Keiretsu

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Related to Keiretsu system: Keireitsu

Keiretsu

A network of Japanese companies organized around a major bank. The term is also used outside of Japan to describe how a large corporation with many subsidiaries and associated firms can manipulate revenues. For example, firm A and B are controlled by firm C. Firm A is forced to buy its input from firm B at a high price. As a result, A is unprofitable and B is very profitable.

Keiretsu

In Japan, a number of independent but related companies centered on and financed by a single bank and/or a joint stock company. That is, the institution (and no other) provides financing for companies in the keiretsu. There are two main types of keiretsu. A horizontal keiretsu is essentially a diversified conglomerate; that is, it may have companies in several, completely unrelated industries so as to reduce the risk of loss if one industry or other has a bad year. A vertical keiretsu, on the other hand, is more centrally controlled such that companies in the same keiretsu provide all steps on the supply chain. For example, a mining company may sell a metal to a refinery in the same keiretsu, who then sells it to an auto company, who then sells cars to consumers. In Japan, these consumers are often employees of the very same keiretsu. Critics of this system contend that they are inefficient; proponents, however, argue that they are sustainable and have helped Japan recover from the post-war period. See also: Japanese miracle, Zaibatsu, Chaebol.

keiretsu

a Japanese term relating to a network of customers and their suppliers working within a related industry, or with a single customer. Developed by the multinational organizations in Japan initially with the idea of exercising control over suppliers. Kereitsu has developed to mean closer links between customer and supplier and includes the sharing of technologies, of skilled employees and of product development. See SUPPLIER DEVELOPMENT, LEAN MANUFACTURING.
References in periodicals archive ?
As noted, the keiretsu system has made a tremendous contributions to the postwar Japan's industrial miracle.
It is obvious that the keiretsu system cannot be practiced effectively in the global market.
The keiretsu system is weakening, but not because of a philosophical shift.
government will not permit Japanese manufacturers to use the keiretsu system to shield unfair competitive practices in the United States.
The Japanese keiretsu system, which many American companies do not condone, is a system that partners or collaborates between the OEM and supplier mostly because the OEM typically has ownership stake in the supplier so the collaboration is somewhat forced.
RW: The Toyota keiretsu system has been given as one reason to hook up with Mitsui.
Further, given that the keiretsu system is a key distinguishing feature of the Japanese industrial system, we also investigate the differences between keiretsu and non-keiretsu firms in how they responded to these two forces.
The findings provide interesting insights into the drivers of changes undertaken by Japanese firms in the 1990s and also into the role played by the keiretsu system in the change process.
The keiretsu system (wherein large Japanese companies own a percentage of their top suppliers) has been used for many years in Japan.
Nissan and other Japanese companies used the keiretsu system of supplier management, but with the Nissan Revival Plan, our CEO announced to all suppliers at one big gathering that we were no longer going to maintain a keiretsu system," says Emil Hassan, Senior Vice President of North American Manufacturing, Purchasing, Quality and Logistics for Nissan North America, in a recent report.