The 1973 Oil Crisis and the End of Rapid Economic Growth

Stable Supply of Resources Supporting Japan’s High-Speed Economic Growth

In 1968, Nissho Co., Ltd. and Iwai Sangyo Co. Ltd. merged into the Nissho Iwai Corporation. Around that time, there was a growing trend of industrial reorganization, exemplified by the merger between Yawata Iron & Steel Co., Ltd. and Fuji Iron & Steel Co., Ltd. and the integration of the Kawasaki Group. Expanding energy demand in this period of rapid economic growth made securing a stable source of energy into a significant issue for trading firms. In addition, the 1973 oil crisis that hit Japan in the ensuing years served to further heighten the role of trading companies. 

In 1973, before liquefied natural gas (LNG)became a commodity , Nissho Iwai Corporation signed a long-term, 20-year contract with Pertamina, a state-owned oil company in Indonesia, and led Japan’s largest project to introduce LNG to Japan. Around the same time, Nissho Iwai also started to provide nuclear fuels to Japanese power companies. In 1980, Nissho Iwai acquired distribution rights for Cogéma’s (currently, AREVA) nuclear fuels in Japan and played a pioneering role in leading the Japanese nuclear industry.

 Around that time, Nissho Iwai accelerated the foundation of business enterprises abroad, establishing Thailand-based TCCC, the world’s largest compound chemical fertilizer manufacturer  and participating in the management of  CPC, a company  associated with the largest petrochemical company in South America, Brazil’s BRASKEM. In 1971, Nissho Iwai also started to trade shoes with Nike, Inc., which was a small company with just about thirty employees at that time. This business later developed into the establishment of Nike Japan through a joint venture between Nissho Iwai and Nike, Inc. and to Nike becoming a global sports brand.

 Nichimen Co., Ltd.’s strengths lay  in the Communist bloc, including China, the former Soviet Union and Poland. In the late 1960s, Nichimen made long-term contracts with the Soviet Union and Poland for iron ore and coal, respectively. In 1974, Nichimen contributed to promoting economic exchange between Japan and the Soviet Union as the trading firm responsible for organizing the South Yakut Coal Field Project jointly with Nissho Iwai Corporation. In 1970, Nichimen started to export bearing plants to Poland, turning bearings into  one of Nichimen’s strongest products. In China, after Japan had normalized its diplomatic relationship with China, Nichimen concluded negotiations on Japan’s first large-scale manufacturing plant in China, designed to manufacture color television sets. Later, they would go on to carry out  an agricultural development project with Heilongjiang Province through ODA in 1980.

 In 1973, Nichimen joined the aircraft business as the distributor for Airbus in Japan. Nichimen also actively worked to expand into the area of machinery, receiving an order for the construction of the  royal palace in Saudi Arabia. When foreign companies started to make their entrance into the Japanese market alongside Japan’s capital liberalization, Nichimen founded Yamazaki-Nabisco Co., Ltd. jointly with Nabisco. As Nabisco was the largest biscuit maker in the world at the time,  this venture served to  introduce Western confectionery culture to Japan. Later, when housing construction started to boom along with an increase in incomes in Japan, Nichimen entered into the condominium and resort business.  They also invested in forest development in Indonesia and the securing of American timber in response to a rise in demand for housing timber. In 1978, Nichimen topped Japan’s total wood imports across all varieties,  including American timber and Southeast Asian timber.