Of Zaibatsu and Keiretsu

The following article from Mainichi's English daily edition caught my attention tonight and got me looking into just what happened to the fearsome Japanese zaibatsu:

http://mdn.mainichi.jp/national/news/20071208p2a00m0na014000c.html

Though I was too young to have any interest at all in the economic happenings of the 80s, when I first became interested in Japan in adulthood I came across plenty of scary articles and literature from that decade about the economic menace that Japan posed to the US. There was some cause for concern since Japan was buying up dollars at a prodigious rate and Japanese real estate holding companies were grabbing land stateside by the handful. In many of those fear-mongering articles the term zaibatsu was brought up often and referred to the old family-run vertical monopolies that existed in Japan since the Edo Period.

The truth of the matter though is that the zaibatsu haven't existed for quite some time in their original capacity as all-powerful, untouchable entities in the Japanese economy. The original four companies that qualified as full-blown zaibatsu were Mitsubishi, Sumitomo, Mitsui and Yasuda, but as many as a few dozen other "baby zaibatsu" existed up until WWII. Those four names are pretty familiar with anyone who's spent time in Japan or follows international business, and one of them, Mitsubishi, should be familiar to most anyone in the world not living in the bush. They existed as family-owned holdings right up until MacArthur and his crack team of post-occupation economic mercenaries wiped the smaller zaibatsu from the Earth by seizing their assets or completely reorganized them while the big four only got broken up like monopolies in America a couple decades previously. The big boys didn't share their little brothers' fate only because MacArthur needed them to rebuild Japan.

When the occupation ended ten years later, Japan's constitution prevented the zaibatsu from reforming entirely, but the US overseers had in the end tried to use Japan and the big four as a blunt economic instrument against Asian Communism and thus rescinded many of their restrictions on the conglomerates. What occurred then was not a reversal back to vertically integrated zaibatsu monopolies, but rather a shift to the keiretsu, a horizontally integrated business system that's nearly as powerful as their predecessors. To give an example of what this means let's take Mitsubishi who survived the occupation to become one of the six major today. Before the war Mitsubishi controlled shipping, auto manufacturing, chemical and banking companies. Mitsubishi could transport their chemicals anywhere by the ships and cars they produced and then financed the entire operation with their bank. Today the Mitsubishi keiretsu no longer has such power over the means of production in such a vertical way, instead spreading its influence over Japan and the world with a vast net of subsidiaries. Obviously when you drive a Mitusbishi car you know it's a product of that company, but I wonder how many Japanese know that Mitsubishi owns Tokio Insurance, Japan Oil, Nikon Camera and the Kirin Beer brand. And now apparently they own KFC Japan...

A quick rundown on the the five other major keiretsu in Japan--I think you'll be surprised by this list:

Fuyo Group--Canon, Hitachi, Nissan, Ricoh, Yamaha, etc.
Mitsui--Fuji Film, Suntory, Toshiba, Toyota, Mitsukoshi (largest dept. store chain in Japan)
Sumitomo--Asahi Beverages, Mazda, NEC, Hanshin-Keihan-Nankai Railways (basically the entire public transit infrastructure in Kobe and Osaka)
Daiichi Kangyo--Fujitsu, Hitachi (partnership with Fuyo), Isuzu, Tokyo Electric Power
Sanwa--Konica-Minolta, Kyocera, Orix, Toho Studios, Keisei Railways (a major rail line in Tokyo), Kobe Steel

Jokes are often made about the Illuminati or a secret Jewish banking cabal that controls the economy of the US and we all have a good chortle about it. In Japan it's six companies that pull the strings on most everything that goes down in the country. I'm looking around my room and realize that most everything in it is a product of these companies: my kerosene heater is from Daiichi; the wreck of a TV on my table is a product of Sumitomo; the AC outside and monitor I'm looking at now are Mitsubishi's doing. The beer in my fridge even a product of a keiretsu. Madness in all directions.

--Matt