History
During the occupation of Japan, under the Supreme Commander of the Allied Powers, General Douglas MacArthur, a partially successful attempt was made to dissolve the zaibatsu in the late 1940s. Sixteen zaibatsu were targeted for complete dissolution, and 26 more for reorganization after dissolution. However, the companies formed from the dismantling of the zaibatsu were later reintegrated. The dispersed corporations were reinterlinked through share purchases to form horizontally integrated alliances across many industries. Where possible, keiretsu companies would also supply one another, making the alliances vertically integrated, as well. In this period, official government policy promoted the creation of robust trade corporations that could withstand heavy pressures from intensified trade competition.[12]
The major keiretsu were each centered on one bank, which lent money to the keiretsu member companies and held equity positions in the companies. Each bank had great control over the companies in the keiretsu and acted as a monitoring and emergency bail-out entity. One effect of this structure was to minimize the presence of hostile takeovers in Japan, because no entities could challenge the power of the banks. Although the divisions between them have blurred in recent years, there have been eight major postwar keiretsu.[13]
Toyota is considered the biggest of the vertically integrated keiretsu groups, although the company is rather considered as a "emerged" keiretsu, along with Softbank, Seven & I Holdings Co.[14] The banks at the top are not as large as normally required, so it is actually considered to be more horizontally integrated than other keiretsu.
The Japanese recession in the 1990s had profound effects on the keiretsu. Many of the largest banks were hit hard by bad loan portfolios and forced to merge or go out of business. This blurred the lines between the individual keiretsu: Sumitomo Bank and Mitsui Bank, for instance, became Sumitomo Mitsui Banking Corporation in 2001, while Sanwa Bank (the banker for the Hankyu-Toho Group) became part of Bank of Tokyo-Mitsubishi UFJ.
Generally, these causes gave rise to a strong notion in the Japanese business community that the old keiretsu system was not an effective business model, and led to an overall loosening of keiretsu alliances. While they still exist, they are not as centralized or integrated as they were before the 2000s. For instance, many troubled Japanese companies are faced with a new reality in which receiving financial support from their main banks is getting harder and unlikelier than ever before. The companies include Sharp Corporation and Toshiba, both iconic Japanese corporations that were forced to accept foreign investment in the aftermath of financial difficulties in the 2010s.
This changed environment, in turn, has led to a growing corporate acquisition industry in Japan, as companies are no longer able to be easily "bailed out" by their banks, as well as rising derivative litigation by more independent shareholders.
United States–Japan bilateral relationship
By April 2015, U.S. Trade Representative Michael Froman and Japanese Economy Minister Akira Amari, representing the two largest economies of the 12-nation Trans-Pacific Partnership, were involved in bilateral talks regarding agriculture and auto parts, the "two largest obstacles for Japan."[15] These bilateral accords would open each other's markets for products such as rice, pork and automobiles.[15]
During the two-day ministerial TPP negotiating session held in Singapore in May 2015, veteran US negotiator Wendy Cutler and Oe Hiroshi of the Japanese Ministry of Foreign Affairs held bilateral trade talks regarding one of the most contentious trade issues, automobiles. American negotiators wanted the Japanese to open their entire keiretsu structure, a cornerstone of the Japanese economy, to American automobiles. They wanted Japanese dealer networks such as Toyota, Nissan, Honda, Mitsubishi, and Mazda to sell American cars.[16] The successful conclusion of these bilateral talks was necessary before the other ten TPP members could complete the trade deal.[15]
