Outline of Transactions

The transactions and activities of the "SHOSHA" are often distinguished by the following major characteristics.

1．Wide range of products handled
2．Global operations and a diverse set of transactions
3．Huge sales volume and massive business scale

Wide range of products handled
The SHOSHA handle a wide array of products, literally ‘everything from mineral water to communication satellites'. They are involved in all types of transactions, from upstream to downstream in almost every kind of industry; machinery, plants, communications equipment, metals, minerals, energy resources, chemicals, textiles, foodstuffs and food products.
Similarly, they deal in all categories of products ranging from raw materials to manufactured goods and from consumer goods to industrial tools. Lately, they have begun to enter the service sector in such areas as food services, supermarkets, convenience stores and mobile communications. They have also started to become involved in promising new business fields related to ICT (information and communication technology), bio- and nano-technology and the global environment.

Global operations and a diverse set of transactions
The SHOSHA are committed to global scale operations and engage in four major patterns of transactions.
These are (a) purely domestic transactions in Japan, (b) export from Japan, (c) import to Japan and (d) strictly offshore transactions between countries other than Japan. Of the combined transaction volume of the representative SHOSHA, foreign-related trade transactions account for roughly 40%.

The SHOSHA are involved in a large portion of Japan's trade of steel, energy and raw materials, as well as in large scale overseas projects like power generation and plant export. In regional terms, transactions in the U.S., Europe and Asia have largely expanded fueled by the SHOSHA's investment. While in Central and South America, the Middle East and Africa, business is often inspired by the SHOSHA's cooperation in the raising of funds and other financial arrangements.

In addition to spot based trading on actual commodity movements, the SHOSHA are also engaged in dealings in the forward contract market (i.e. term settlement market). This circle of commodity dealing includes commercial bonds, metals (precious and non-ferrous), energy (crude oil, natural gas and naphtha), foodstuff (grains, sugar and coffee), and general merchandise (natural rubber). They make use of these schemes mainly to minimize the risk associated with price fluctuations.

Huge sales volume and massive business scale
Another characteristic of SHOSHA is their huge sales volume and massive business scale. In fiscal 2005, the consolidated sales volume of the top seven SHOSHA was 72 trillion yen ($670 billion). A major factor enabling these huge sales is the existence of a large number of subsidiaries and affiliates inside and outside Japan. For example, the aforementioned seven SHOSHA have some 3,937 subsidiaries and affiliates, forming enormous business groups.
These major SHOSHA often make inroads into new business territories by setting up new companies or buying out ongoing companies and they are naturally termed as 'enterprise creating SHOSHA'
It is largely through close cooperation with these group companies that the SHOSHA pursue the expansion of their transactions and earnings.
Lastly, this huge sales volume used to be regarded, in the context of growth strategy, as one of the most important management barometers during Japan's high economic growth period. However, with the trend toward globalization starting in the 1990's, alignment with global standards drove a shift in management strategy from going after even larger sales volume to pursuing returns commensurate with the asset risk, i.e. putting more emphasis on profitability.