Keiretsu: Inside the Hidden Japanese Conglomerates

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Keiretsu: Inside the Hidden Japanese Conglomerates

By Kenichi Miyashita and David W. Russell
McGraw-Hill, 1994
225 pp. $22.95
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An American business journalist based in Japan and his Japanese counterpart deliver a wealth of information about the mammoth corporate alliances that lie at the heart of the Japanese business system. They begin by observing how ignorant most American companies are about their Japanese competitors, and they reflect on the fact that so many U.S. corporations are not studying business as thoroughly and systematically as the Japanese. To the Japanese, this is carelessness, and carelessness is one step away from failure.

Can or should the United States imitate the Japanese keiretsu system? Obviously not. As the authors point out, the American equivalent of the keiretsu system would be if Ford Motor Company, General Electric Company, Digital Equipment Corporation, Metropolitan Life Insurance Company, Morgan Guaranty, Goodyear Tire and Rubber Company, DuPont, 3M, Kimberly-Clark Corporation, Merck & Company, Reynolds Metals Company, Mobil Oil Corporation and TRW, Inc., were to link up, exchange small percentages of their stock with other group members, exchange directors, agree to buy from each other whenever feasible, exchange information about their respective markets, cooperate on new ventures, cooperate to support political candidates and lobby for legislation that would further the group's goals.

Can or should U.S. business learn from the keiretsu system? The authors say that they can and that some U.S. companies are already doing so. They cite three important areas where American firms can profit from adopting keiretsu strategies: in building long-term relationships between suppliers and manufacturers; in transforming non-core businesses into affiliated subsidiaries; and in learning to cooperate in R&D ventures. As the authors suggest, there is a critical need for American business and government to reflect on the need to study Japanese and other foreign competitors more systematically. Is anyone in the CIA or the Department of Commerce listening?

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