zaibatsu

is a Japanese term referring to industrial and financial vertically integrated business conglomerates in the Empire of Japan, whose influence and size allowed control over significant parts of the Japanese economy from the Meiji period until the end of World War II. A ''zaibatsu'' general structure included a family-owned holding company on top, and a bank which financed the other, mostly industrial subsidiaries within them. Although the ''zaibatsu'' played an important role in the Japanese economy from the 1860s to 1945, they increased in number and importance following the Russo-Japanese War of 1904–1905, World War I and Japan's subsequent attempt to conquer East Asia during the inter-war period and World War II. After World War II they were dissolved by the Allied occupation forces and succeeded by the ''keiretsu'' (groups of banks, manufacturers, suppliers, and distributors). Equivalents to the ''zaibatsu'' can still be found in other countries, such as the '' chaebol'' conglomerates of South Korea.

Terminology

The term ''zaibatsu'' was coined in 19th century Japan from the Sino-Japanese roots ''zai'' ('wealth', from Middle Chinese ) and ('clique', 'group', from Middle Chinese ). Although ''zaibatsu'' themselves existed from the 19th century, the term was not in common use until after World War I. By definition, the ''zaibatsu'' were large family-controlled vertical monopolies consisting of a holding company on top, with a wholly-owned banking subsidiary providing finance, and several industrial subsidiaries dominating specific sectors of a market, either solely, or through a number of subsidiary companies.

Significance

The ''zaibatsu'' were the heart of economic and industrial activity within the Empire of Japan, and held great influence over Japanese national and foreign policies. The '' Rikken Seiyūkai'' political party was regarded as an extension of the Mitsui group, which also had very strong connections with the Imperial Japanese Army. Likewise, the ''Rikken Minseitō'' was connected to the Mitsubishi group, as was the Imperial Japanese Navy.

The ''zaibatsu'' were viewed with suspicion by both the right and left of the political spectrum in the 1920s and 1930s. Although the world was in the throes of a worldwide economic depression, the ''zaibatsu'' were prospering through currency speculation, maintenance of low labour costs and military procurement. Matters came to a head in the League of Blood Incident of March 1932, with the assassination of the managing director of Mitsui, after which the ''zaibatsu'' attempted to improve their public image through increased charity work.

History and development

The ''zaibatsu'' were at the heart of economic and industrial activity within the Empire of Japan since Japanese industrialization accelerated during the Meiji era."The Rise and Fall of the Zaibatsu: Japan's Industrial and Economic Modernization", David A. C. Addicott, Pepperdine University, https://digitalcommons.pepperdine.edu/cgi/viewcontent.cgi?article=1259&context=globaltides They held great influence over Japanese national and foreign policies which only increased following the Japanese victory over Russia in the Russo-Japanese War of 1904–1905 and Japan's victories over Germany during World War I. During the inter-war period the ''zaibatsu'' aided Japanese militarism and benefited from the conquest of East Asia by receiving lucrative contracts.

When Japan emerged from the self-imposed, pre-Meiji era ''sakoku'' in 1867, Western countries already had very dominant and internationally significant companies. Standard Oil, Carnegie Steel Company, AT&T, General Electric, Western Union, Friedrich Krupp AG, Thyssen AG, Robert Bosch GmbH, Lloyd's of London, Reckitt and Sons, East India Company, and British Petroleum were very dominant and were the major players in international trade. The British Empire, under the leadership of the Baring family, the Rothschild family and the Guinness family, as well as Imperial Germany and other European countries were colonizing much of the undeveloped world, and Japanese companies realized that in order to remain sovereign, they needed to develop the same methodology and mindset of North American and European companies, and the ''zaibatsu'' emerged.

Big four

The of, in chronological order of founding, Sumitomo, Mitsui, Mitsubishi, and Yasuda were the most significant ''zaibatsu'' groups. Two of them, Sumitomo and Mitsui, had roots in the Edo period while Mitsubishi and Yasuda traced their origins to the Meiji Restoration. Throughout Meiji to Shōwa, the government employed their financial powers and expertise for various endeavors, including tax collection, military procurement and foreign trade.

New ''zaibatsu''

Beyond the big four, consensus is lacking as to which companies can be called ''zaibatsu'', and which cannot. After the Russo-Japanese War, a number of so-called "second-tier" ''zaibatsu'' also emerged, mostly as the result of business conglomerations and the awarding of lucrative military contracts. Some more famous second-tier ''zaibatsu'' include the Ōkura, Furukawa, and Nakajima groups.

The early ''zaibatsu'' permitted some public shareholding of some subsidiary companies, but never of the top holding company or key subsidiaries.

The monopolistic business practices by the ''zaibatsu'' resulted in a closed circle of companies until Japanese industrial expansion on the Asian mainland (Manchukuo) began in the 1930s, which allowed for the rise of a number of new groups (''shinko zaibatsu''), including Nissan. These new ''zaibatsu'' differed from the traditional ''zaibatsu'' only in that they were not controlled by specific families, and not in terms of business practices.

Postwar dissolution

The ''zaibatsu'' had been viewed with some ambivalence by the Japanese military, which nationalized a significant portion of their production capability during World War II. Remaining assets were also highly damaged by destruction during the war.

Under the Allied occupation after the surrender of Japan, a partially successful attempt was made to dissolve the ''zaibatsu''. Many of the economic advisors accompanying the SCAP administration had experience with the New Deal and were highly suspicious of monopolies and restrictive business practices, which they felt to be both inefficient, and to be a form of corporatocracy (and thus inherently anti-democratic).

During the occupation of Japan, sixteen ''zaibatsu'' were targeted for complete dissolution, and twenty-six more for reorganization after dissolution. Among the ''zaibatsu'' that were targeted for dissolution in 1947 were Asano, Furukawa, Nakajima, Nissan, Nomura, and Okura. In addition, Yasuda dissolved itself in 1946. The controlling families' assets were seized, holding companies eliminated, and interlocking directorships, essential to the old system of inter-company coordination, were outlawed. The Matsushita Electric Industrial Company (which later took the name Panasonic), while not a ''zaibatsu'', was originally also targeted for breakup, but was saved by a petition signed by 15,000 of its union workers and their families.

However, complete dissolution of the ''zaibatsu'' was never achieved, mostly because the U.S. government rescinded the orders in an effort to reindustrialize Japan as a bulwark against communism in Asia.

In his 1967 memoirs, Kennan wrote that aside from the Marshall Plan, setting the "reverse course" in Japan was "the most significant contribution I was ever able to make in government". George F. Kennan, ''Memoirs'', 1925-50 (Boston, 1967), 393. ''Zaibatsu'' as a whole were widely considered to be beneficial to the Japanese economy and government, and the opinions of the Japanese public, of the ''zaibatsu'' workers and management, and of the entrenched bureaucracy regarding plans for ''zaibatsu'' dissolution ranged from unenthusiastic to disapproving. Additionally, the changing politics of the occupation during the reverse course served as a crippling, if not terminal, roadblock to ''zaibatsu'' elimination.

Modern-day influence

Today, the influence of the ''zaibatsu'' can still be seen in the form of financial groups, institutions, and larger companies whose origins reach back to the original ''zaibatsu'', often sharing the same original family names (for example, Sumitomo Mitsui Banking Corporation). However, some argue that the "old mechanisms of financial and administrative control" that ''zaibatsu'' once enjoyed have been destroyed. Despite the absence of an actual sweeping change to the existence of large industrial conglomerates in Japan, the ''zaibatsu's'' previous vertically integrated chain of command, ending with a single family, has now widely been displaced by the horizontal relationships of association and coordination characteristic of . Keiretsu, meaning "series" or " subsidiary", could be interpreted as being suggestive of this difference.

List of ''zaibatsu''

The "big four"
* Mitsubishi (三菱財閥)
* Mitsui (三井財閥)
* Sumitomo (住友財閥)
* Yasuda (安田財閥)

Second-tier ''zaibatsu''
* Asano (浅野財閥)
* Fujita (藤田財閥)
* Furukawa (古河財閥)
* Mori (森コンツェルン)
* Kawasaki (川崎財閥)
* Nakajima (中島飛行機)
* Nichitsu (日窒コンツェルン)
* Nissan (日産コンツェルン)
* Nisso (日曹コンツェルン)
* Nomura (野村財閥)
* Okura (大倉財閥)
* Riken (理研コンツェルン)
* Shibusawa (渋沢財閥)

Bankrupt ''zaibatsu''
* Suzuki shoten (鈴木商店)

Popular culture

The term ''zaibatsu'' has been used often in books, comics, games, and films, referring to large and usually sinister Japanese corporations, who are often involved in shady dealings or have connections to the yakuza. Examples include the Mishima Zaibatsu, which is prominently featured in the ''Tekken'' series, the ''Zaibatsu'' criminal group in '' Grand Theft Auto 2'', and various writings of pioneer cyberpunk author William Gibson. In other cases ''zaibatsu'' are used simply to provide the background for a character from an influential family, such as in the case of the F4 in '' Boys Before Flowers'' who are the sons and heirs of the four biggest corporations in Japan.

* In the Tom Clancy book '' Debt of Honor'', a group of ''zaibatsu'' seize control of Japan and invade the US-held Mariana Islands.
* The video game '' Grand Theft Auto 2'' features a gang called the Zaibatsu that the player can take jobs from. It is the largest gang in the game, and the eventual final enemy.
* The video game '' Hearts of Iron IV'' features the Zaibatsus as a modifier for the nation of Japan. This modifier is present at the start of the game in 1936 which causes a small percentage of increase in faster civilian, military, and naval factory construction with the trade-off of gaining less political power, increasing political power cost of trade laws, and higher economy costs.
* Karin Kanzuki, a character from the ''Street Fighter'' series, is the heiress to the Kanzuki ''zaibatsu''.
* The Itoshiki family from '' Sayonara Zetsubō Sensei'' owns a ''zaibatsu'' to accentuate their heavy economic and political background.
* In the ''Tekken'' series, the Mishima Zaibatsu is the major organization behind the tournaments.
* In the manga ''Tokyo Ghoul'', Shuu Tsukiyama is the heir to the Tsukiyama Group, a powerful international business conglomerate that originated as a ''zaibatsu''.
* In the tabletop role-playing game '' Shadowrun'', several of the Big Ten mega-corporations are formed from the old ''zaibatsu'' and still carry on their managerial styles in the Japanese Imperial State in the sixth world, prominent examples being Renraku and Mitsuhama Computer Technologies.
* In the board game ''Nippon'', players control ''zaibatsu'' and try to grow their influence and power as they oversee the era of rapid industrialization of Japan.
* In the manga and anime ''Urusei Yatsura'', the character Shutaro Mendou is the heir to the Mendou ''zaibatsu'', the wealthiest and most powerful ''zaibatsu'' with its own private army and even private air force. His rival Tobimaro Mizunokoji is the heir to the Mizunokoji ''zaibatsu'', the second wealthiest and second most powerful ''zaibatsu'' which also has its own private military. Their sisters Ryoko Mendou and Asuka Mizunokoji are also important characters, with Ryoko Mendou commanding large numbers of kuroko and setting up elaborate, very expensive and destructive schemes, and Asuka Mizunokoji being terrified of all men except for her brother and also having such extreme superhuman strength due to an entire lifetime of military training that it makes the superhuman strength of Shinobu Miyake seem normal by comparison.
* In the manga and anime ''Killing Bites'', the plot revolves around four ''zaibatsu'' and the bloody to-the-death tournaments members of them participate in against other ''zaibatsu'' teams. Recently, through gene splicing or similar technology, all of the fighters have been turned into creatures called Therianthropes – people with abilities to make partial, and in some cases complete, transformations into animals, and take on many characteristics of these animals.
*In the manga and anime '' Kaguya-sama: Love Is War,'' the female protagonist Kaguya Shinomiya is the daughter of the leader of the fictitious Shinomiya group, one of the big four ''zaibatsu'' of an alternate history.

See also

* Big business
* Chaebol
* Concern
* Conglomerate (company)
* Four big families of Hong Kong
* Four big families of the Republic of China
* Konzern
* The Hongs
* Japanese post-war economic miracle
* Thirteen Factories

References

Notes

Bibliography

* Alletzhauser, Albert J. ''The House of Nomura''. New York: Harper Perennial, 1991. .
* Allinson, Gary D. ''Japan's Postwar History''. Ithaca, New York: Cornell University Press, 1997. .
* Aoki, Masahiko & Hyung-Ki Kim
''Corporate Governance in Transitional Economies: Insider Control and the Role of Banks''
Retrieved online 28 June 2004. Print edition: Washington, D.C.: World Bank Office of the Publisher, 1995. .
*
* Schenkein, Joshua (2014).
Japan, the Great Power: Industrialization Through the Lens of Zaibatsu
'. .

External links

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Economic history of Japan
Empire of Japan
Japanese business terms
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