Keiretsu
Keiretsu, pronounced “keh-reh-tsu,” is a Japanese term that refers to a loosely knit association of businesses and industrial enterprises that often cooperate in a variety of ways. These associations are typically dominant in specific industries and play an important role in the Japanese economy.
Key Features:
- Loosely knit: Keiretsu members are not necessarily formal subsidiaries of one another, but they often have close ties and share similar business interests.
- Industry focus: Keiretsu tend to be concentrated in particular industries, often commanding a significant share of the market.
- Vertical and horizontal cooperation: Members cooperate in both vertical (supplier-buyer) and horizontal (competitor) relationships.
- Economic influence: Keiretsu groups have a significant impact on the Japanese economy, influencing both market dynamics and policy decisions.
Examples:
- Toyota Motor Corporation: Leading automotive manufacturer and one of the biggest keiretsu members.
- Honda Motor Company: Another major automotive manufacturer and keiretsu member.
- Mitsubishi Corporation: Conglomerate with interests in various industries, including automotive, electronics, and construction.
Historically:
Keiretsu flourished during the latter half of the 20th century and were instrumental in Japan’s rapid industrialization. However, their dominance has waned in recent years due to changing economic landscape and challenges from global competitors. Despite the decline, keiretsu still play a significant role in the Japanese economy and hold considerable influence in certain industries.
Additional Resources:
- Wikipedia: Keiretsu
- Investopedia: Keiretsu
- The Japan Society for the Promotion of Science: Keiretsu
FAQs
What is keiretsu in Japanese business?
Keiretsu is a Japanese term referring to a group of interlinked businesses with cross-ownership and close relationships, usually involving a central bank that supports the group financially.
What are examples of Japanese keiretsu?
Major examples include Mitsubishi, Mitsui, Sumitomo, Fuyo, Sanwa, and Toyota, each consisting of interconnected companies across industries, from manufacturing to banking.
Is Toyota part of a keiretsu?
Yes, Toyota is a major example of a vertical keiretsu, forming a close network with its suppliers, manufacturers, and distributors.
What is the difference between keiretsu and zaibatsu?
Zaibatsu were large family-controlled business conglomerates before WWII. After WWII, keiretsu replaced zaibatsu with a more cooperative, cross-shareholding model without central family control.
