The Sogo ShoshaThere are thousands of trading companies in Japan today, but only a few hundred are engaged in foreign trade. Amongst them are the sogo shosha, which are Japanese general trading companies. In 1993, there are only 16 sogo shosha in Japan (Shao and Herbig, 1993, p.37). These sogo shosha, whether compares with Japanese or non-Japanese trading companies, are 'unique in terms of the scale of transactions, the almost infinite number of products they handle, the global spread of their business, the multiple types of their trade, and, equally important, in terms of the services they provide and the enormous resources they command for conducting and expanding their business' (You ...view middle of the document...
2). Various types of information ranging from size of potential market to the latest equipment available in the market can be obtained from the sogo shosha. This is especially useful for small firms whose information and research and development capabilities are inadequate for collecting detailed information on a global scale.The sogo shosha always gives priority to their keiretsu before others in terms of their dealings, 'intimate stock, along with financial and business ties, give an unfair advantage to the keiretsu and assures them access at preferred rates to sources of major funds...Group manufacturing firms provide them with assurance id there are no captive customers for raw materials, equipment and technology and are stable sources of manufactured goods and other supplies for sale. Group firms provide ready and reliable partners for joint ventures. Mutual stock holdings promote group solidarity and business stability and prevent inroads by outside elements, especially foreign speculators, which might upset group and government relations or disrupt Japanese management system' (Shao and Herbig, 1993, p.42).The Sogo Shosha's role in the export marketBefore the World War II, the sogo shoshas supplied their customers with as many services as they could from financial services to paperwork in order to facilitate and expand their business. Today, they play an important role in Japan's export market by providing large-scale organization and coordination services to their clients which are the companies that exist within the keiretsu. Amongst the services offered are such as:-Financial ServicesThe sogo shosha provide 'extension of credit, loans, loan guarantees and venture capital to their clients...they borrow heavily from their own main banks and from other banks and make small loans to numerous clients thus also act as a risk buffer by absorbing the financial risks for the clients' (Young, 1979, p.58).-Information servicesThe sogo shosha supply their clients with up-to-date information about thousands of product markets from all over the world. They 'spot business trends, market gaps and investment opportunities' (Herbig, 1993, p.3) and channel these information to their clients.-Risk reduction servicesThe sogo shosha serve as 'financial intermediaries between large commercial banks and thousands of small clients and also as risk buffers for commercial banks...commercial banks avoid the high costs associated with making small loans by using the sogo shosha as the intermediaries...they also absorb the risk from foreign exchange fluctuations by hedging in the futures market signing contracts to buy and sell at certain exchange rates at given future dates to foreign exchange banks at predetermined amounts of dollars' (Young, 1979, p. 58). They also 'offer foreign exchange management, letters of credit and insurance' (Herbig, 1993, p.3).-Organization and coordination servicesSogo shoshas 'take on complex projects and pool capital to share ri...
