Adaptable Octopuses

The Japanese, in characteristically understated fashion, call them trading houses, but that comes nowhere near summing up the role of a unique kind of company in the country's spectacular economic rise. Because most Japanese manufacturers concentrate solely on production, they rely on trading houses to buy abroad the raw materials that they need and to sell their finished products both at home and abroad. Combining silken persuasiveness with samurai dedication, the trading houses also serve as market researchers, financiers and worldwide economic intelligence agents. In short, they are archetypical middlemen, helping Japanese business, banks and government to capitalize on economic opportunities.

Now, though, such houses as Mitsubishi, Mitsui and Marubeni have lost some of their heroic luster under a rain of charges that they have fueled Japanese inflation by engaging in widespread land and commodity speculation. A government study released this month accuses the six biggest trading houses of spending more than $2.5 billion in the past 18 months to buy up and hoard scarce supplies of land and such commodities as rice, wool, silk and soybeans. Prices of all these things have risen, and though the trading houses deny the charges, consumer tempers have gone up, too. Recently, carpenters who were laid off because of a lack of lumber demonstrated in Tokyo, brandishing placards that read: DOWN WITH SPECULATING TRADERS.

Even more fundamentally, the trading houses are catching the first glimmerings of a new business era to which they will have to adjust. In March, Japan posted a record balance of payments deficit--yes, deficit--of $1.1 billion, caused by a hefty rise in Japanese imports and a huge outflow of long-term investment capital. Though the payment figures have been bouncing around too erratically from month to month to establish any definitive trend yet, they may presage--to the vast relief of the U.S.--the dwindling if not the end of the gigantic Japanese surpluses in commercial dealings with the world.

Yet the trading houses are far too central to the Japanese economy to diminish in importance any time soon. Last year the ten largest trading houses--led by branches of the Mitsubishi and Mitsui industrial complexes--brought in 62% of the foreign goods purchased by Japan and sold half the nation's exports. Their total sales came to an astounding $76 billion, twice the size of the Japanese national budget. The companies earn their profits on massive turnover despite sliver-thin margins (1.8% last year).

The trading houses also provide their clients with a wide range of services, including storing, transporting and insuring goods. They hunt up bank loans when needed. A small army of trading-house representatives roams the world sending back a steady stream of information on foreign politics, weather, and anything else that might affect an export decision. The trading houses also organize huge consortiums to tap natural resources anywhere. Mitsui, for instance, is a major partner in a group that is developing copper deposits in the African nation of Zaire.

The trading houses are already proving themselves adaptable octopuses. For example, they are scouting out investment as well as export opportunities overseas for their clients. In addition, they are cozying up to Japan's trading partners: Mitsubishi now sells American urea fertilizer in southeast Asia, and Mitsui sells U.S. soybeans in Germany and German chemicals in Venezuela. Says Mitsuo Uemura, executive vice president of Sumitomo Shoji Kaisha, Ltd.: "We go wherever the business is."

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