Hanwa - Company History

In 1946 Kita Jiro left the trading house Ataka & Co. and set up Hanwa Shokai in Osaka with his younger brother Kita Shigeru; the following year it was incorporated as Hanwa Kogyo with eight employees. The 興業 in the name — “to raise up an enterprise” — was chosen for the chaos of the immediate postwar years and for an eventual move into production. The timing was the opportunity: Mitsui Bussan and Mitsubishi Corporation were being broken up, wartime controls on steel were coming off against surging demand, and new traders sprang up everywhere. But where most of the trading houses that survived descended from a prewar zaibatsu, a textile merchant or a steel mill, Hanwa started on a third path, belonging to none of them.

The functions came first. A Tokyo office opened in December 1948 (today the Tokyo head office) and Nagoya in November 1952, putting the firm directly alongside the buyers of the Kanto and Chubu regions. It joined the Kozai Club in 1949 and widened its steel range, supplying light rail to dam construction sites. In 1950 it took the Umeda warehouse in Osaka and combined two things that had rarely been combined — bulk purchasing from the mills and just-in-time delivery of small lots to users. That stock-and-deliver machine, built in Kansai ahead of rivals, is the ancestor of every strategy the company has run since. Trade with the People’s Republic of China began in 1953.

In 1957 Kita Jiro put $27,778 (¥10m) of the company’s $277,778 (¥100m) of stated capital into the Hanwa Ikuei-kai foundation and served as its first chairman, giving outright grants — not loans — to students who would otherwise have abandoned their studies for want of money. A ten-year-old firm endowing education outside its own walls looks like philanthropy; it was also arithmetic. An independent with no group to route business to it had only its price-competitiveness and its salespeople, so the making of people had to be built into the business as a standing institution rather than left to chance. “A trading house is its people” was Kita Jiro’s phrase, and it survived him.

Hanwa listed on the second section of the Osaka Stock Exchange in August 1963 and on the second section of the Tokyo Stock Exchange in September 1970, moving up to the first sections of both in 1971. Steel stayed the spine, but from the mid-1960s the company added non-ferrous metals, building materials, foodstuffs, petroleum, chemicals, timber, cement and machinery. The industry offered two standard shapes — the sogo shosha that carried everything and the specialist that carried one thing deeply — and Hanwa, with neither a zaibatsu nor a mill to define it, went after both at once: the breadth of the first and the shop-floor depth of the second. Kita Shuji would later describe the result as “the trading house that scratches where it itches.”

The overseas network went out on the same logic, through the growth years and the export boom: HANWA AMERICAN CORP. in 1968, Hanwa Hong Kong in 1971, HANWA SINGAPORE in 1972, a London office in 1975, HANWA THAILAND in 1976. None of it rested on a parent group’s introductions; each office had to find its own counterparties, which is slower and, once done, harder for anyone to take away.

Kita Jiro ran the company he had founded for thirty-six years, from 1947 to 1983. What he handed on was not scale — Hanwa was still a middling trader — but a particular apparatus: warehouses close to customers, a range wide enough to answer almost any order, and an organisation trained to believe that its survival depended on being useful rather than on being connected.

In 1983 Kita Shigeru succeeded his elder brother as second president, and the Tokyo branch was raised to a second head office, giving Osaka and Tokyo equal standing as the centre of gravity of steel distribution shifted east. Then the balance sheet changed character. Through the bubble years Hanwa became known as a representative zaiteku company — a trader famous for financial engineering. By 1992 it had issued roughly $3.2B (¥400bn) of Swiss-franc convertible bonds and warrant bonds and placed most of the proceeds in specified money trusts, fund trusts and foreign bonds; from 1988 it also issued commercial paper in volume to fund large time deposits. Investment assets peaked above ¥3 trillion, and stated capital swelled from $64.1M (¥15bn) in 1985 to $976.5M (¥141bn) in 1990, roughly ninefold. Earnings now came in two streams: the gross margin on steel, and the return on the portfolio.

In March 1990 the share price reached an all-time high of $31 (¥4,460). The market was rewarding a trading house for being good at finance. When the bubble broke and the valuation losses surfaced, the same market re-priced it just as fast: $3 (¥387) by 1993. Kita Shigeru resigned in June 1993 to take responsibility, and in January 1994 the newspapers reported some $1.3B (¥130bn) of special losses. From 1994 Hanwa paid no dividend for eight consecutive years, and its independence — the thing it had defended since 1947 — was openly questioned by investors. Having no group meant having no one to route business to you; it also meant having no one to tell you to stop.

In February 1994 the presidency went to Kita Shuji, the founder’s eldest son — and, until the year before, a senior official of the Ministry of International Trade and Industry, with twenty-seven years in government behind him. The third generation of the family inherited his uncle’s losses. The rebuilding programme had one axis: wind the portfolio down between 1994 and 2002 and put the resources back into steel distribution. That meant unglamorous work — inventory turns, gross-margin discipline, and thousands of small orders accumulated one at a time from the mid-size and small manufacturers the delivery network had been built to serve. Hanwa went eight years without a dividend while it did so, and restored the dividend in 2002.

The other half of the repair was structural rather than financial: letters written directly to the president so that the real state of the business could not be filtered on its way up, outside directors brought onto the board, and in 1997 an unprecedented cancellation of the company’s own shares funded out of stated capital. The point of each was the same — to stop a company whose fate had twice turned on one man’s judgement from depending on one man’s judgement.

Freed of the portfolio, Hanwa began adding capability around the core instead of beside it: Eco Steel in 2000 for recycled steel (now Hanwa Eco Steel), Hanwa Steel Service in 2002 to bring processing in-house, Sogo Tekkin Kogyo in 2007 (now Tohan Steel) for rebar fabrication, Showa Metal made a subsidiary in 2010 and Toyo Energy the same year. A Johannesburg branch opened in 2009 to work on platinum-group metals and chrome ore, while the overseas network kept extending — Shanghai and Taiwan in the 1990s, Canada, Guangzhou and processing plants in Thailand, Dongguan and Indonesia in the 2000s. Kita Shuji moved up to chairman in June 2011, ending three generations of Kita family presidents.

In April 2011 Furukawa Hironari became the first president promoted from the ranks. His diagnosis was blunt: Japanese steel had stopped growing and turned to contraction, China outweighed Japan in volume for commodity grades, and an independent could be dropped overnight — “if a customer says it doesn’t need Hanwa, it can switch immediately.” His answer was not a new business but a recombination of old ones: so-ko-ka — 即納 immediate delivery, 小口 small lots, 加工 processing — sold together to mid-size and small manufacturers, using the delivery warehouses inherited from the 1950s and the processing subsidiaries built after 1994.

Over roughly a decade that produced more than 6,000 new customers and a group of 88 subsidiaries. The mechanism was “M&A+A” — acquisition plus alliance: buy the local steel distributor or fabricator whose owner has no successor, and where the shares cannot be bought, take a minority stake and tie the relationship with capital anyway. Daiko Steel (2010), Hokuriku Column (2013), Daisan and Nikko Kinzoku (2015), Japan Life (2017), Tekken Kogyo (2020), Tanaka Steel Sales (2022), Thinks (2024) — the practice of absorbing other firms’ distribution functions became a repeatable method rather than a series of deals. Alongside it ran “a second Hanwa in Southeast Asia”: HANWA VIETNAM (2011), HANWA MEXICANA (2012), a Malaysian steel subsidiary (2018), HANWA ITALIA (2022), HANWA UK (2024), plus capital ties with local distributors across ASEAN. Overseas sales-subsidiary revenue grew from $956.2M (¥101bn) in FY14 to $2.6B (¥400bn) in FY24, roughly fourfold.

Furukawa handed over in April 2022, the company’s seventy-fifth year, to Nakagawa Yoichi, who had joined in 1986. His framing — “three-storey management” on an ESG and SDG foundation — put strengthening the base on the first floor, developing business strategy on the second and monetising the investments on the third: the acknowledgement that a decade of expansion now had to be converted into earnings, with recurring profit targets of $228.4M (¥30bn) for FY22 and ¥50 billion plus an A credit rating by FY30. The new investment pillar is battery materials from mine to product — the QMB nickel-cobalt project in Indonesia (150,000 t/year of nickel sulphate from 2022), graphite in Australia, lithium in Mexico — extending the resource participations begun with lithium in 2017 and South African platinum-group metals in 2018. The mix has shifted with it: in FY24 energy and living materials turned $2.5B (¥384bn) of revenue into $68.6M (¥10bn) of segment profit, second only to steel’s $218.5M (¥33bn), with recycled metals, primary metals and foods behind. Group revenue peaked at $20.3B (¥2.67tn) in FY22 and stood at $16.9B (¥2.55tn) in FY24, and headcount roughly doubled from under 3,000 in FY11 to 5,688. In 2026 the mid-term plan “Go Beyond” set out to lift the overseas revenue ratio to 50% and bought the US steel-structure maker ASG with the Development Bank of Japan for about $354.1M (¥56bn) — the largest acquisition in the company’s history, and the next test of whether an independent can keep buying its own indispensability.