Attractive to All Stakeholders
EIZO KOBAYASHI
President and CEO
TOCHU Corporation
ITOCHU Corporation is leveraging its global network as it aims to become a global enterprise that is attractive to all its stakeholders.
President and CEO Eizo Kobayashi has staked his reputation on achieving this goal.
“The message I try to convey is—our company is attempting to be a real global enterprise,” he says.
ITOCHU has grown from a simple linen retailer established by 15-year-old Chubei Ito in 1858 to Japan’s leading general trading company, and is now a diverse global conglomerate with over 150 offices in 85 countries.
The basic management philosophy of ITOCHU’s founder is known as sampo yoshi—business designed to benefit the seller, the buyer and society—and it remains at the core of company values.
But ITOCHU has outgrown its role as the middleman in domestic and international deals, and is now involved at each stage of the product life cycle, from raw materials to consumer goods and services as it creates value chains to boost shareholder value.
The food industry is one example of how ITOCHU has expanded the scope of its business activities.
ITOCHU is in the process of developing a huge operation in the U.S., buying soybeans, corn and wheat, which are stored in huge silos or elevators before being exported to Japan. The corn is processed into feed by domestic feed makers and fed to chickens, with the resultant eggs and meat channeled through retailers to consumers.
ITOCHU runs its midstream operations via a well-organized network involving food wholesalers, such as Nippon Access or ITOCHU Shokuhin, and services the downstream operations through its convenience store network, FamilyMart, or Yoshinoya—the beef-bowl food chain.
The expansion has clearly worked.
“We need people with the capacity to
acknowledge, to understand, and to respect
differences in culture, race, gender and age.”
“When we acted as a pure middleman, the Gross Business Profit Ratio of our company was below 2% against sales,” Kobayashi says. “That profit has improved significantly and is now around 8% or 9%.”
Now ITOCHU faces the most serious test in its history—how to overcome shrinking markets in Japan. The lowest birth rate among the industrialized nations could see the Japanese population fall from less than 130 million today to just 94 million by 2050.
“This is one of the most critical challenges we need to overcome,” Kobayashi says. “Historically, no country has been able to pursue growth under a falling population.”
Fortunately, the global population is set to rise from nearly 7 billion at present to about 9 billion by 2050, and for Kobayashi the message is clear.
“Internationally our target lies in emerging markets,” he says.
ITOCHU has great expectations for Brazil, Russia, India and China, along with Indonesia.
Globalization is a two-way street, and under Kobayashi’s leadership ITOCHU has altered its HR policies to promote diversity.
“We sent a clear message on this point,” Kobayashi says. “We need people with the capacity to acknowledge, to understand, and to respect differences in culture, race, gender and age.”
Questioned about whether this means there may one day be a non-Japanese CEO at the helm of ITOCHU, Kobayashi enthusiastically replies, “That’s right! That’s what we are trying to do!”
“We should have non-Japanese and female executive directors,” Kobayashi says. “In 2007, I said I wanted to see this emerge in a 10-year time frame.”
It is surely stressful running one of the biggest companies on the planet, and Kobayashi relaxes by exchanging ideas while drinking with his staff.
“Basically, I am an optimistic person, so I can relax whenever I have the time,” he says.
and the U.S. Promoted to President and CEO in 2004, Kobayashi is known for his dedication to work and his respect for interpersonal relationships.