Our Roots A history of rising to the challenge vol.8
Staying True to the Spirit of the Three Corporate Principles
Even in Times of Great Economic Turmoil
We look at how MC devised policies to fulfill its responsibility to society as a good corporate citizen during the period of economic turmoil that accompanied the Nixon Shock and the 1st Oil Crisis in the early 1970s.
Japan entered an extended period of high economic growth in the mid-1950s. MC adeptly picked up on this trend and proceeded to build up its organization and expand its business. However, the economic climate started to change in the 1970s. In September 1973, MC President Chujiro Fujino voiced his concerns in a message to the heads of all departments and offices: "Present economic conditions in Japan and abroad are decidedly unusual."
The first major blow to the global economy had come in the form of the Nixon Shock*. Then the 4th Middle East War erupted in October 1973, triggering the 1st Oil Crisis. In turn, this sparked a period of intense inflation, and rising prices further fueled growing social unrest. People did not just rush out to obtain petroleum-based products—they also bought up various everyday goods and products quickly disappeared from retailers' shelves. Frustrated Japanese consumers directed their anger toward shoshas, which were engaged in import-export activities. MC's sales for the 1974 fiscal year totaled 9.4 trillion yen, but this figure was largely the result of soaring prices. The actual volume of sales, adjusted for price increases, reveals a year-on-year decline of almost 7%.
During this difficult period, MC returned to its roots by reaffirming the spirit of its Three Corporate Principles. In June 1973, President Fujino made a company-wide announcement detailing the company's Standards of Conduct, which addressed activities in ten areas, including business involving general commodities, consideration for the environment, and harmony with local communities. In this way, President Fujino sharpened the focus on the spirit of the Three Corporate Principles while clarifying MC's business philosophy and the high standards expected of all employees.
In February 1974, Japan's prime minister held a meeting at his official residence to discuss inflation. The meeting was attended by business leaders from various industries including President Fujino, who declared, "We will fully cooperate with efforts to rein in prices." He instructed MC to immediately freeze prices on all goods that directly impacted consumers. This affected 37 products in categories ranging from general merchandise and fuels to foods. In the spirit of the Three Corporate Principles, MC devised measures to hold down prices in order to promote greater social stability and help fulfill its responsibility as a good corporate citizen.
- *In 1971, U.S. President Richard Nixon announced a series of economic measures including the discontinuation of the direct convertibility of dollars to gold and a 10% surcharge on imports. These measures sent shockwaves throughout the global economy and forced other developed countries to adopt floating exchange rate systems. The value of the yen had previously been fixed at 360 yen to the dollar, but this system was abolished. These changes represented great challenges for the Japanese economy—and especially for sogo shoshas, which suddenly had to incorporate consideration for foreign currency risk, exchange gains and losses and many other new factors into their business activities.