iwai as the keiretsu's dominant trading company. Itoh's affiliation with the keiretsu was significantly looser than other keiretsu-affiliated trading companies, and many firms within the DKB group did not use Itoh's services at all.[9]

Itoh absorbed Ataka & Co., the ninth largest general trading company in Japan, in 1977. Ataka had recently suffered major losses from an oil development project in the United States and had undergone restructuring at the direction of its main lender, Sumitomo Bank.[10]

From the early 1970s Itoh was a major supplier of synthetic yarn (polyester) to India's Reliance Industries Limited.[11] Over the years, the close collaboration between both companies culminated in the co-promotion of a world-scale Polypropylene Project with a capacity of 250,000 tonnes per annum at a total project cost of Rs. 525 Crores, at Hazira in the State of Gujarat. With a $50 million for a 15 percent stake,[11] it was at that point, the largest investment in India by a Japanese firm.[12] Itoh also marketed products—under their own label—as diverse as a line of bicycles (mostly manufactured by Bridgestone), and computer printers. Itochu began to develop a strong information technology business in the 1980s through its subsidiary C. Itoh Techno-Science (CTC), which acted as a Japan distributor for Sun Microsystems, Cisco, Oracle and others.[8]

On October 1, 1992, C. Itoh & Co. Ltd. changed its English name to Itochu Corporation, a more direct transliteration of its Japanese name.[12] By the early 1990s Itochu had become the largest trading company in Japan, but losses from the Japanese asset price bubble, particularly domestic real estate investments, brought it down to third place by the middle of the decade.[7] In the 1990s Itochu made several investments in the media industry, including a minority stake in Time Warner and investments in cable and satellite delivery systems.[13]

Uichirō Niwa became president of Itochu in 1998, implementing cuts to unprofitable businesses and cutting back executive perks enjoyed by his predecessor Murofushi.[8] In 1999, Itochu became one of the first Japanese companies to move away from the traditional seniority-based pay scale, adopting a base pay scale based on responsibilities, impact and value of each position as well as a performance-linked bonus system.[14] Itochu also spun off CTC in 1999, only to see CTC quickly achieve a market capitalization more than twice that of its former parent company.[8]

Masahiro Okafuji became president of Itochu in 2010 and announced a strategy to make Itochu the first-ranked sogo shosha in areas other than raw resources, particularly in food products and machinery. Under Okafuji's leadership, Itochu implemented a general ban on work after 8 PM with an across-the-board "lights out" policy at 10 PM while encouraging that any necessary overtime be taken in the early morning hours, reducing the total amount of overtime across the company.[15] Itochu moved its Osaka headquarters to the North Gate Building adjacent to Osaka Station in 2011.[16]

Itochu entered into a cross-shareholding relationship with the Thai conglomerate Charoen Pokphand (CP) in 2014, and together with CP, agreed to invest over $8 billion in the Chinese state-owned conglomerate CITIC Limited during 2015, the largest investment ever made by a Japanese general trading company.[17] The transaction was also the largest acquisition in China by a Japanese company, and the largest investment by foreigners in a Chinese state-owned enterprise.[18]

In July 2016, short seller Glaucus Research Group published a report critical of Itochu's accounting practices, causing a stock price dip of around 10%.[19]

As of 2020 Itochu was one of the three largest global tuna traders along with Tri Marine of Italy and FCF of Taiwan.[20]