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A keiretsu (系列?, lit. system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings. It is a type of business group.

There are three types of keiretsu:


In Japan

The prototypical keiretsu appeared in Japan during the "economic miracle" following World War II. Before Japan's surrender, Japanese industry was controlled by large family-controlled vertical monopolies called zaibatsu.

During the occupation of Japan, under the Supreme Commander of the Allied Powers, General Douglas MacArthur, a partially successful attempt was made to dissolve the zaibatsu in the late 1940s. Sixteen zaibatsu were targeted for complete dissolution, and twenty six more for reorganization after dissolution. However, the companies formed from the dismantling of the zaibatsu were later reintegrated. The dispersed corporations were re-interlinked through share purchases to form horizontally-integrated alliances across many industries. Where possible, keiretsu companies would also supply one another, making the alliances vertically integrated as well. In this period, official government policy promoted the creation of robust trade corporations that could withstand heavy pressures from intensified world trade competition.[1]

The major keiretsu were each centered around one bank, which lent money to the keiretsu's member companies and held equity positions in the companies. Each bank had great control over the companies in the keiretsu and acted as a monitoring entity and as an emergency bail-out entity. One effect of this structure was to minimize the presence of hostile takeovers in Japan, because no entities could challenge the power of the banks.

There are two types of keiretsu: vertical and horizontal. Vertical keiretsu illustrates the organization and relationships within a company (for example all factors of production of a certain product are connected)—while a horizontal keiretsu shows relationships between entities and industries, normally centered around a bank and trading company. Both are complexly woven together and self-sustain each other.

Although the divisions between them have blurred in recent years, there are six major postwar keiretsu:

Toyota is considered the biggest of the "vertically-integrated" keiretsu groups.[2] The banks at the top are not as large as normally required so this is actually considered to be more horizontally integrated than other keirutsu.

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