Keiretsu


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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 ?
Keiretsu were critically impacted, while changes on a level previously unheard of occurred rapidly across all sectors, most evidently in the financial sector via restructuring, consolidation, and alliance.
The results also show that reinsurance purchase positively relates to firm value even among keiretsu firms.
It makes more sense to support entrepreneurs in using them more actively.Another reason is that the traditional Japanese business model is often not flexible enough to react quickly to global competition and keiretsu market changes.
These have brought their skills to the keiretsu coordinating production, transport and financing among the enterprises in the group.
US automobile market, supplier management practices, Japanese assemblers, American practices, keiretsu practices, Thailand
However, Dietmar Ostermann, global lead director for PRTM's automotive industry practice and author of the report, says: "Despite the fact that Toyota Keiretsu suppliers show very well as potential buyers in our study and have the financial strength and capability to be a consolidator, we don't expect them to be very busy with M& A activities.
The Sumitomo Trust & Banking Company Ltd, a member of the Sumitomo keiretsu or group of companies, operates as an independent financial concern offering asset management and custodial services as well as traditional commercial banking services.
The calculation may also be that the Japanese "keiretsu" model of interlocking corporate shareholdings with strong government influence, more suits Russian business than the raw US-style capitalism imposed during the Yeltsin years.
The stock of Korean Chaebol member companies is heavily owned and controlled by the owner' family members, whereas the controlling ownership in Japanese Keiretsu members are spread among their affiliated companies.
We look forward to providing BizSpark participants access to early stage funding, as well as business support though our strong keiretsu network".
* We also investigate whether the relationships differ between keiretsu and nonkeiretsu firms.
The interlocking nature of the companies is an example of the type of investment technique known as keiretsu, where a network of companies are linked by a series of relationships.