Ie (trading houses)
Encyclopedia
Ie were pre-modern Japanese trading houses and precursors to the modern zaibatsu
and keiretsu
. They first emerged in the mid-18th century, and shared many features with the Western concept of cottage industry.
The ie operated on a system very similar to what economists today call the "Putting-Out system
" or "workshop system." City-based merchants would provide rural producers with raw materials and equipment, and would then sell the final product in the cities.
This level of organization to production, with one trading house (in effect, one company) controlling production, transportation, and sales, was unprecedented in Japan, and can easily been seen as the forerunner to the factory system
, economic and industrial modernization, and the rise of the zaibatsu (Japanese monopolies). One of the key differences, organizationally, however, between the ie and the zaibatsu which would come later is that the ie always focused on producing and selling only one or two types of goods; so-called "horizontal zaibatsu" would seek to deal in many unrelated types of goods. For example, today, Mitsubishi
is both an automobile company and a bank
.
Two of the ie, originally founded by merchants in the early 17th century, survive today as Mitsui
and Sumitomo, both major modern Japanese corporations.
In the late 18th and 19th centuries, as Japan's economy continued to develop and modernize in many ways, the ie adapted, changing and growing to meet the demands of the new economic situation. Many became banks, trading originally in rice (which was essentially currency; see koku
) and later in paper and metal currency. In doing so, they began to replace the Osaka rice brokers; by 1868, the Osaka rice brokers, in many ways the first bankers in Japan, had disappeared.
The next step in the development of the ie would come with the opening of Japan to foreign trade in the 1850s-60s. Many ie reorganized and came to be known as sōgō shōsha
(総合商社), trading companies which focused on exchanging domestic goods for foreign goods, which they would then resell in Japan's major cities.
By the beginning of the 20th century, the ie had disappeared. However, many were not eliminated, but rather transformed into modern sōgō shōsha, zaibatsu, and banks.
Zaibatsu
is a Japanese term referring to industrial and financial business conglomerates in the Empire of Japan, whose influence and size allowed for control over significant parts of the Japanese economy from the Meiji period until the end of World War II.-Terminology:...
and keiretsu
Keiretsu
A is a set of companies with interlocking business relationships and shareholdings. It is a type of business group. The keiretsu has maintained dominance over the Japanese economy for the greater half of the twentieth century....
. They first emerged in the mid-18th century, and shared many features with the Western concept of cottage industry.
The ie operated on a system very similar to what economists today call the "Putting-Out system
Putting-Out system
The putting-out system was a means of subcontracting work. It was also known as the workshop system. In putting-out, work was contracted by a central agent to subcontractors who completed the work in their own facilities, usually their own homes....
" or "workshop system." City-based merchants would provide rural producers with raw materials and equipment, and would then sell the final product in the cities.
This level of organization to production, with one trading house (in effect, one company) controlling production, transportation, and sales, was unprecedented in Japan, and can easily been seen as the forerunner to the factory system
Factory system
The factory system was a method of manufacturing first adopted in England at the beginning of the Industrial Revolution in the 1750s and later spread abroad. Fundamentally, each worker created a separate part of the total assembly of a product, thus increasing the efficiency of factories. Workers,...
, economic and industrial modernization, and the rise of the zaibatsu (Japanese monopolies). One of the key differences, organizationally, however, between the ie and the zaibatsu which would come later is that the ie always focused on producing and selling only one or two types of goods; so-called "horizontal zaibatsu" would seek to deal in many unrelated types of goods. For example, today, Mitsubishi
Mitsubishi
The Mitsubishi Group , Mitsubishi Group of Companies, or Mitsubishi Companies is a Japanese multinational conglomerate company that consists of a range of autonomous businesses which share the Mitsubishi brand, trademark and legacy...
is both an automobile company and a bank
The Bank of Tokyo-Mitsubishi UFJ
is the largest bank in Japan, which was established on January 1, 2006, with the merger of the Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd. The bank serves as the core retail and commercial banking arm of the Mitsubishi UFJ Financial Group....
.
Two of the ie, originally founded by merchants in the early 17th century, survive today as Mitsui
Mitsui
is one of the largest corporate conglomerates in Japan and one of the largest publicly traded companies in the world.-History:Founded by Mitsui Takatoshi , who was the fourth son of a shopkeeper in Matsusaka, in what is now today's Mie prefecture...
and Sumitomo, both major modern Japanese corporations.
In the late 18th and 19th centuries, as Japan's economy continued to develop and modernize in many ways, the ie adapted, changing and growing to meet the demands of the new economic situation. Many became banks, trading originally in rice (which was essentially currency; see koku
Koku
The is a Japanese unit of volume, equal to ten cubic shaku. In this definition, 3.5937 koku equal one cubic metre, i.e. 1 koku is approximately 278.3 litres. The koku was originally defined as a quantity of rice, historically defined as enough rice to feed one person for one year...
) and later in paper and metal currency. In doing so, they began to replace the Osaka rice brokers; by 1868, the Osaka rice brokers, in many ways the first bankers in Japan, had disappeared.
The next step in the development of the ie would come with the opening of Japan to foreign trade in the 1850s-60s. Many ie reorganized and came to be known as sōgō shōsha
Sogo shosha
' means general trading companies, a business entity unique to Japan trading a wide range of products and materials. In addition to trading, they have historically acted as investment banks and private equities. Sōgō shōsha may be better described as a business philosophy than with a visual model...
(総合商社), trading companies which focused on exchanging domestic goods for foreign goods, which they would then resell in Japan's major cities.
By the beginning of the 20th century, the ie had disappeared. However, many were not eliminated, but rather transformed into modern sōgō shōsha, zaibatsu, and banks.