TITLE : KEIRETSU: INSIDE THE HIDDEN JAPANESE CONGLOMERATES

PREFACE

In the very short time since 1989 a Japanese word migrated to America, jumped onto the cover of Business Week, made a dramatic debut before the U.S. Congress, did a variety of television appearances, and was quickly "naturalized" into the English language. The term keiretsu may lack the cultural associations of kimono and geisha and the upscale image of sushi, but it has accomplished something that these other Japanese imports have not: it has joined America's business lexicon. The general subject of Japan's industrial "families" (the various kinds of keiretsu) has become a topic of considerable debate in the United States, in Europe, and even in Asia. Innumerable studies have been undertaken in the United States, from the university to the government level, trying to determine whether to tolerate or castigate the Japanese keiretsu.

Are the keiretsu merely efficient organizational systems for streamlining the Japanese economic machine? Or are they instead exclusionist confederations designed to keep out foreign competition? Are they, perhaps, both? Should the United States allow Japanese keiretsu to operate unchallenged? Should they be allowed to expand their influence in America? Should American firms be trying to emulate the keiretsu in order to improve our elusive "competitiveness"?

Everyone, from columnists to Congressmen, has added to the debate on the keiretsu. Yet the subject of this growing public policy issue is clouded by a lack of information on what the keiretsu are and, more important, how they are understood in Japan. The aim of this book is to provide the foundation for understanding the keiretsu, both horizontal and vertical, and to give the reader some feel for the vital interconnections of Japanese business.

We will examine a number of features that are common to most keiretsu, such as the "main bank," stable share holding, and interconnecting directorates. We will also look at some features which have no parallel in America, such as a general trading company. We will look at the history of Japan's most famous keiretsu, observe how the government itself promoted the "keiretsification" of the economy, and then visit with workers in the production keiretsu to see firsthand what life is like on the inside. To our knowledge this is the first time that voices from inside the keiretsu have ever appeared in English.

Kenichi Miyashita

David Russell