Trading Company Business Model and Social Role
Trade and business investment are the 'two wheels of the car'
In addition to traditional trading (trading), the source of trading companies' profits is the increasing proportion of investment activities in recent years, forming a business portfolio that combines trading and business investment as the "two wheels of the car."
The profit structure of trading companies is shifting from a traditional approach centered on commissions generated from trades to a movement that captures diverse profit opportunities arising from manufacturing and service industries, including subsidiaries, across the entire group.
Differences Between Trading and Business Investment
Commercial Transactions (Trading)
- Buying and selling traditional goods
- Leveraging global information networks, distribution networks, and financial strength
- Earn commissions (revenue) by finding and matching sellers and buyers on behalf of customers.
Business Management (Business Investment)
- Deep involvement in the management of investee companies, characterized by relatively long-term strategic investments
- By holding long-term, we nurture our own businesses and make investments that aim to expand trading and other synergies.
- Sometimes we invest alone, while others aim to acquire expertise in new fields, find strong partners, and make joint investments
- Unlike investment banks or funds, which focus from the start on capital gains from sales
Features of Trading Company Business Investment
- Value Chain Strategy
- Handling a wide range of business areas from upstream to downstream
- Comprehensive Skills Gained from Investment Experience
- Leveraging comprehensive capabilities based on trading company functions, we have expanded into unknown business areas
Business experience with partners in specialized fields worldwide
- Versatile revenue structure
- The revenue a trading company earns includes not only dividends and equity gains, but also various fees such as sales commissions related to trading, interest from transactions, and management advice fees.
- Deployment of Know-How
- Not only is it profitable for individual investment projects, but also by deploying similar investments in other companies or countries
- Long-term strategic investments
- Unlike investment banks and funds that aim for short-term capital gains, it makes strategic investments through long-term holding
SDGs and Trading Companies
Trading companies have always responded to environmental changes in each era, constantly considering what functions and roles they should fulfill and meeting their needs. The trading company industry is often said to have a wide range of business fields and complex business methods, but the 17 goals proposed by the SDGs align closely with the broad business scope of trading companies, contributing to initiatives across various fields.
- Protecting the Global Environment
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To realize a decarbonized society, we are engaged in renewable energy businesses, recycling businesses, and environmental conservation.
- Responsible for stable supply
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We are working to establish a stable supply system for food and resources.
- Supporting Global Business
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We support business activities in various ways and are committed to building supply chains to reduce environmental impact in logistics and protect human rights.
- Supporting a Rich Life
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To realize a healthy and prosperous life for everyone, we are engaged in infrastructure, lifestyle industries, and healthcare businesses.
- Creating new value
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We are committed to creating innovative businesses that contribute to solving social issues.
- The Richness of People and Society
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We are working to create opportunities and workplaces where diverse talent can share values and grow. We contribute to the development of each country and region through social contribution activities.
Trading Company Initiatives
Sustainability-related business of trading companies
We introduce the sustainability-related businesses that trading companies are engaged in around the world.
Renewable Energy Business
Power generation from renewable energy sources (such as geothermal, solar, wind, and hydropower) is being developed and expanded worldwide as an alternative energy source to thermal power generation using fossil fuels (such as oil and coal).
Circular Economy-Related Businesses
We focus on various waste across a wide range of business domains from upstream to downstream in the value chain, and are working to realize a circular economy by adding new value.
Stable Food Supply
Trading companies are working to improve agricultural productivity, build diverse supply chains for agricultural products, ensure stable supply, and enhance traceability.
Supporting a Rich Life
Trading companies' business areas are broad from upstream to downstream, and they often provide various services to consumers through their investees, so it is not uncommon for them to purchase goods or services without knowing the trading company's involvement. We are involved in almost every aspect of daily life, including "wearing," "eating," "living," "living," and "enjoying," contributing to the realization of comfortable living for people both domestically and internationally.
Logistics Business
Trading companies are constantly optimizing their own logistics and providing high value-added logistics services by leveraging their accumulated know-how and trading company functions.
Lifestyle Industry Business
Trading companies consistently provide a wide range of products and services that support people's comfortable lives by combining the group's wide range of products, functions, and know-how.
Healthcare Business
Trading companies are widely involved in supporting pharmaceutical development, supplying pharmaceutical raw materials and formulations, establishing and supporting management of medical institutions both domestically and internationally, providing online medical consultations and AI-based diagnostic services, and operating drugstores and facilities for the elderly, contributing to improving people's quality of life through their businesses.
Digital and Next-Generation Technology Business
Trading companies have connections with various regions, industries, and people, and by combining the expertise gained through business with digital technologies (IoT, AI, XR, etc.), they realize DX, working to evolve existing businesses and create new value. We also identify promising businesses for the next generation and are constantly pursuing the construction of businesses that will serve as a major revenue base in the future.