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KEIRETSU IN JAPAN The prototypical keiretsu are those which appeared in Japan during the " Economic Miracle " following World War II . Before Japan's surrender, Japanese industry was controlled by large conglomerates called '' Zaibatsu ''. The Allies dismantled the zaibatsu in the late 1940s, but the companies formed from the dismantling of the zaibatsu re-interlinked 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 to some extent as well. The major keiretsu were each centred around one Bank , which lent money to the keiretsu's member companies and held equity positions in the companies as well. Each central bank had great control over the companies in the keiretsu and acted as a monitoring entity as well as an emergency bail-out entity. One effect of this structure was to minimize the presence of Hostile Takeover s in Japan, because no entities could challenge the power of the banks. Although the divisions between them have blurred in recent years, there are six major postwar keiretsu: In addition to these mega-groupings, many companies formed smaller keiretsu. Nissan , Hitachi and their affiliates have had a longstanding keiretsu relationship dating to their prewar existence as part of the same zaibatsu; the Hankyu-Toho Group is an even closer relationship within a keiretsu. The Japanese recession in the 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 . Additionally, many companies from outside the keiretsu system, such as Sony , began outperforming their counterparts within the system. Generally, these causes gave rise to a strong notion in the business community that the old keiretsu system was not an effective business model, and led to an overall loosening of keiretsu alliances. While the keiretsu still exist, they are not as centralized or integrated as they were before the 1990s. This, 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. KEIRETSU OUTSIDE JAPAN The keiretsu model of Japan has not appeared outside Japan, but many non-Japanese businesses are described as keiretsu such as the Virgin Group (UK) and Tata Group (India). Airline Alliance s such as Oneworld and the Star Alliance have also been described as keiretsu. Generally, these groups exhibit more top-down management, centralized control or (in the case of airline alliances) looser equity ownership connections than do "true" keiretsu. Banks cited as being central to keiretsu like systems include Deutsche Bank and the early years of JP Morgan in the United States. The venture capital firm of Kleiner, Perkins, Caufield & Byers (KPCB), a major player in the Dot Com Boom , describes its investment portfolio as a keiretsu. Like the Japanese keiretsu of the postwar period, KPCB has invested in independent companies covering a number of business sectors, and encouraged business connections between those companies, making its portfolio one of the closest analogues to a keiretsu outside Japan. There is a Keiretsu Forum in America, which describes itself as the largest network of Angel Investors in the world. South Korean conglomerates, called Chaebol , are often compared to keiretsu, as they share common ancestry with the pre-war Japanese zaibatsu. However, the two business forms are quite different. FURTHER READING
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