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Thursday, September 20, 2012

Ohmi Shonin - Originators Of Japan's Financial and Manufacturing Industry

I'm not one for having a great interest in the financial comings and goings of businesses not my own—unless there's a bit of interesting history attached to it.

I recently posted a story on Itochu Corp. - HERE, and learned about a caste of people called the Ohmi Shonin - the traveling salesmen of Japanese history.

Don't let that statement fool you... I meant history, and the traveling part does not mean door-to-door salesman. I have been a door-to-door salesman and did well enough at it, but I hated rejection and could never understand why I couldn't close a sale... it would eat me up.

But this blog isn't about that. The History:

Back in 1585, Toyotomi Hidetsugu (surname first), the nephew and adopted heir to Toyotomi Hideyoshi, the samurai warrior who unified Japan in 1590 after 100+ years of civil war, built a castle called Hachiman Castle on Mount Hachiman. He was named the feudal lord of the area located in Shiga-ken.

Anytime a castle springs up, a castle town does, too... this one was named Omihachiman. The young Toyotomi Hidetsugu helped set up the town, inviting merchants and artisans et al.  

But, when the Toyotomi family met with disaster, and Hachiman Castle was abandoned with the fall of Toyotomi Hidetsugu, the city did not fail.

Since these merchants no longer enjoyed the prestige of being castle town merchants, they went back to their roots selling local products to other towns, carrying their wares on a pole (see photo above). One such popular local product was mosquito netting.

After expanding their sales area, they created a new sales system when they established branch shops in other towns, who kept in touch with the Hachiman headquarters... it sounds a whole lot like the daimyo keeping touch with the shogun... or pretty much like any business nowadays making sure the had office knows what's going on. This may indeed have been going on in other parts of the world - I'm thinking Europe, China, etc— but this was a first for Japan. 

As well, these Ohmi Shonin merchants created a concept - which they practiced - called "Shokoku Sanbutsu Mawashi", which translates roughly to: "the circulation of goods among the regions."

In this novel (again, novel to Japan) trading device, they shipped their local products like the mosquito nets, tatami mats, sake, rice and more to other towns and villages by land and by water.

They would purchase goods from these areas, and then re-sell them to other parts of the country. They literally were the traveling salesmen.

This was how industrial development got a big kick in the ass in Japan. Merchants wanting to make more products or sell more wares to the Ohmi Shonin who wanted to sell it along other established trading partners.

It all sounds a little late in the game for the Japanese, as I'm pretty sure the Phoenicians had been doing stuff like this 2,000 years earlier... and the Native Americans, Aztec, Mayans, Incans, heck... I think I've even heard of something called the Silk Road across Turkey to China.

This is what happens when you shut yourself off from the rest of civilization. Next thing you know, you haven't heard that WWII is over until 30 years later.    

Anyhow... my sarcasm aside, at least the Ohmi Shonin merchants were progressive in their thinking, which was how they enlarged their sales area by sailing into places like Vietnam and into the big island of Hokkaido.

Independent free thinkers—as much as Japanese culture would allow, of course, the Ohmi Shonin's trade practices allowed the rest of Japan and other countries to experience products they might never have seen. Regional products went national and even international.

But it simply wasn't just carting everything from one region to the next... the Ohmi Shonin learned what sold and where it sold. They got to know the purchasing power of the customer. Supply and demand. Right across Japan.

Again, headquartered in Ohmihachiman in Shiga-ken, the Ohmi Shonin set up branch shops in Edo (known now as Tokyo), Osaka and Kyoto—three of the most important cities in Japan at that time.  

These merchants... they helped create Japan's financial and manufacturing sectors.

And, if you are wondering if any of these merchants still exist - they do I've provided extra data for a few of them, including net sales (in brackets):
Department Stores: Seibu; Daimaru (¥941.4 billion ~Cdn/US$12-billion) est. 1717; Takashiyama (¥410-billion ~Cdn/US $5-billion) est. 1829.
Trading Companies: Itochu Corp. (total equity: ¥1.7-trillion ~Cdn/US $21.7-billion) est. 1858; Marubeni Corp.; Tomen.
Textile Industry: Toyobo Co., Ltd. (¥349.5-billion ~Cdn/US $4.5-billion) est. 1882; Nisshinbo Holdings Inc. (¥379.3-billion ~Cdn/US $4.8-billion) est. 1907
Other Industries: Nihon Seimei; Yanmar Diesel; Seibu Group.

And what is cool about all of those companies listed, is that they are into a whole lot more industries than the ones I listed.

Cheers
Andrew Joseph

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