Mitsui, the largest of the prewar Japanese zaibatsu (enterprise group), emerged as a business enterprise during the middle of the seventeenth century, making the transition from sake brewing to money exchange and innovative dry-goods marketing. A house code that frowned upon new enterprises kept the company's focus on core businesses. As it built up its financial role in exchange between Osaka and Edo, it diversified into commodity distribution, including tax rice (rice collected for taxation purposes), which placed it in a close relationship with the Tokugawa government.
These governmental ties remained through the period of the Meiji Restoration (1868–1912). Mitsui became the major financial agent of the new government, serving as a depository for government funds and continuing its earlier role of tax-rice distribution. Furthermore, industrially, Mitsui retained close ties to the government, which helped to establish the trading firm Mitsui Bussan in 1876. But during the 1880s Mitsui, somewhat like Mitsubishi, gradually moved away from its close government ties. The establishment of the Bank of Japan in 1882 removed Mitsui from its favored position, pressuring the firm to develop a more autonomous strategy. One step was its purchase in 1888 of the government-owned Miike mine, whose coal it had previously distributed. Second, through the leadership of Nakamigawa HikojirM, (1854–1901) the Mitsui Bank shifted its lending policies from government business and mortgages to industrial finance. Meanwhile, Mitsui Bussan drastically reshaped its commodity distribution. Shipments of rice, grains, fertilizers, marine products, and coal fell from 53 percent of its business in 1890 to 16 percent in 1914, whereas cotton, cotton manufactures, machinery, and raw silk rose from 11 percent to 52 percent during the same period. Behind this shift were effective strategies that Mitsui developed to enhance the competitiveness of Japanese industry. It helped to bring together Japanese industrial firms (particularly in the cotton industry), financial institutions such as the Yokohama Specie Bank, and shipping firms into alliances that were crucial in lessening the cost of raw-material imports and creating stronger distribution networks for industrial exports. Mitsui also developed distinctive strategies in expanding its ties to a range of firms within Japan. One was the sole agency contract, which obliged a contracting industrial firm to rely solely on Mitsui for its distribution. Another was the supervisory branch system, in which one particular branch would oversee all global operations of the firm in a particular product or commodity (for example, Osaka in the case of cotton). A third strategy was to encourage language training among its employees. This was particularly effective in enabling Mitsui to bypass compradors in China and deal directly with Chinese purchasers and suppliers. One result of these strategies was the strong position Mitsui achieved in third-country trade, shipping, for example, rail equipment from the United States to China or raw cotton from India to China. In 1919 third-country trade accounted for one-third of all of Mitsui's trade. The company's influence in this form of trade enabled it in the interwar years to achieve a strong position in the major cross trades, particularly wheat, lumber, and rubber. Its influence in these trades led it into substantial conflict with British firms, which became highly critical of Mitsui's strategies and tried to pressure the British government to act against Mitsui. Nevertheless, despite this criticism it is clear that Mitsui did not pursue a purely nationalist strategy of allying simply with Japanese firms. On the contrary, its overseas branches were more like nodes in a global web of contacts that involved close ties with foreign firms through whom Mitsui gained much of its strategic information and from whom its local branches often received financing.
Beyond its strictly trading activity, by the early twentieth century Mitsui Bussan had begun to play a major role in importing technology. It arranged for technology transfer primarily from General Electric in exchange for that firm's equity participation in Mitsui-related industrial firms, such as the predecessors of Toshiba. Later in the interwar years, as the raw-silk trade declined, it set up rayon manufacturers in Japan in partnership with foreign firms. In the postwar years Mitsui Bussan, after being abolished by the authorities of the occupation government, re-emerged in the 1950s and became a leader in commodity distribution, in servicing the early trade of manufacturing firms, and in laying the framework for overseas investment by Japanese manufacturing firms.
Japan Business History Institute, ed. The Mitsui Bank: A Brief History. Tokyo: Author, 1976.
Japan Business History Institute, ed. The 100-Year History of Mitsui and Co., Ltd., 1876–1976. Tokyo: Author, 1977.
Yonekura Seiichiro. "The Emergence of the Prototype of Enterprise Group Capitalism: The Case of Mitsui." Hitotsubashi Journal of Commerce and Management 20 (December 1985): 63–104.