Pronunciation: [ke͡əɹˈɛtsuː] (IPA) 
"Keiretsu" is a Japanese term used to refer to a business group. The spelling of this word is influenced by the phonetics of the Japanese language. It is pronounced as [keiɾe̞tsɯ̥] in IPA phonetic transcription, where "kei" sounds like "kay," "re" sounds like "ray," "tsu" sounds like "zoo," and the "e" in "tsu" is silent. It is important to spell "keiretsu" correctly to avoid confusion and miscommunication in business contexts.
Keiretsu refers to a distinctive Japanese business network or group characterized by interconnected companies that maintain close relationships and collaborate extensively in various sectors of the economy. The term "keiretsu" directly translates to "system" or "series," symbolizing a web of interconnected relationships and shared interests. Typically, these networks are composed of two types: vertical and horizontal keiretsu.
Vertical keiretsu often emerge in the manufacturing sector and comprise a large manufacturer surrounded by various suppliers and distributors who have long-term contractual relationships. In this arrangement, the central company provides guidance and assistance to the subsidiary entities, ensuring a stable supply chain, access to specialized resources, and shared market presence.
On the other hand, horizontal keiretsu tend to develop in diverse industries and involve companies with complementary business operations. They cooperate by exchanging technology, sharing research and development costs, and forming joint ventures, emphasizing mutual benefits and efficiency gains. These relationships facilitate economies of scale, reduce risk through diversification, and enhance market domination collectively.
Keiretsu relationships are often fortified by formal arrangements, such as cross-shareholding or interlocking directorships, establishing financial and structural links between member entities. These connections not only enhance collaboration but also work as a mechanism to safeguard against hostile takeovers and promote loyalty among the companies within the network.
While the keiretsu structure has been instrumental in Japan's economic growth and stability, it has also faced criticism for potentially inhibiting competition and innovation beyond the member companies. Additionally, the globalization of Japanese businesses and increased involvement in international markets have led to a shift in the traditional keiretsu model, adjusting it to better suit the demands of the modern business environment.
The word "keiretsu" is of Japanese origin. It is comprised of two kanji characters: "kei" (系) meaning "system" or "group" and "retsu" (列) meaning "row" or "line". It is commonly translated as "group" or "enterprise" in English. The concept of keiretsu refers to a type of business organization found in Japan, where a group of companies with interlocking relationships and cross-shareholdings work together for mutual benefit. This term gained international attention in the 1980s during Japan's economic expansion.
