The Mitsubishi Corporation capital and business alliance, and the transfer of 1.62 million treasury shares (2007)

Five years of borrowing a trading house's functions

Read this alliance as "a general trading company takes a stake" and you misjudge its size. What was handed over was 1.62 million treasury shares worth $24.6M (¥3bn) — 3.41%, not a holding that reaches into management. What United Arrows wanted was not capital but a means of assembling, on schedule, goods in volumes and at prices that the manners of a high-sensibility city store could not reach. The figures for the year to March 2008 — gross margin down 3.2 points and inventories swollen — suggest how pressing that was.

Yet the dissolution after five years also shows that this form was not a mechanism it needed for long. The company explained that the arrangement had served its purpose, but it appears to have judged that materials procurement and production could continue without a shareholding relationship — and indeed Mitsubishi Corporation Fashion remained a major supplier afterwards. Offer up shares in order to borrow another firm's functions, and return them once the capability has been copied inward: these five years can be read as a transaction with a set term.