Keiei Shigaku (Japan Business History Review)

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After 1902, Mitsubishi Goshi opened branches in Hankou, Shanghai, Hong Kong, Peking, Vladivostok, and Singapore in order to export coal extracted from the company's mines. As these branches began in the 1910s to deal in commodities made by other companies, the character of the trading department of Mitsubishi Goshi changed from that of a sales department to that of a Sogo-shosha (general trading company). In this paper, I will try to outline reasons for the change by analyzing the business activities of the branches.
In the 1910s, coal exports to China were unstable because of the severe fluctuations of the foreign exchange rate. As a result, the branches were unable to show stable profits. On the other hand, they had adopted an independent profit system. Thus, in order to obtain a profit, the manager and salesmen of each branch attempted to deal in goods produced by other companies.
They sold the goods made by Mitsubishi-related companies, including beer, carbonated water, paper, and glassware, and traded commodities of unrelated companies, including raw cotton, cotton thread and fabrics, cement, paulownia oil, sesame, and so on. They succeeded only in dealing in paulownia oil and sesame-export goods of Chinese origin to Europe and America. This indicates that only those goods which do not suffer the instability of major goods (coal) are suitable for trade.
From the above analysis, we can form a hypothesis that the Sogo-shosha is a mechanism for stabilizing foreign trade and that a sales department must transform its character to that of a Sogo-shosha in order to stay in operation when its main business becomes unstable.

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