BookTitleToyota Tsusho 70-Year History

Summary

Toyota Tsusho 70-Year History

construction of huge resorts throughout the country under the Act on Developmentof Comprehensive Resort Areas, which was enacted in 1987. Most of the projectsthat were under construction were either canceled or failed.Amid the unprecedented situation of financial institutions, which controlled thelife’s blood of the economy, failing one after another, the government injectedpublic funds into the banks in an attempt to avoid a financial crisis. From March1998 to June 2003, a total of more than 12.38 trillion yen was injected based onthe Financial Function Stabilization Act.3 The Asian Currency CrisisIn the late 1990s, as Japan was suffering from the long-lasting aftereffects of thebubble economy and looking for ways to recover, an economic crisis that beganin Asia hit the world. In November 1997, the collapse of the baht, Thailand’scurrency, triggered a currency and economic crisis in the Philippines, Indonesia,and Korea, the impact of which spread throughout the remainder of Asia. In eachcountry, foreign funds that had supported economic growth up to that time werewashed away, stock prices plummeted along with currencies, and economiesdeteriorated sharply. The Asian currency crisis spread to Russia as well as Centraland South America in 1998, and U.S. hedge funds went bankrupt with thedevaluation of the Russian ruble. This also had a significant impact on developednations. Thailand, Indonesia, Korea, and others were forced to rebuild theireconomies under the control of the International Monetary Fund (IMF) to escapethe crisis.Although the impact of the bursting of the bubble economy was relatively minorfor Toyota Tsusho, the company was hit hard by the sharp drop in trade volumeand in exchange rates during the Asian currency crisis.Vacant properties proliferated in Tokyo, includingupscale Ginza, following the bursting of thebubble economyPhoto:TheMainichiShimbun/AfloSection 2 General Trading Companies in an Era ofDepression1 The Bursting of the Bubble EconomyThe booming Japanese economy of the late 1980s was a tailwind for generaltrading companies. Exports faced a headwind because of the strong yen after thePlaza Accord, but imports were strong, especially of food, beverages, sportinggoods, ornaments, and medical equipment. Toyota Tsusho’s entry into theinformation and communications field, in which there were high expectations fornew business, also advanced. In addition, overseas investment increased as the yenappreciated.That all changed because of the bursting of the bubble economy. General tradingcompanies’overall profits, once at record highs in 1990, decreased in 1991,resulting in large unrealized losses. Toyota Tsusho’s sales peaked at 2.2259 trillionyen in fiscal 1991 but dropped to 2.0786 trillion yen in fiscal 1992 and 1.7303trillion yen in fiscal 1993.Many general trading companies were also forced to deal with nonperformingassets and with reorganizing affiliated companies where business performancehad deteriorated. Strengthening damaged financial structures thus became a majorThe US dollar plunging to the 79 yen levelagainst the strong yenPhoto: The Mainichi Shimbun/AfloHistory85