AM Lecture 1

Highly protectionist activities

(From the Congressional Research Service report, 1994)

It has been found companies in a Keiretsu tend to buy from within their groups only and discriminate against other exporters to Japan.
The "Big Six" apparently made 68% of their purchases from companies in which they had at least a 10% equity interest and bought only 5% from unrelated companies
Official figures show 15% inter-company purchases
Japanese transplant automakers have heavily relied on their traditional Japanese suppliers even at their US plants
Keiretsu ties help Japanese firms develop new technology or conduct long-term planning
In a Keiretsu, companies are kept from going bankrupt, unlike the West
The ties to the parent company are so strong that a foreign firm would not be able to break into subsidiaries, making keiretsu a very stable and resilient group. They would be impossible to compete against
Keiretsu distribution systems may attempt to inhibit foreign producers' goods reaching the Japanese consumer
Keiretsu stockholding patterns make the buying and selling of Japanese companies virtually impossible
All keiretsus have the support of a Trading company (Sogo Shosha), which provide a range of goods and services. It is also essentially the marketing operation of keiretsus, as from this they can find information about customers and products.