Company history

In the middle Meiji period something close to nine-tenths of Japan’s foreign trade passed through the foreign trading houses of Yokohama and Kobe, and the margin on it stayed in foreign hands. Kanematsu Fusajiro saw that if a Japanese merchant bought abroad directly, that margin came home. He sailed to Sydney himself in 1887 to look at the trade at close range, and in 1889, aged forty-four, opened F. Kanematsu & Co. in Kobe to ship Australian wool, tallow and hides to Japan without an intermediary. Only two or three Japanese houses — Morimura and Mitsui Bussan among them — were buying overseas on their own account at the time; a branch followed in Sydney in 1890, so that from the very first years the company ran a home office and an overseas post as a matter of course.

Within a decade Kanematsu handled forty to fifty per cent of Japan’s wool imports, riding the explosive growth of the spinning industry. The founder died in 1913 at sixty-eight, but the Australian axis held: the firm incorporated in 1918 with capital of ¥2 million, expanded through the First World War boom and absorbed the losses of the reaction that followed, and in April 1922 turned its Sydney branch into a locally incorporated company, F. Kanematsu (Australia) Ltd. — a step into the southern hemisphere that few prewar Japanese traders took.

Wartime trade controls squeezed private traders, and in February 1943 the company took the name Kanematsu Co., Ltd. The postwar dissolution of the zaibatsu fell hardest on the trading sector — Mitsui Bussan and Mitsubishi Shoji were broken into more than two hundred pieces in July 1947 — but Kanematsu, a textile house with no zaibatsu parent, was left intact and instead lost its overseas network to the occupation’s trade controls. Rebuilding it came first. In April 1951, without waiting for the San Francisco peace treaty to be signed, Kanematsu set up Kanematsu New York Inc., the first US subsidiary of any postwar Japanese trading house; head-office functions moved from Kobe to Osaka in 1952, a West German company followed in 1957, and a 1961 listing on the Osaka Stock Exchange (first section from 1963) finally opened the capital market to it.

By the 1960s the five Kansai cotton traders — Itochu, Marubeni, Toyo Menka, Nichimen and Gosho — were racing one another to become general trading houses. Synthetic fibres were pushing natural ones aside, and the industry agreed that a single-commodity textile book was a risk rather than a franchise. Gosho, founded in Osaka in 1891 by Kitagawa Yohei, had chased diversification after the war without earning from it and was visibly failing by the mid-1960s. The Bank of Tokyo, main bank to both, brokered a merger at a ratio of 1:5 with Kanematsu as the surviving company.

In April 1967 the two became Kanematsu-Gosho Ltd., capitalised at $7.8M (¥3bn). What Kanematsu took in was Gosho’s machinery, steel, food and chemicals — the end of a one-commodity structure. The build-out that followed was rapid: a machine-tool distributor in 1967 (today Kanematsu KGK), Kanematsu Electronics in 1968, a steel trading arm in 1970 alongside the promotion of the Tokyo office to head office, a computer systems company in 1974 (today Kanematsu Communications), and a Hong Kong company in 1975. Listings on the Tokyo and Nagoya first sections in 1973 ratified the transformation from the market’s side.

Through the two oil shocks and then the strong yen of the later 1980s, the non-textile trio of machinery, electronics and energy carried the top line. In December 1987 Kanematsu Electronics listed on the Tokyo Stock Exchange’s second section — a parent-and-subsidiary listing that raised money for the IT push and would stand for the next thirty-six years. In January 1990 the company dropped the interim name and became Kanematsu Corporation again. The general trading house was complete; its balance sheet, inherited from a textile trader, was not built for what came next.

Like every trading house, Kanematsu had spent the 1986–90 bubble adding property, equities and overseas project positions, expecting capital gains larger than any intermediation margin the trade itself could earn; the 1991 move of the Tokyo head office to Shibaura was of a piece with it. When land prices turned in early 1991 and equities fell through 1992, those positions went underwater. The difference between Kanematsu and Mitsui, Mitsubishi or Itochu was not the mistake but the cushion: a textile house’s thin equity left it no practical option to carry the losses forward another year.

The write-downs ground on for a decade, with textiles, paper and pulp, real estate and assorted peripheral businesses all losing money. After a dividend of ¥1.5 a share for the year to March 1998 the company paid nothing for fifteen years. In the year to March 1999 it booked a net loss of $445.4M (¥51bn) and fell into negative net worth — for the first time in a history reaching back before the war, Kanematsu’s survival was in question. In June 1999 Kuraji Tadashi, who had come from the Bank of Tokyo after serving as its senior managing director, took the presidency to run both sides of the problem: the negotiation with the banks and the surgery inside the company.

The Structural Reform Plan announced in May 1999 — the company called it a “second founding” — paired a capital reduction of $296M (¥34bn) with debt forgiveness of roughly $1.3B (¥150bn) from the bank syndicate, one of the largest such rescues of the late 1990s and a sign that the lenders had chosen rebuilding over liquidation. What Kanematsu gave in return was more than half its trading portfolio: the founding textile business was spun off, paper and pulp, real estate and the peripheral businesses were exited, headcount fell to about a third, and the company took down its own general trading house sign to become a specialist trader in food, IT and steel. It was neither Ataka’s collapse nor the merger of equals that produced Nissho Iwai and Nichimen’s successor — a third road, and one no other member of the “ten great trading houses” chose.

Under Miwa Noriyasu, president from 2004, the task was to find growth inside what was left. A majority stake in the mid-sized trader Shin-Toa Koeki in December 2005 was the first acquisition of the specialist era; livestock and marine sourcing widened, US specialty steel and oil-country tubular goods grew, and project work ran from Vietnamese shipyards to Indonesian geothermal plants. The five reporting segments settled into IT, food, steel and plant, life science and energy, and textiles — with IT alone at about thirty per cent of consolidated sales. The 2008 Lehman shock then hit a company with little financial slack, and the temptation to shrink again was real; management held the specialist line instead.

Shimojima Masayuki, president from April 2010, named the discipline: management within the company’s means, no investment beyond its size. Where he did move early was electric vehicles — a market not yet closed off by the incumbent carmakers, where a trader could work across industry lines — selling a converted i-MiEV to corporate fleets. In September 2013 Kanematsu declared its first dividend in fifteen years, ¥3 a share for the year to March 2014, the symbolic end of the reform era. The rebuilt business then compounded: revenue of ¥1,114.5 billion and net income attributable to owners of ¥11.8 billion in the year to March 2014. A 2015 change in IFRS presentation cut reported revenue by forty per cent, to ¥668.4 billion, by recognising agency trades net rather than gross — a change of accounting optics, not of earning power.

Tanigawa Kaoru took over in June 2017 and in 2018 set out “future 135”, a six-year vision to the company’s 135th anniversary that concentrated resources on four strong fields — electronics and devices, food, steel and plant, and vehicles and aerospace — against a ¥25 billion net income target. Net income ran ¥16.6 billion and ¥14.4 billion in the years to March 2019 and 2020, and ¥18.6 billion on revenue of ¥911.4 billion in the year to March 2023. Then Miyabe Yoshiya, president from October 2023, closed the loop opened in 1987: tender offers took Kanematsu Electronics ($532.3M (¥75bn)) and Kanematsu Sustech private, ending thirty-six years of parent-subsidiary listing. The logic was cross-selling — some 20,000 trading customers on one side, an IT subsidiary’s 4,000 on the other, and almost no business flowing between them. The 2024 medium-term plan “integration 1.0” put $396M (¥60bn) of growth investment behind it, about two-thirds into digital, and redefined the company as a solutions provider rather than a mover of goods. One hundred and thirty-five years after the first direct shipment from Sydney, the middleman being cut out is now its own.