Japan's trading houses to step up asset sale to defy resource slump

Faced with mounting writedowns on energy and metals assets, Japan’s trading houses are looking to step up the sale of assets to offset weaker income from resource businesses and fund shareholder returns, while reining in investment.

IMO trading companies are simply a throw-back to a by gone era, and really do nothing but add cost and bureaucracy to many products' pipelines.

Would you mind actually explaining how and why you have these opinions Jerseyboy? Trading companies are more less future markets, but are an actual company. It is hard for most companies to buy commodities/resources in foreign countries and have them shipped to a different location for processing/mnfg. If Soga Shosha were not needed, non-Japanese companies would simply not use them.

Would you mind actually explaining how and why you have these opinions Jerseyboy?

elkarlo -- absolutely. First, is just the reason you say -- why do you need companies to perform the function of commodieties markets? In most western countries, companies do their own purchasing, through in-house departments, to acquire the resources they need. What makes you believe this is difficult? But, that is my point -- instead of allowing free-market dynamics to operate, Japan has basically privatized it. And all this adds is cost. Second, the Japan commercial code originally made it very difficult for foreign companies to open subsidiaries in Japan without a JV partner. Which, conveniently, the trading houses provided. Again, IMO, this is simply too much government inteference, and allowing Japanese firms to make a lot of money that they really didn't earn, because all they are doing is taking a foreign firm's successful product and adding cost to it.

I don't think you understand what you are typing. So, the Japanese Soga Shosas are either, making it impossible for other companies to sell commodities. Or they own the sources and are selling the commodities at market prices. How is that a bad thing? As most, make serious profits when commodity profits don't fluctuate. Now that they are, the Soga are in trouble. But that is on them

elkarlo -- I know exactly what I am saying. I simply don't think you undrestand it, because you have no other frame of reference. And that is exhibited by your statement:

Or they own the sources and are selling the commodities at market prices.

Because the trading houses are NOT selling commodities at market prices, they are building in a substantial profit margin which increases costs in Japan, simply for buying and then re-selling something. They are adding no real value. In case you missed it, Japan is in a global economy now, and cannot be competitive with other countries when their costs are artificially raised by inefficient structural problems. Also, you did not address my second point, because you know full wel it is true. Sorry, but IMO, companies that add no real value, and exist just because of protection provided by bureaucracy and a lack of desire to change, are simply a drag on the economy.

Well, what you are saying that the Sogo Shosha are doing, is something that died out in the early 1970s(even old trading houses like Jardine Matheson had to get out of the middleman business back then). They are not middlemen, but future traders, and also they are owners of production. Such as mines, fisheries, and oil wells. To think that by them just buying up all futures, and forcing Japanese companies to buy from them, is incredibly outdated.