Comparative large Japanese and Korean business groups g p keiretsu and chaebol

INTRODUCTION
► An

oustanding feature that both Japanese g p and Korean economies share is the dominance of large business groups – keiretsu in Japan and kaebol in Korea.
► Their Influence is not just restricted to the economy, but also they have maintained very close relationships with their governments. ► B recruiting mainly from top-universities
By
iti i l f top- i t iti they control first-rate human resources in firsttheir th i countries. ti Large Japanese
L
J business groups g p

Zaibatsu
► Zaibatsu

played an important role in the p p rapid modernization of Japan from the late
19th century to the Second World War.
► The four largest zaibatsu groups –
Mitsubishi, Mitsui, Sumitomo and Yasuda accounted about 2 % of all Japanese d b
25% f ll business. Zaibatsu
► In

short its ownership structure resembled a pyramidal model. py ► Although the family members controlled the top position of the groups usually the groups, management of the business operations was given to professional managers, who f l h were not related to the families.

Zaibatsu piramidal structure

Mitsubishi
► Expanded

from the shipping business into other areas by diversifying its products; y y g products; p practiced a system with a strong president – the Iwasaki brothers held the main posts posts. However, professional managers, from non
Iwasaki families, were given a great deal of families power.

Mitsui
► Was

initially concentrated on textile and money exchange buisnesses. y g
► The Mitsui family virtually owned the Mitsui
Group,
Group but as the group grew, the onwing grew family slowly dissociated itself from direct praticipation. The trasnformation of Mitsui h f f y professional to a zaibatsu was led by p managers from non-zaibatsu families non- Sumitomo
► It

made wealth from copper refining and mining businesses. g ► In contrast to Misui and Mitsubishi the
Sumitomo family had a lower onwership percentage. However, the parent company had h d more financial and personnel control f l d l l over the subsidiary companies. y p

Zaibatsu after WW2
► After

the Second World War the four largest zaibatsu groups voluntarily made dissolution proposals because they became a target of the
Allied Forces Supreme Command.
► In 1951 Japan regained its lost independence – old familiar names like Mitsui, Mitsubishi,
Sumitomo began to reemerge. Nevertheless some prewar groups never regained their original g g g ownership.

Keiretsu
► Postwar

Japanese business groups differed from zaibatsu in many aspects: aspects: Their pattern of ownership changed from hiearchical system to an inter-locking ownership pattern with the intermember companies cross-owning th stocks of others b i crossi the t k f th within the group. group. The governing body is the Presidential Club body Each group is organized around a general trading company and a major in-house bank in- Keiretsu
► Large

groups are linked through capital and personnel – cross holding of stocks among p g g the members of the group.
► Old zaibatsu families rarely get involved in management – these large groups are almost entirely run by professional l l b f l managers g Keiretsu star picture

Keiretsu largest among the six big keiretsus is
Mitsubishi with presidential club called Kiyokai
► Mitsui group is ranked as second. Its presidential club is called Nimokukai
► Sumitomo Group is the third largest group with presidential club called Hakusuikai
► The rest three of the biggest keiretsu groups are
Fuyo, Sanwa and Dai-Ichi Kangyo
Fuyo
Dai► The

Keiretsu
► Advantages

g p groups: in forming large business

The mutual stockholding among the group members improves their stability
Each group is supported by a general trading