Rare-Earths Crisis and the Business Strategies of Sogo Shosha

• Tanaka Akira

  Kyoto University

• Huang Xiaochun

  Hirosaki University

• Kojo Shion

  The International University of Kagoshima

Bibliographic Information

Other Title

• レアアースショックと総合商社

Abstract

This article discusses the 2010-2013 supply restrictions on rare earths called the “rare-earths crisis,” and examines the strategies of sogo shosha, or Japanese general trading companies. In particular, we focus on three companies—Sojitz, Mitsubishi Corporation, and Toyota Tsusho—as study cases.<br>China has dominated the world’s rare-earths supply, accounting for more than 90% of global production since the early twenty-first century. The Chinese government began restricting exports of rare earths by the late 2000s, introducing an export surcharge and export quota in 2006. Furthermore, following the 2010 Senkaku incident, it halted exports of. This caused a severe supply shock and a 10-times rise in international prices. In response, the Japanese government planned urgent countermeasures via such means as innovation for the development of substitutes, reduction in the use of rare earths, recycling from used products, and diversification of sources via development of alternative mines. However, no measure other than source diversification was likely to yield immediate results.<br>Sogo shosha historically took a significant role in investing in overseas natural resources and importing the same to Japan, and have redefined natural resources as one of their core businesses based on the returns on risky assets. Several sogo shosha reacted to this crisis. However, the rate earth business is small as compared to other major resources such as iron ore, coal, and oil and gas, and accordingly, sogo shosha merged their rare-earths and rare-metals field units, and instead divided their operations into two units, one for commodity trading and another for customer-oriented activities, particularly for long-term procurement for the Japanese automobile industry. Sojitz committed to a huge production project for an Australian supplier with financial assistance from the Japanese government, while Mitsubishi Corporation was not willing to invest in green-field rare-earths mines. Toyota Tsusho moved to secure alternative sources for the Toyota Group.

Journal

• Annals of the Society for Industrial Studies, Japan

  Annals of the Society for Industrial Studies, Japan 2016 (31), 27-39, 2016

  The Society for Industrial Studies, Japan

Details

• CRID: 1390282680299697024
• NII Article ID: 130005530374
• DOI: 10.11444/sisj.2016.27
• ISSN: 18841015
• ISSN: 09187162
• Text Lang: ja
• Data Source:
  • JaLC
  • CiNii Articles
  • KAKEN
• Abstract License Flag: Disallowed