CandleFocus Glossary Editor
Keiretsu is a unique form of strategic partnership common among Japanese companies. It is a business network made up of organizations including manufacturers, financiers, suppliers, wholesalers, and distributors, who have close relationships and provide each other with mutual support and cooperation. The term keiretsu refers to the close connections between these organizations, and the understanding that despite their independence, there is an expectation of loyalty and collaboration.
Keiretsu have become integral to the economics of Japan and its corporate world. After the Second World War, these organized networks of companies helped rebuild the Japanese economy and now remain an important part of the country’s business structure. Companies within a keiretsu can benefit from shared expertise, lower costs on services and supplies, access to capital and more easily diversify their product lines.
The two main types of keiretsu are horizontal and vertical. In a horizontal keiretsu, companies in different industries partner with a financial institution at the center, which supports the companies financially by issuing stock and providing loans. For example, the Mizuho Financial Group is the leader of the Mizuho keiretsu, which includes over 250 companies such as Toyota and Toshiba. Through collaboration within these networks, companies can share resources and increase their capacity to compete in the global market.
In a vertical keiretsu, companies in the same industry join forces. The arrangement begins with a manufacturer at the top, who is then followed by a chain of suppliers and distributors, all of which have equity stakes in each other’s companies, making them indirectly connected. Vertical keiretsus are especially important in Japan due to the country’s long-term relationship culture, and many of the country's large manufacturers have vertical keiretsus.
Keiretsu are here to stay and offer many advantages to the companies and industries that are part of the network. Companies within the network are able to share resources and have access to a broad range of expertise, allowing them to remain competitive and create innovative products. The concept of keiretsu, with its cooperative framework, is an important example of how globalization is transforming the way businesses work, and how collaboration can provide long-term value. By forming partnerships, companies can maximize their potential and succeed in an ever-changing global market.
Keiretsu have become integral to the economics of Japan and its corporate world. After the Second World War, these organized networks of companies helped rebuild the Japanese economy and now remain an important part of the country’s business structure. Companies within a keiretsu can benefit from shared expertise, lower costs on services and supplies, access to capital and more easily diversify their product lines.
The two main types of keiretsu are horizontal and vertical. In a horizontal keiretsu, companies in different industries partner with a financial institution at the center, which supports the companies financially by issuing stock and providing loans. For example, the Mizuho Financial Group is the leader of the Mizuho keiretsu, which includes over 250 companies such as Toyota and Toshiba. Through collaboration within these networks, companies can share resources and increase their capacity to compete in the global market.
In a vertical keiretsu, companies in the same industry join forces. The arrangement begins with a manufacturer at the top, who is then followed by a chain of suppliers and distributors, all of which have equity stakes in each other’s companies, making them indirectly connected. Vertical keiretsus are especially important in Japan due to the country’s long-term relationship culture, and many of the country's large manufacturers have vertical keiretsus.
Keiretsu are here to stay and offer many advantages to the companies and industries that are part of the network. Companies within the network are able to share resources and have access to a broad range of expertise, allowing them to remain competitive and create innovative products. The concept of keiretsu, with its cooperative framework, is an important example of how globalization is transforming the way businesses work, and how collaboration can provide long-term value. By forming partnerships, companies can maximize their potential and succeed in an ever-changing global market.