| E. Birth of Keiretsu (see A above) | |
| 0. August 1945-April 1952: Allied Occupation | |
| 1. As soon as the Americans were out Jpn, however, the law against using the old clan names was abolished. | |
| 2. No sooner had the Occupation ended in 1952 than the former zaibatsu restored their outlawed company names and began picking up the pieces and re-assembling themselves.... | |
| 3. 1950s: the formation of the Big Six horizontal keretu. | |
| a) Once their old names were restored, encouraging the old group industies to come back together was easy. | |
| b) E.g.: Mb. Shoji was broken up into over 170 separate trading compnaies. | |
| b1) After the Occupation shipped out, however, all the pieces began reorganizing, forming ever larger subgruoups, until by the end of 1952, the bulk of the companies haed merged into four large trading firms. One of those bore the name Mb. Shoji. | |
| b2) In 1954, it was agreed that the four would merge into a single unit (a parent co.), whose name should be Mb. Shoji. | |
| b3) The new co. increased its capital more than fourfold, and the members of the Mb. Group were alloted shares in the new firm as compensation for their efforts to bring about the merger. | |
| b4) This was the first instance of one of the ex-Zaibatu groups establishing cross-shareholding relationships within its group. | |
| 4. The then Jpn bureaucracy saw the cross-shareholding relationships as necessary. | |
| a) By 1953 MITI was already calling for the "keiretsification" of industry. | |
| b) The ministry even paired up manufacturers and shosha when the former had no fixed outlet for exporting. | |
| 5. The Bank of Jpn supplied the old zaibatu banks with funds which they funneled to the nation's cash-starved industries. | |
| a) Thus, industries naturally began to gayther around the banks, institutions such as Mb. and Sumitomo banks naturally gave preference to companies they knew well, their old zaibatu colleagues. | |
| b) Of the Big Four zaibatu bankds, only Yasuda thought it best not to return to its old name, and to this day is still known as Fuji Bank (although its other core financial firms retained the Yasuda name). | |
| c) Sanwa Bank, which was formed early in the 1930s, retained its name, having as members those of the defunct[=dead] Suzuki zaibatu. | |
| d) Dai-Ichi Bank, the core of old Shibusawa zaibatu, became once again the fiancial center ofr that old group of firms. | |
| e) The result: the steady rise of the commercial ("city") banks to positions of tremendous power. For better or worse, bankers determined the future of Jpn business. | |
| F. 1960s - early 1970s: Keiretsu under Gvmt protection. mid 1970s on: Exposed to free competition | |
| 1. 1960s: The keiretu's domestic mardets were protected by import restrictions, and the companies themselves by similar restriction on foreigh capital. | |
| 2. By the 1970s, the Big Six had already achieved the govmt's goals of building up Jpn's heavy industries to internationally competitive levels | |
| 3. mid 1970s on: Keiretu under free competition [exposed to volatile exchange rate, free competition, etc.] | |
| a) By the 1980s, as cries were being raised around the world for Jpn to open itself up to free competition, the keiretu no longer needed proteciton. | |
| b) Successive waves of liberalization and deregulation followed, and are still continuing, primarily because there is no need for the govmt to protect most industries and because other nations are finally demanding it. |