Keiretsu

A keiretsu is a group of businesses that work together.  There are keiretsu in Japan.

Structure

The companies in the keiretsu each own shares of each other's stock.  Sometimes, there is a bank at the middle of a keiretsu. These are called horizontal keiretsu.

Keiretsu can also have some companies that make supplies that other companies in the keiretsu need.  These are called vertical keiretsu.

Not all countries allow keiretsu.  For example, in the United States, keiretsu are illegal.  They are against antitrust laws.

History

The keiretsu started after World War II during the American occupation of Japan.  Before there were keiretsu, there were zaibatsu.  The zaibatsu were also business groups, but they were owned by families.  The zaibatsu supported the military government of Japan from the 1800s through World War II, so the Americans broke them up after the war.

In the 1990s, there was a financial crisis in East Asia.  Most of the companies in keiretsu decided to cut costs.  This weakened the keiretsu because each company wanted to get the best deal, even if it wasn't with a company in its own keiretsu.  Japan made treaties with other countries that required it to break up some of the keiretsu because of antitrust laws.

 References 

Category:Economy of Japan
Category:Business organizations