COLOMBIA - Green Economy
President, Sumitomo Corporation Andes
Takahiro Saito graduated from Waseda University with a BS in political science and completed an executive course at the University of Chicago Booth School of Business. He started his career with Sumitomo Corporation in 1993 and has held several positions, including manager of the international steel trade department, product manager, head of electrical steel sheet team, head of power train team No. 2, and President, Sumitomo Corporation Andes.
Sumitomo has ambitious plans to tap into the significant growth potential in the country while simultaneously contributing to its development.
Can you provide a general view of the Sumitomo Corporation and outline the company’s principal objectives in Colombia?
Sumitomo Corporation is a Japanese company and was originally the trading arm of Sumitomo Group. Right now, each Sumitomo company is independent. The company has transformed its business model from trading to business investment. Our company Sumitomo Andes is in charge of three countries in the region: Colombia, Ecuador, and Peru. Our biggest business in the region is mining, with a large investment in a copper mine in Peru, and other traditional trading business such as automotive. We import cars from Mazda, which is also a group company, and we do some internal distribution business with cosmetic ingredients. We have invested in a European company called Fyffes, the largest distributor of bananas in Europe. Our other core business is the import and distribution of agrochemicals. Those are the traditional businesses that we have invested in.
Sumitomo Corporation has between USD2.5 and USD5.5 million of product investment in Colombia. What principles guide your planning in Colombia?
We are in the second year of the mid-term business plan outlined to 2023. The focus is supporting the country’s ESG objectives and contributing to a sustainable economy. In South America and the region, we are focused mainly in two areas: de-carbonization, carbon neutral, or carbon free; and agriculture-related business. We would like to contribute to solve social issues throughout the business.
What is Sumitomo’s approach to partnerships?
Sumitomo is a large corporation spread out all over the world. We have offices in over 150 countries and 70,000 employees. We rotate employees from one country to another every four or five years. Our business principle is to look for a local business partner where we want to make a business or investment. We place great importance in long-term business. We are not like a typical investment bank that makes an investment and then sells it after three-four years. As long as the investment is creating value, we want to stay long term, and it is important that our partner has the same philosophy. Making a profit is important, but we want to contribute to society. The philosophy of the executives of partners is extremely important when making an investment decision.
What business synergies did you identify with the Colombian company, Promigas?
Promigas has the same mentality and strategy as us; they are interested in developing business lines in the area of de-carbonization, especially in hydrogen. There are things that both companies can bring together and are on to the table for the project. That was the initial reason why we wanted to talk with Promigas. It is part of a big group in the country and has a good, solid reputation. After meeting with its executives several times and talking about the business opportunities and personal lives, we realized we have similar philosophy and have similar expectations. There is a good and similar chemistry between two companies.
Sumitomo is a perfect example of FDI confidence in Colombia. What expertise can Sumitomo bring to the Colombian economy?
Other than simple financial resources, our global network and the diversity of our business portofolio are key. We work closely with other regional offices as well as the head quarter. If we see a need for specific technology, for example, to produce hydrogen, then we communicate with our sister offices to find solutions. Promigas’ main business is in gas transportation. We have an energy business in Houston. We try to look for support that we may be able to do from energy business groups. That is our expertise.
What makes hydrogen energy revolutionary, and what makes the field interesting as an investment opportunity?
Sumitomo Corporation is extremely concerned about climate change. Japan always has an issue with energy, as we do not have much fossil fuels, and we has been investing in renewable energies such as wind and solar. Hydrogen has the great potential to replace oil and gas in the future. There are still many challenges ahead, such as the cost; the cost is much higher than oil, and there is still much to do on the supply chain side. It is coming, but we believe solution will be found in a matter of time. Even though it might be premature to make an investment at this moment, we wanted to get involved in the early stages.
What are Sumitomo’s targets for the medium and long term in Latin America and in Colombia?
We want to increase our presence in Colombia and tap into our global network. We are discovering many opportunities here, with significant growth potential in the country. There are 100 million people in total in the three countries that Sumitomo Andes is in charge of. There are many ways in which we can contribute to the development of Colombia. Japan, as a country, can contribute more to the development of the region and the country. To do so, we have to let them know about the opportunities in both Colombia and South America.
How do you evaluate Colombia’s approach to investment attraction?
ProColombia is extremely active not only here but also in Tokyo. In FDI, there are lot of competitions and other countries also want to promote different products and opportunities to Japan. We always need to evaluate why Colombia is the best destination for the investment, before presenting a particular product or opportunity. We still need to make great effort in that area and work with ProColombia and embassies in both countries.
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