When Cargill gains access to an American grain trading firm, it also gains access to serving new markets in Japan.
After World War II, many foreign trading companies had a difficult time entering Japanese business markets. Cargill began its entry into the market in 1953 when it acquired Kerr Gifford & Co., a grain trading firm that had used a team of agents in Japan to sell grain to Japanese brokers from its home base in the United States. In 1956, Cargill purchased the agency, creating an opportunity to sell grain directly into Japan’s market through Japanese brokers.
With an established presence in Japan, Cargill built a bulk grain storage facility in Kawasaki on Tokyo Bay to handle incoming ships holding up to 52,200 tons of imported grain. Despite the promising strategy, the facility’s methods were soon copied by competitors, eliminating Cargill’s competitive advantage and reducing profits. As a result, the company was forced to resume trading through Japanese brokers, which proved successful for several years.
Then, in 1987, Japan’s trading houses staged a boycott to protest the involvement of Cargill, a foreign business, in the country. To help gain acceptance and demonstrate its support of Japanese business, Cargill bought two million shares of stock in Showa Sangyo, a large Japanese food processor. Cargill began selling soybeans directly to Showa and, eventually, the boycott came to an end.
As the Japanese market evolved, Cargill kept up with the changes. In 1995, it became the first non-Japanese company licensed by the Japanese government to sell grain directly into the country. This allowed Cargill to supply up to 40,000 tons of grain and barley to the Japanese government’s food agency. Instead of working through brokers, Cargill could take a more active role in Japan, working directly with the country’s grain distribution and flour milling industries.
Cargill’s ultimate success in Japan came in 1997, when one of the country’s food companies, Toshoku, filed for bankruptcy. Cargill assumed management of Toshoku, becoming the first foreign company to be approved as a bankruptcy sponsor in Japan. Cargill fully acquired the company in 2000, gaining access to a number of new customers. Toshoku’s deep customer knowledge combined with Cargill’s supply chain efficiencies to create a winning business model. With time, Toshoku gained financial stability, enabling Cargill to introduce an array of packaged foods and specialty ingredients to Japanese consumers.
Finding its place in Japan was an important step in Cargill’s international expansion, which eventually took the company to countries across Asia. Cargill continues to demonstrate its commitment to improving local markets around the world in order to help more customers achieve success.