UK Accounting Glossary
A set of Japanese companies with interlocking business relationships and shareholdings.
A keiretsu (Japanese: 系列, literally system, series, grouping of enterprises, order of succession) is a set of companies with interlocking business relationships and shareholdings.
A keiretsu is a group of closely related Japanese companies, often with interlocking ownership. Traditionally, there have been both horizontal and vertical keiretsu. Horizontal keiretsu centre on a main bank and their companies span various industries. Vertical keiretsu centre on a major manufacturer, like Toyota, and include its various suppliers and wholesalers. The keiretsu encourage its members to award contracts to sister companies and cooperate with each other for the overall good of the keiretsu. The keiretsu dominated the Japanese economy in the last half of the twentieth century. More recently, however, the keiretsu have been losing their grip, and the long-term business relationships of the keiretsu are fraying. When written in Japanese, keiretsu comprises two characters, meaning “system” and “row”. Thus the term keiretsu is now used more generally to mean an alliance of companies and individuals that work together for mutual benefit.
The keiretsu maintained dominance over the Japanese economy for the second half of the 20th century, and to a lesser extent, the early 21st century.
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This glossary post was last updated: 9th February 2020.