Sociology Index

Zaibatsu And Kairetsu

Zaibatsu is a Japanese term referring to industrial and financial vertically integrated business conglomerates in the Empire of Japan, and its influence and size allowed control over significant parts of the Japanese economy from the early Meiji period until the end of World War II. A Zaibatsu's general structure included a family owned holding company on top, a bank which financed the other, mostly industrial subsidiaries within them. A keiretsu is literally a system, a series, a grouping of enterprises, or order of succession. A keiretsu is a set of companies with interlocking business relationships and shareholdings. A Keiretsu is a type of informal business group that are alliances within the social world of Japan's business community.

The Keiretsu maintained dominance over the Japanese economy for the second half of the 20th century, and the dominance continues. The member's companies own small portions of the shares in each other's companies, centered on a core bank, a system that helps insulate each company from stock market fluctuations and takeover attempts, which enables long-term planning in projects.

The Zaibatsu played an important role in the Japanese economy from the 1860s to 1945. After the Russo-Japanese War of 1904-1905 Zaibatsu increased in number and importance. After World War II Zaibatsu was dissolved by the Allied occupation forces and succeeded by the Keiretsu.

Before World War II, Japan's industrialized economy was dominated by four major zaibatsu: Mitsubishi, Sumitomo, Yasuda and Mitsui. They focused on steel, banking, international trading and various other key sectors in the economy, all of which was controlled by a holding company. They remained in close connection to influential banks that provided funding to their various projects.