Keiretsu

A keiretsu (Japanese: 系列; literally system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings that dominated the Japanese economy in the second half of the 20th century. In the legal sense, it is a type of business group that is in a loosely organized alliance within Japan's business community. It rose up to replace the zaibatsu system that was dissolved in the occupation of Japan following the Second World War. Though their influence has shrunk since the late 20th century, they continue to be important forces in Japan's economy in the early 21st century.

The members' companies own small portions of the shares in each other's companies, centered on a core bank; this system helps insulate each company from stock market fluctuations and takeover attempts, thus enabling long-term planning in projects.

Origins

The prototypical keiretsu appeared during the Japanese economic miracle which followed World War II, amid the dissolution of family-controlled vertical monopolies called zaibatsu.

The zaibatsu had been at the heart of economic and industrial activity within the Empire of Japan since Japanese industrialization accelerated during the Meiji era. They held great influence over Japanese national and foreign policies which only increased following the Japanese victories in the Russo-Japanese War of 1904–1905 and World War I. During the inter-war period the zaibatsu aided Japanese militarism and benefited from their conquest of East Asia by receiving lucrative contracts.

After the surrender of Japan the Allied occupation forces partially attempted to dissolve the zaibatsu which had worked closely with the militarists during the first half of the 20th century and during the war. However, the United States government later rescinded those orders in an effort to reindustrialize Japan as a bulwark against communism in Asia, so the zaibatsu were never completely dissolved.