The world¡¦s most famous soy sauce has a long history and an expansive future

THAT RED-CAPPED bottle of Kikkoman soy sauce in your pantry has a pretty spectacular pedigree. The company traces its roots to 1603. Since 1917, it has been run by a member of one of eight linked families. Japan¡¦s royal family dunks their nori-makis in Kikkoman, a special batch brewed exclusively for them. Following successful moves into the US and European markets in the 1960s and 70s, Kikkoman has become the most popular soy sauce in the world ¡V and China is its new big market. The company started producing in Shanghai in 2002 and in Shijiazhuang this month. In 1961, Yuzaburo Mogi, Kikkoman¡¦s CEO, was the first Japanese national to earn an MBA at Columbia University in New York. power contributing editor Bernard Krisher studied at Columbia at the same time, and the two men have called each other ¡§classmates¡¨ ever since. Krisher caught up with Mogi at Kikkoman¡¦s modernistic Tokyo headquarters in Shimbashi.

Kikkoman is a remarkable firm. I believe it is as old as the Tokugawa Shogunate, which ruled Japan for more than 250 years from 1603.
Yes, we started our company at the same time, from the early 17th century.

You are also one of the very few companies in the world that has been solely owned and operated by the same group of families through its entire history.
Yes.

You have a secret recipe for soy sauce. What is the recipe for Kikkoman¡¦s longevity?
There are several reasons. We have never ceased to place importance on the quality of our product. We have also never failed to be a good corporate citizen.

Can you give me an example of your good corporate citizenship?
During the Meiji era (1868-1912), Japan¡¦s renaissance after the fall of the Tokugawa Shogunate, we established the Mogi elementary school in Noda City, our founding location and headquarters. We then added hospitals and a community hall. We also established a bank we named the Shoyu Bank. Shoyu has two meanings: ¡§soy sauce¡¨ and ¡§commerce.¡¨ The first three letters, sho, mean business and the last two letters, yu, mean ¡§to lead¡¨ or ¡§to guide.¡¨ In the early 1930s, we built a railway between Omiya and Funabashi to stimulate the economy.

How about today?
We still maintain the hospital in Noda and we make donations to charities or causes that we value, such as educational institutions or local communities. Our employees are also encouraged to volunteer for community service.

You have a number of plants in overseas locations such as Wisconsin, California, Holland and Singapore. Is Kikkoman a good citizen there too? 
Yes. There is a Kikkoman Foods Foundation in Wisconsin, which is contributing funds to schools and we support a research center for food science at the University of Wisconsin, following the philosophy and tradition of my ancestors, particularly my father. I feel the prestige and dignity of a company is intertwined with its contributions to society.

In the Netherlands, we contributed funding to remodel a wing at the Rembrandt House Museum and we became a primary sponsor for a water resources conservation project in which the Kikkoman Mill was built as a landmark of our involvement. In the spirit of being an international citizen, we work with local companies wherever we operate by having our staff integrate with the community and not huddle together among ourselves or other Japanese. For example, we source all our needs locally, such as ingredients or packaging materials. We recruit our employees locally and place great effort in encouraging our Japanese staff to become involved in local community and cultural activities.

Kikkoman was nurtured in traditional Japanese culture but your father sent you to the US to study. How did this contribute to Kikkoman? What did you learn at Columbia?
I learned the way of doing business in the United States. Just after graduating from Columbia, I found it difficult to apply what I learned to my job because there was too great a difference between the way business is conducted in the United States and in Japan. Later, however, my experiences there helped me a lot when I became involved in executive level decision-making and as our business became more globalized.

How important are ningen kankei (personal relations) today to Kikkoman¡¦s success and profitability?
Personal relations remain important not only in Japan but everywhere. The relationship between people is key to the good functioning of an organization in the US, Japan and everywhere. I have always personally visited our customers, suppliers and distributors, regarding them as family. These family ties have cemented us and continued to sustain a strong bond benefiting everyone who has a relationship with Kikkoman and me. In establishing and maintaining good personal relationships, the key ingredient is touching the flesh, eye-to-eye contact, and not relying on the telephone or the Internet.

What is the biggest business crisis you have faced?
The crisis I remember most vividly was when we decided to build a soy sauce factory in Wisconsin in 1970. There was a movement among some local people opposing us. I thought the reason was because we were Japanese, or maybe because they didn¡¦t know anything about soy sauce. But it turned out the reason was because we were planning to build the factory in a farming area and they feared that once there was a factory there, another plant might follow and destroy their rustic farming atmosphere.

How did you change their minds?
At first I was afraid because once a plant proposal is rejected in a locality, it may be difficult to get the opponents to reconsider their decision and difficult to obtain approval to establish it anywhere else in the US. I was greatly concerned about this movement and frankly lost some sleep over it. But I became determined to try to persuade the local people and Wisconsin media to let us go ahead with the factory on the premise that they understood that soy sauce is pollution-free and our business is an agribusiness, which can coexist with local farmers. I met with many people there and I think my Japanese instincts and my fluent English, thanks to Columbia, enabled me to have a very good rapport with them. We finally got the approval. This experience helped me in dealing with other crises, especially the oil crisis of 1973, when the prices of everything went up and interest rates rose more than 20 percent. This affected our product shipments from Wisconsin. And in 1974 we suffered a huge deficit. But as sales grew, we were able to adjust the price and survive.

Are you facing any financial problems now as a result of the world financial crisis?
No, no, no, not now. Food is a very steady business. We are not affected.

What do you think is the reason for the crisis and your solution to resolving it?
The reason is there was excessive financial engineering. The financial assets compared to the gross domestic product rose astronomically. In a market economy, government regulation should be minimized, but in an emergency such as the present one, I see no reason to oppose government intervention and feel certain measures should be taken for everyone¡¦s benefit, Wall Street and Main Street.

What influence did your father have on you in the running of Kikkoman?
His philosophy, which I inherited, was to always remain a good corporate citizen. I am deeply impacted by his decisiveness in every situation that needed a prompt judgment and his inclination to take risks when most people tend to be hesitant. Many business people in Japan tend to avoid making decisions because they fear taking risks. My father, however, did not hesitate to take risks. He was quite positive to build a soy sauce plant in Wisconsin, far away from Japan, which involved taking a risk against the hesitant, cautious nature of some of our board members and senior employees. Of course, risk should generally be avoided or minimized, but there are times when situations exist where it is proper to take a risk to pursue a principle and an enlightened vision.

What about the next generation? Is the Mogi family continuing the tradition of perpetuating Kikkoman?
We have six Mogi families, and one Takanashi and one Horikiri family, which have alternately run Kikkoman since our family companies merged 91 years ago to form our modern-day corporation. We have begun to bring others into the top management of Kikkoman and are grooming talented young people from our organization toward future key roles, such as our current chief operating officer, who is not a family member. He was a regular employee. In the future, the president may or may not be a family member, depending on the person¡¦s ability.

When and why did you decide not to have a Mogi or another of the founding family members as a president of Kikkoman?
Six years ago we invited external board members, such as Toshihiko Fukui, the former governor of the Bank of Japan, to join our board. As we are now listed on the Tokyo Stock Exchange, we have a nominating committee to select board members who can be members of our family or outsiders.

Is your son working for Kikkoman?
Yes, he is now, after graduating from the University of Wisconsin and working three years as a consultant for PricewaterhouseCoopers in Chicago.

Besides soy sauce, what other businesses are you in?
We acquired [food manufacturer] Del Monte and market its products such as ketchup, juices and canned goods in the Asia-Pacific region excluding the Philippines. We have built a Del Monte factory in Thailand. We also recently built a Del Monte factory in China to produce ketchup. In Japan, we produce wine and soy milk, which has become very popular here and overseas. We also have a biotechnology business and make health foods, such as vitamins and nutritional supplements both here and in the United States. So we are now aiming to diversify our business.

 

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