Business

Doing Business in Japan – カヴァン・ チョクシ

A few things set Japanese businesses apart from businesses in other countries. The first is the way that businesses are organized. In Japan, businesses are organized into three types of groups: keiretsu, Chuka gesaku, and zaibatsu カヴァン・ チョクシ.

What is a Keiretsu?

A keiretsu is a group of businesses associated with each other through shareholdings. The word comes from “kai,” meaning company, and “retsu,” meaning group. A typical example would be Toyota Motor Corporation, which makes cars, and owns Denso Corporation, which supplies car parts to Toyota Motors. This is just one example. There are hundreds of keiretsu throughout Japan, each with many businesses in its group.

These are the large groups of companies that dominate the Japanese economy. Each has various levels of business involvement through cross-shareholding. They exist because, before World War II, all large companies were ‘zaibatsu,’ which was a problem. Post-war, the main part of the reform was to break up these ‘ zaibatsus.’ As a result, many were dissolved completely or just partially, as mentioned above. However, some remained – the key difference from before is that companies which make up the group are more independent – however, they still maintain cross-shareholdings within the group to ensure that there are bonds between them.

What is Chuka Gesaku?

Chuka gesaku are similar to keiretsu in that there is a cross-shareholding system. However, these groups usually have much less than ten companies in them. They can be made up of companies within the same industry but not restricted only to that. The cross-shareholding has less power than in keiretsu’s. They are also less well-known and much smaller.

What is a Zaibatsu?

The word zaibatsu means financial clique or family; however, the kanji used are different from this meaning. A zaibatsu group has complete control over an industry – they have all of the power that a keiretsu group would have. Zaibatsus are the pre-war version of keiretsu, and sometimes they are so closely related that it can be difficult to tell them apart. Most Japanese companies are part of a zaibatsu group.

How Does This Affect Japanese Businesses?

The main point is that keiretsu and Chuka gesaku groups are not independent. On the contrary, they work closely together, even if they aren’t completely intertwined like zaibatsu groups.

Another impact is that for foreigners, it is difficult to set up a successful business in Japan without being part of an already existing keiretsu or Chuka gesaku. Without the network, there is little chance of success.

There are also some terms used in Japanese business that can confuse foreigners – for example, sokaiya. These are company shareholders who only buy shares with the sole intention of making trouble for their company by attempting to increase their benefits.

Conclusions

As shown above, there are various terms used in Japanese business which are unique to Japan. These can be difficult for foreigners to understand. There are also difficulties involved with setting up a successful business in Japan without being connected to an already existing keiretsu or Chuka gesaku group, which will give you the necessary network that is needed.

May 2022
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