International Trading Companies: Building on the Japanese Model
Robert W. Dziubla, International Trading Companies: Building on the Japanese Model
International Trading Companies: Building on the Japanese Model
Robert W. Dziubla 0
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International Trading Companies:
Building On The Japanese Model
Robert W. Dziubla*
Passageofthe Export TradingCompanyAct of1982providesnew
opportunitiesfor American business to organize and operategeneraltrading
companies. Afterpresentinga thoroughhistory anddescriptionofthe
Japanese sogoshosha, Mr. Dziubla gives several compellingreasonsfor
Americans to establish export tradingcompanies. He also examines the changes
in UnitedStatesbanking andantitrustlaws that haveresultedfrompassage
ofthe act, and offers suggestionsfor draftingguidelines,rules, and
regulationsfor the Export Trading CompanyAct.
For several years, American legislators and businessmen have
warned that if America is to balance its international trade-and in
particular offset the cost of importing billions of dollars worth of
oilshe must take concrete steps to increase her exporting capabilities., On
October 8, 1982, the United States took just such a step when President
Reagan signed into law the Export Trading Company Act of 1982,2
which provides for the development of international general trading
companies similar to the ones used so successfully by the Japanese.
The Japanese success in exporting goods is primarily a result of the
operation of a specific type of trading company, the sogoshosha, or
gen* Awarded the Japan-U.S. Friendship Commission/American Bar Foundation Fellowship in
in scattered sections of 12 and 15 U.S.C.).
eral trading companies. While there are thousands of Japanese trading
companies, the vast majority of these are small- to medium-sized firms
specializing in a particular product or industry (senmonshosha)3. Only
nine out of these thousands, however, qualify as sogoshosha.4
The ability of the sogoshoshato export goods in enormous
quantities and thus help Japan maintain a trade surplus is undeniable. The
Japanese overall trade surplus is expected to climb from $16 billion for
1981 to $20 billion in 1982, and its trade surplus with the United States
is expected to reach $15 or $16 billion, up from $9.91 billion.5
Former Senator Adlai Stevenson III, the chairman of the Senate
Subcommittee on International Finance and formerly the primary
proponent of the Export Trading Company Act, noted that in June 1980
the United States had a trade deficit of $2.28 billion, the fiftieth
consecutive monthly trade deficit, and that the "success of trading companies
in exporting United States products has already been demonstrated by
foreign trading companies. Mitsui Trading Company is America's
sixth largest exporter." 6
While this statistic is both impressive and disturbing, it
nevertheless fails to convey the true enormity and marketing ability of the
sogoshosha. One revealing statistic is that in 1979 these nine
companies accounted for 54.5% of Japan's imports and 48.2% of her exports.'
Further figures showing the size of the sogoshosha, the scope of their
activities, and their importance to manufacturers will be considered
below.
Two important questions face American businessmen and their
counsel as they consider the establishment of export trading companies.
First, why should American business go to the expense and trouble of
trying to establish general trading companies that could compete with
companies such as Mitsui or Mitsubishi when these same companies
are doing so well at exporting American products, for a commission of
only 2-3%? In other words, would it not 'be cheaper for American
companies to use the Japanese sogoshosha and pay their small commission,
or alternatively enter into joint ventures with them, rather than spend
millions of dollars to set up their own general trading company?
Second, if, as this article will demonstrate, there are compelling reasons
3 Y. TSURUMI & R. TSURUMI, SoGOSHOSHA: ENGINES OF EXPORT-BASED GROWTH 1 (1980)
[hereinafter cited as SOGOSHOSHA]; Cole, supra note 1, at 281.
4 SOGOSHOSHA,supra note 3, at 1; Cole, supra note 1, at 281 n.22.
5 Asian Wall St. J. Weekly, Nov. 23, 1981, at 2, col. 1.
6 126 CONG. REC. S1 1587 (daily ed. Aug. 26, 1980) (Statement of Senator Stevenson).
7 Kanabayashi, Japan'sBig andEvolving TradingFirms: Can the U.S. Use Something Like
7hem, Wall St. J., Dec. 17, 1980, at 58, col. 2.
4:422(1982)
why America should establish general trading companies, then how
can American business develop general trading companies?
Six reasons compel American business to develop its own general
trading companies rather than to rely on the existing Japanese export
companies. First, although it will require enormous cap (...truncated)