An Interview With Executive Director Of Marubeni Co., China General Representative Ping She Shun: China'S Operation Of Marubeni, A Japanese General Trading Company.

Executive director of Marubeni Co., China general representative Ping se Shun Gan Jun photo

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Over the past 40 years, the Japanese comprehensive trade company has acquired several "first" in China. For example, the first Sino foreign joint venture rental housing for foreigners, the first Sino foreign joint venture logistics enterprise, the first joint venture BOT project, the first Sino foreign joint venture wholesale company......

MARUBENI, founded in 1858, has been in the history of more than 160 years and is one of the five major commercial complexes in Japan. Starting from the wholesale business of linen cloth, the business scope of Marubeni has been expanding. Now it has covered many fields such as grain and oil, living industry, raw materials, energy and metals, power and complete sets of equipment, transport aircraft and so on. In addition to engaging in domestic and foreign trade, Marubeni is investing globally. In the 2019 Fortune 500 list, Marubeni ranked 147th.

As early as 1979, Marubeni entered the Chinese market. So far, Marubeni has opened 17 branches in 15 cities in China and has 71 investment companies.

"Looking back on the history of these 40 years, Marubeni can be said to be developing along with the expansion of China's reform and opening up and constantly adjusting its position in the Chinese market. Now, the second largest market in the world has become the most important market for Marubeni. The executive director of Marubeni Corporation and Chinese general representative Ping se Shun spoke in fluent Chinese in an exclusive interview with the twenty-first Century economic report. In 2018, the trade volume of Marubeni to China was about 1 trillion and 400 billion yen (about 89 billion 400 million yuan).

In 1980s, he was sent to China by maruon headquarters and participated in the Sino Japanese Friendship water purification plant project supported by the Japanese government. After that, he participated in the real estate business of Changchun's Shanghai. "Partners with Changchun and Shanghai have built up a valuable friendship in their careers, which is unforgettable. It also makes me believe that the most important thing in China is to become good friends with good partners."

Now, as China's economy has entered a stage of high quality development, Marubeni has been actively looking for new business opportunities in China. In 2019, Marubeni and G7 jointly established the Tianjin Ji Hong Finance Leasing Co., Ltd., which is committed to providing one-stop cold chain Trailer Asset Services for cold chain logistics related enterprises. A joint venture with Shanghai Fosun Group to set up Fuhong Kang medicine Jiangsu Co., Ltd. will jointly build a health care market focusing on medicine and medicine in China and Japan.

The big bay area of Guangdong, Hong Kong and Macau is also the focus area of Marubeni. Ping said that maruon is working with Macao and mainland enterprises to promote Zhuhai's LNG receiving station and re gasification project. The total investment of the project will reach more than 10 billion yuan in the first phase, and the expected 20 million tons in the long term.

Ping is the first foreigner in Lujiazui to receive "permanent residency". In his interview, he quickly dried out his "green card" which lasted for ten years. He said that it is very convenient to use this card when traveling by plane or staying in hotels in China, and it saves the annual cumbersome visa renewal. "When I first got it, at the airport in the local city, the first time I saw the airport window of the permanent residence permit, the clerk did not know what it was, and specifically confirmed it with the boss. People seem to have known it recently. "

From filling in "regional difference" to filling in "time difference"

Twenty-first Century: Japan's general trading company is a very special enterprise mode. From mineral water to communication satellite, from Ramen to missile, its business scope is almost all inclusive. In your opinion, what is the weight of the comprehensive business in the Japanese economy? What is the role of Japanese enterprises in "going global"?

Ping Shun: the business scope of the comprehensive business community is very extensive, and develops along with the times changes. Therefore, the influence of business on Japanese economy is changing with the times. Marubeni has a history of more than 160 years, and it can be said that it has been growing with the Japanese economy. In the Meiji era, at first, represented by Japan's long term fiber industry, the export of light industrial products (processing trade) expanded to steel, machinery exports and heavy chemical industries, and eventually developed into a comprehensive trading company that spans all industries. During the period after the Second World War, it was not easy to travel overseas. Therefore, the comprehensive business community represented by Marubeni began to set up offices overseas and dispatched staff to sell many Japanese enterprises' products overseas through trade activities.

Japan is a country with limited resources. Therefore, the business community shoulders a major social mission, that is, importing resources such as oil and grain from Japan to Japan. I think Marubeni, as a comprehensive business in the world, is constantly improving and improving. For maruon, it is also a great mission to bring Japanese companies to sea. Nowadays, many Japanese manufacturers who have been successful in overseas markets, such as Nissan and Canon, have been helped by Marubeni when they went to sea. Even now that many Japanese companies have been able to expand their overseas markets independently, the mission of Marubeni has not changed. It helps overseas enterprises to sell overseas and provide cooperation and support for their first entry into the new market. For example, many small and medium enterprises in Japan have world-class technology, but some of them may not have entered the overseas market. We will continue to help these enterprises go out in the future.

That is to say, in the past, the work of the business community was to import goods from the A area from the B area to fill the regional difference. Now, the work of the business community is to implement the successful business model of A in the B area to fill in the time difference. Marubeni China is not limited to developing businesses in Japan and China. We are also committed to helping Chinese enterprises to develop the third party market. I believe that providing help to Chinese enterprises will ultimately benefit Marubeni.

Twenty-first Century: in the list of the world's top 500 in 1995, Japan's comprehensive business group accounted for six of the ten largest enterprises in the world. But in recent years, Japan's comprehensive business has fallen significantly in the world top 500. Does this mean that the model of the comprehensive business community is facing serious challenges?

Ping Shun: This is related to the world's top 500 calculation methods, it is difficult to give a clear answer. But compared with 1995, the 5 major general trading companies (Japan's Yanjing later reconstituted into two days, it is hard to compare) now the profits are far above the level. Therefore, it would be inappropriate to discuss the world top 500 ranking with the integrated business model. In addition, as China's economy grows, there are many Chinese companies on the list. At the same time, GAFA (Google, Amazon, Facebook, Apple), the rise of these giant platform enterprises, coupled with the changes in the world economic environment, is a fact that the ranking of the business community has been declining.

However, with the development of the times, the comprehensive business organizations are constantly adjusting their business models. In the medium term business strategy announced in 2019, Marubeni clearly put forward the vision of "surpassing the existing framework of the business community and becoming a value creating enterprise group". Specifically, it is divided into three areas. First, we need to continue to enrich the mature businesses that guarantee the existing revenue, second, we need to enhance the mature business strategy, and third, we should focus on the future business areas with explosive growth, establish new business models and develop growth businesses. In order to achieve our new strategy, in April 2019, the company set up the "new generation of business development headquarters", mobilizing 100 elite elites, without limiting the category of commodities, and building a system for pursuing explosive growth. Moreover, in terms of regional strategy, Marubeni has been doing business all over the world and has not announced the so-called key areas. However, under the new headquarters, there is also the "Asian business unit", which aims at the large number of emerging middle class in China and Asia. In fact, this shows that China is one of the key markets.

So far, Marubeni has opened 17 branches in 15 cities in China and has 71 investment companies. - Gan Jun photo

Willing to work together with Chinese enterprises to develop the third party market

Twenty-first Century: as one of the main grain producers in the world, the soybean trade of Marubeni accounts for 15% to 20% of China's soybean imports. In July 2019, pill red hair statement stated that its US subsidiary Columbia Grain Trading Inc (CGTI) will stop selling soybeans to Chinese customers, but another US subsidiary Gavilon Group will continue to export soybeans to China. Overall, what is the impact of Marubeni's soybean business on China?

Ping Shun: because of the impact of Sino US trade war and intensified trade competition, the income level of the business continued to decline. In July 24, 2019, CGTI decided not to sign new soybean sales orders, but this decision only stopped CGTI from supplying soybeans to Huaxin, and did not change any other business companies' operations and policies, and will continue to trade with China's soybean trade. With the agreement reached in the first stage of Sino US trade negotiations, China's demand for us soybeans is expected to increase in 2020. Over the past two years, although our soybean supply to China has declined, the share of soybeans from Brazil has increased. We have a port grain storage and storage company in Brazil.

In the future, as the world trend, the importance of protein replacement is getting higher and higher. Therefore, we hope to develop aquatic feed and other related protein business in China. Take beef as an example. Marubeni has an Rangers Valley in Australia, and has a large beef processing plant Creekstone in the United States. The beef of the two companies is now beginning to export to China. In addition, I hope Japan and cattle can resume their export to China this year.

Twenty-first Century: in recent years, China's economic growth has slowed down and labor costs have been rising. How to view the investment prospect of Chinese market? Are we considering transferring some industries from China? Do you plan to increase investment in China in some industries? What kind of investment strategy will be adopted?

Ping Shun: Marubeni is not a manufacturer. The increase in labor costs will not directly affect our business. Therefore, there is basically no idea of transferring business to other countries. As I mentioned before, the number of middle class in China is increasing and living standard is improving. What can we do in this huge consumer market is the most important thing. We should actively provide products and services that meet the needs of the market according to the changes of people's lifestyle. Specifically, in terms of clothing, food and housing, we should increase investment in related businesses from the perspective of providing high-quality goods, expanding overseas imports and providing new services.

The key strategy of Marubeni in China is the response to lifestyle changes I just mentioned. The second point is to respond to the transformation and evolution of agriculture and provide agricultural solutions. The third point is to deal with the transformation of environmental protection and energy policies, the substitution of plastic products, garbage disposal, soil improvement, and the transformation of energy policies, mainly based on LNG related businesses (receiving stations, ship refueling), EV and hydrogen energy. The fourth point is that although it is not direct investment in China, we will strengthen cooperation with Chinese enterprises in the third party market. In this regard, we are very confident that we can give full play to our overseas experience advantages and strengths.

With regard to LNG business, we are working together with enterprises in Macao and mainland to promote the LNG receiving station and re gasification project in Zhuhai. The project has been planned for a period of 5 million tons of liquefied natural gas in the near future, and the additional two tons will be 5 million tons to 10 million tons. The long-term outlook is expected to reach 20 million tons. The total investment will reach more than 10 billion yuan.

Twenty-first Century: at present, the two governments are actively promoting the third party market cooperation between China and Japan. What is your comment on this new direction of cooperation? What role can Marubeni play in it? What fields or areas does maruon wish to focus on?

Ping sun Shun: in October 2018, the first Sino Japanese third party market cooperation forum was held in Beijing. The two countries signed 52 memorandums of cooperation, of which 3 were Marubeni. At the plenary session, Prime Minister Andouble introduced the modernization project of Kazakhstan's oil factory in maruon and Sinopec, calling it a model for successful cooperation between Japan and China. Subsequently, Premier Li Keqiang and Prime Minister Andouble came to the exhibition hall of the project before the presentation of the project to the two by the president of the Marubeni group. As mentioned before, one of the major strategies of Marubeni in China is cooperation in the third party market. We believe that this is also the best area to play the experience and expertise of Marubeni. The 3 memorandum of cooperation signed in 2018 included: cooperation with EPC, signed by Sinopec refining and chemical engineering company, cooperation with China photovoltaic industry association in the field of photovoltaic power generation, medical and pharmaceutical cooperation signed with Shanghai Fuxing medicine. These 3 items are the businesses that we will continue to invest more in the future. In addition, in the case of complete sets of equipment and power generation, Marubeni can also exert its experience and expertise in third countries. This is our key work in the future. As long as there are advantages that can be developed, regardless of the scope and scope, Hong Hong will join hands with powerful Chinese enterprises in third countries.

Expecting foreign investment law to further optimize China's business environment

Twenty-first Century: in recent years, the Chinese government has announced a series of measures to deepen reform and open wider to the outside world. In the latest business environment report released by the world bank in 2020, China's rankings rose to thirty-first place in the world. How do you evaluate the current business environment in China? What room for improvement is there?

Ping sun Shun: since I joined the China business in 1986, I have witnessed the continuous improvement of China's business environment. I am also proud that I am a witness to this history. Since reform and opening up, China's social infrastructure has been continuously improved. It is no exaggeration to say that such a highly efficient and complete social infrastructure resource is one of the main attractions of attracting foreign investment in China. In terms of foreign enterprises in China's newly established enterprises or in domestic mergers and acquisitions of existing enterprises or projects, at the institutional level, China has undergone a fundamental transformation from the project approval system to the filing system. As a result, foreign businessmen can enjoy national treatment completely except "negative list". Basically, there are no major obstacles and barriers to foreign investment in China.

The operation of an enterprise is inseparable from the guarantee of funds. The low proportion of direct financing is a common problem faced by all Chinese enterprises, including foreign-funded enterprises. In terms of indirect financing, foreign-funded enterprises have certain advantages over small and medium-sized domestic enterprises and are more likely to get loans from banks. However, sometimes it is subject to the macroeconomic regulation and control policies of the government or the central bank. Commercial banks have to compress the overall credit scale, thus affecting normal financing businesses such as loans to foreign-funded enterprises. It is hoped that the government will also consider the situation of foreign-funded enterprises when it comes to macroeconomic policies.

In terms of labor market, China has the advantages that other developing countries do not have, no matter the quantity or quality of labor force. However, with the continuous improvement of China's overall economic level and quality of life, the problem of rising labor costs has become increasingly apparent. To solve this problem, it is necessary for the central government to proceed from the perspective of promoting the upgrading of China's industrial structure. The whole country takes the whole concept of "flying wild goose step by step" as a model to guide all industries from low to high, gradual transfer and upgrading from coast to inland, and fundamentally mitigate the impact of rising labor costs on China's investment and business environment.

Twenty-first Century: how do we see the foreign investment law, which began in January 1, 2020?

Ping zhe Shun: in the foreign investment law, I am particularly optimistic about the relevant provisions of "giving national treatment to foreign-funded enterprises" and "strengthening intellectual property rights protection". Whether or not to grant the national treatment to foreign-funded enterprises is one of the most important criteria to weigh the investment and business environment of a country. It is also the most important issue that foreign capital enterprises must consider first before they invest in the country and decide on long-term operation.

At the same time, if we can effectively implement the "intellectual property rights protection" issue, I believe that foreign-funded enterprises will be more active in introducing their own technology into China and promoting the production in China. This will help improve the level of "made in China" as a whole and ultimately achieve win-win cooperation.