Mitsubishi, a Japanese enterprise group (zaibatsu), began in the years immediately preceding the Meiji Restoration of 1868. Its founder, Iwasaki YatarM (1834–1885), was an official in the enterprise of the Tosa domain, which he basically transformed into his own private firm by incurring the domain's debt, which was later paid off by the central government. He then converted this enterprise into Mitsubishi, focusing initially on shipping, for which he was granted government subsidies starting in 1875. By the early 1880s Mitsubishi had strategically diversified, concentrating increasingly on coal mining. In the process, the firm's shipping services deteriorated, prompting the rise of a competing firm, which in 1885 merged with Mitsubishi's shipping assets to form the NYK (Nippon Yusen Kaisha). For Mitsubishi, these moves represented a shift away from government connections and a partial withdrawal from shipping in favor of a broader pattern of diversification into mining, real estate, trading, banking, and especially shipbuilding. For example, sales of NYK shares enabled Mitsubishi to purchase land adjacent to the imperial palace known as Marunouchi, which it converted into a business district modeled on the City of London.
Increased government subsidies to industry following the Sino-Japanese War of 1894 to 1895 created a complex structure among Mitsubishi-related enterprises that redirected Japan's trade with Europe toward emerging investment trends within East Asia. Subsidies to shipping enabled the NYK to buy ships from Mitsubishi rather than from Britain. Between 1896 and 1914 NYK purchased 43 percent of its tonnage from Mitsubishi, and 42 percent of that was constructed under the subsidy program. (Mitsubishi built 64 percent of the total tonnage constructed under that program.) As part of a broader, integrated network, Mitsubishi's shipbuilding enterprise gradually came to purchase more of its steel from the government-owned Yawata Steel Works in Kyushu, which itself relied on iron ore imported from the Hanyehping firm in central China. This firm relied on loans from Japan's Industrial Bank, debentures of which were purchased by the NYK. Meanwhile, ships of Mitsubishi's trading enterprise transported the ore to Yawata. This complex network of industrial linkages suggests that the government's subsidies to shipping functioned as a trigger that generated these integrated connections. However, despite the rapid growth of Mitsubishi's shipbuilding, it contributed only 10 percent of the firm's profits between 1894 and 1913. Its profits still came mainly from mining (55% during the same period) and to a lesser extent from banking (15%) and trading (11.5%).
During World War I Mitsubishi was much less active globally than its principal competitor, Mitsui, and tended to focus its activities on East Asian business, while also earning windfall profits from the demand for ships. Mitsubishi avoided excessive commitments prior to the post-war recession that hurt shipbuilding. Its core industrial strategies tended to follow two paths. Partly through ties with Westinghouse it imported electrical technology and created a new firm, Mitsubishi Electric. Secondly, during the interwar years the group's trading firm, Mitsubishi ShMji, increasingly became a strategic importer of technology. Working closely with the shipbuilding firm's factory-based laboratories and the group's research institute, ShMji aided new technological breakthroughs in electric welding and diesel-engine design that probably enabled Mitsubishi to surpass the technical level of British shipbuilding before World War II.
Mitsubishi's prewar success in shipbuilding made possible its key role in naval shipbuilding both before and during World War II, but partly because of that its operations were restricted during the U.S. occupation of Japan. Its shipbuilding company was divided into three separate firms (which reunited in 1964) and its trading company was dissolved outright in 1947 before reviving in the early 1950s. Overall, in the postwar years Mitsubishi remained dominant in shipbuilding, especially in the 1960 to 1980 period when Japan retained a 50 percent share of the world market. Diverse in its activities, Mitsubishi ShMji developed leading positions in resources. Though Mitsubishi remained the most cohesive of the industrial groups in the postwar years, following the decline of the resource trade in the 1980s its position weakened. Also, its automobile firm, established partly through Chrysler investment, failed to reach the top ranks of the industry, and its real estate firm suffered losses in the financial crisis of the 1990s. However, some of its core interests in shipping and banking retained leading positions in their industries.
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Mishima Yasuo. The Mitsubishi: Its Challenge and Strategy. Greenwich, CT: JAI Press, 1989.
Shiba Takao, and Shimotani Masahiro, eds. Beyond the Firm: Business Groups in International and Historical Perspective. Oxford, U.K.: Oxford University Press, 1997.
Wray, William D. Mitsubishi and the N.Y.K., 1870–1914: Business Strategy in the Japanese Shipping Industry. Cambridge, MA: Harvard University Press, 1984.