In the post-war era, integrated trading companies led Japan's economic growth and played an important role as a bridge between Japan and the rest of the world. Today, people, goods, and money move freely across national borders as economies and societies undergo dramatic change. What roles are required of integrated trading companies? This content, in an eight-installment series, attempts to redefine the roles of present and future integrated trading companies, while showcasing the wide range of business activities of Sumitomo Corporation.
Waging the Iran-Iraq War, which lasted 8 years from 1980, the Gulf War, which erupted in 1991, and the Iraq War in 2003, Iraq was one of the most war-torn countries in the world from the end of the last century to the beginning of the current century. In this Middle Eastern country, Sumitomo Corporation has been engaged in the automotive business for nearly half a century. How was it possible for the company to maintain its business for such a long period in this war-ravaged and chaotic country?
Kimio Fukushima, general manager of Automotive Division, No.2 and an executive officer, has been engaged in the automotive business for his entire career. "There are no internal cliques, old-boy networks, or other personal constraints in Sumitomo Corporation. That makes the company a great workplace," Fukushima says, "My belief is that integrated trading companies are companies which can cross over among various areas and continue evolving. In other words, the ability to change is the strength of integrated trading companies."
Kimio Fukushima, general manger of Automotive Division, No.2, Sumitomo Corporation, took up his post in Iraq in 1982. With his newly wedded wife, the employee with four year experience in the company flew to the country in the midst of the war against Iran. Fukushima recalled his life in Iraq by saying, "With our newborn baby, we continually changed locations to stay in order to escape from missile attacks. One day, when I was on my way to the office, I noticed a building I had always passed by had completely disappeared as if it had never existed."
Sumitomo Corporation started exporting Toyota cars to the Iraqi market in 1965. When Fukushima moved, infrastructure development was booming in the country despite its involvement in the war with Iran. At that time, the company's annual automobile exports to Iraq amounted to 70,000 units. Why did Sumitomo Corporation select the Middle East, not the US or Europe?
"Sumitomo Corporation launched trading business in earnest after the end of the Second World War. The company lagged far behind other integrated trading companies, which had already entered the Western markets. Therefore, the company had to cultivate new markets. And Iraq was one of them," explains Fukushima.
In this way, Sumitomo Corporation pioneered introducing Japanese products with excellent functions and quality to Iraq, a market dominated by European firms for geographical reasons, and the company established its position as the No.1 Japanese trading company in the country. Its strong presence in Iraq was at the peak during the three years Fukushima worked in Iraq, from 1982 to 1985. At that time, almost 80 Japanese employees were working there.
Masahiko Taniguchi joined Sumitomo Corporation in 1982. He is the head of the department responsible for the company's automotive business in Asia, Middle East, and Africa. With experience in the automotive business in Saudi Arabia, Libya, Turkey, the Canary Islands, Ukraine, and other countries, Taniguchi says, "Coping with different problems in different countries in the optimal manner and doing business as if there were no difficulties - that is the way a professional trading company person does his job."
The situation was significantly changed when the Gulf War erupted in 1991. In response to Iraq's invasion of its neighboring country Kuwait, the United Nations decide to send multinational troops to attack Iraq. Japan was quick to declare its support for the UN policy.
"'Japanese people betrayed us' - such a sentiment prevailed among Iraqi people. Japanese products were boycotted. We were unable to sell cars for a while," says Masahiko Taniguchi, another member of Automotive Division, No.2.
From 1999 to 2003, he made many long-term trips from Japan to Jordan, from where he drove to Baghdad, the capital of Iraq. "It was impossible to operate our office in Iraq. There were no air routes to Baghdad. I cannot count how many times I had to travel rough roads of 1,300 km one way by car." His mission then was to maintain operations in Iraq in one way or another and regain local confidence and trust in Japanese companies.
"One day, I suddenly received a telex message that told me to visit Baghdad because discussion on automobile transactions would be resumed. I, who was the section chief at that time, and the general manager of the department flew to Baghdad immediately. As a result of a two-week negotiation where we had to handle many unreasonable demands, we were able to win the first contract on Toyota vehicles after the Gulf War. It is hard to express in words how delighted I was. Knowing I was finally able to make sure that the torch received from our predecessors would be able to be passed on to future generations, the general manager and I both felt a warm glow of contentment."
A torch received from predecessors - the expression is often mentioned by Sumitomo Corporation employees who have been engaged in the automotive business in Iraq. They say it is their mission to make sure that the torch will be relayed between different people and different eras without any disruptions, however difficult the situations they find themselves in may be.
Shinsuke Fujimoto leads the automotive business team in Iraq. Since joining Sumitomo Corporation in 1992, he has been engaged in the automotive business in Latin America, Slovenia, and Thailand. "Doing business in a reportedly high-risk market and achieving a great success is one of the greatest things about working in an integrated trading company. In a pub in Thailand, general manager Fukushima wrote his autograph on a chopstick package and gave it to Fujimoto. "I feel the package represents the torch and keep it in a special place."
In the Iraq War of 2003, Saddam Hussein, who had controlled Iraq by dictatorship since 1979, was captured by the U.S. forces, ushering in a new era for the country. The gradual introduction of a free market economy to the former socialist country was increasingly opening the door of business opportunities once again for Japanese companies. Sumitomo Corporation reopened its Baghdad office operated by local staff in 2006. It was about 15 years after the company practically halted the operation of its Baghdad office, although the registration of the office had been maintained even during the war.
Shinsuke Fujimoto, who is currently leading the automotive business in Iraq, started to make long-term business trips to Baghdad from fall 2010. With his experience in importing and selling automobiles in Slovenia, Thailand and other overseas markets, he was appointed to the leadership position. Currently, he is spending half a year in Iraq. "The vehicles we have exported to Iraq are mainly for public transportation and industrial use, including taxies, agricultural pickup trucks, minibuses for medium-range trips, and wheelchair-accessible vehicles. From now on, we anticipate passenger cars for non-commercial purposes will gain momentum and become a mainstream category. At present, we are operating four Toyota after-sale service stations. We are intending to focus further efforts on non-commercial automotive business."
In the automotive business, completing the export and sales of vehicles does not mean crossing the finish line. After-sales services are indispensable to meet maintenance, spare parts, and other vehicle owners' needs. Sumitomo Corporation had offered those services in Iraq until the 1980s. Fujimoto says that the company's next goal is to resume the service in full scale, offer technical expertise to local people, and eventually localize the production and thereby create employment as well as to make Japanese automobiles penetrate more deeply into the local Iraqi market. He also adds, "Iraq is in the process of creating a new country. Through offering products, namely automobiles, we would like to make a contribution to these nation-building efforts. And we want more Iraqi people to learn about and experience the excellent quality of Japanese products. This is our wish."
In Iraq, one of the countries with the world's highest business risks over the turn of the century, what made it possible for Sumitomo Corporation to continue its automotive business?
"Our pride as trading company staff. That pretty much sums it up. Sumitomo Corporation is a late comer in the integrated trading business market but the company has established its position as the leading trading company in Iraq. We cannot lose that position. With our strong passion and desire to continue Iraqi operations somehow and contribute to the country's development, the metaphorical torch had to be passed from generation to generation," Fukushima says.
Meanwhile, Taniguchi considers Iraq's allure as a country was the key enabler. "Iraq is a great country. Cultural standards are very high and there are many warmhearted people. I have made friends with many local people. I would like to keep our friendships for many years to come."
The torch is now in the hands of Fujimoto and his team. Keeping the flame lit, making it bigger and brighter, and passing the torch on to the next generation is their role. "All senior employees who have experience in the automotive business in Iraq passionately told me how exciting and fulfilling working in that country is. Now I can feel that passion inside myself. I believe it is this strong, long-inherited passion which has driven Sumitomo Corporation to continue its business in Iraq."
Someday, the torch carried by many predecessors with such a strong passion will be handed over to the next generation. Until such a day comes, Fujimoto and his team will continue to make their relentless efforts.
(Honorific titles are omitted)