What is a Keiretsu?
A Keiretsu is a complex network of companies and individuals in Japan that are interlinked through a cross-shareholding system. The term ‘Keiretsu’ is derived from the Japanese words ‘kei’ (meaning ‘series’) and ‘retsu’ (meaning ‘set’). The Keiretsu system is a unique feature of the Japanese economy and has been in place for many years.
Types of Keiretsu
There are two main types of Keiretsu: the horizontal and vertical Keiretsu. The horizontal Keiretsu is a network of independent companies that are linked through cross-shareholding and other business deals. The vertical Keiretsu, on the other hand, is a network of companies that are linked through a parent-subsidiary relationship.
Benefits of Keiretsu
The Keiretsu system has many advantages. These advantages include:
- It creates a strong sense of loyalty within the network.
- It provides a strong base for business deals and alliances.
- It helps to promote fair competition within the network.
- It encourages innovation and risk-taking within the network.
- It helps to provide stability in times of economic downturns.
Examples of Keiretsu
Some of the most famous examples of Keiretsu include the Mitsubishi, Sumitomo, and Toyota groups. These three groups are among the largest and most well-known Keiretsu in Japan.
Conclusion
The Keiretsu system is a unique feature of the Japanese economy and has been in place for many years. It provides many benefits, such as promoting loyalty and fair competition within the network, as well as encouraging innovation and risk-taking. Some of the most famous examples of Keiretsu include the Mitsubishi, Sumitomo, and Toyota groups.