zaibatsu

/zuy"bah tsooh"/, n., pl. zaibatsu.

a great industrial or financial combination of Japan.

[1935-40; < Japn, equiv. to zai wealth ( < MChin, equiv. to Chin cái) + batsu, deriv. of bat clique ( < MChin, equiv. to Chin fá)]

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(Japanese; "wealthy clique")

Large capitalist enterprises of pre-World War II Japan, similar to cartels or trusts but usually organized around a single family.

One zaibatsu might operate companies in many areas of economic importance; all zaibatsu owned their own banks, which they used as a means for mobilizing capital. After the war the zaibatsu were dissolved: stock owned by the parent companies was put up for sale and individual companies were freed from the control of parent companies. After the signing of the peace treaty in 1951, many companies began associating into what became known as enterprise groups; these differed from zaibatsu primarily in the informal manner that characterized policy coordination and in the limited degree of financial interdependency between member companies. Modern-day keiretsu are similar.

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▪ Japanese business organization

      (Japanese: “wealthy clique”), any of the large capitalist enterprises of Japan before World War II, similar to cartels or trusts but usually organized around a single family. One zaibatsu might operate companies in nearly all important areas of economic activity. The Mitsui combine, for example, owned or had large investments in companies engaged in banking, foreign trade, mining, insurance, textiles, sugar, food processing, machinery, and many other fields as well. All zaibatsu owned banks, which they used as a means for mobilizing capital.

      The four main zaibatsu were Mitsui (Mitsui Group), Mitsubishi (Mitsubishi Group), Sumitomo (Sumitomo Group), and Yasuda, but there were many smaller concerns as well. All of them developed after the Meiji Restoration (1868), at which time the government began encouraging economic growth. The zaibatsu had grown large before 1900, but their most rapid growth occurred in the 20th century, particularly during World War I, when Japan's limited engagement in the war gave it great industrial and commercial advantages.

      In 1946, after the end of World War II, the Allied occupation authorities ordered the zaibatsu dissolved. Stock owned by the parent companies was put up for sale, and individual companies of the zaibatsu empires were freed from the control of parent companies. The management of the individual companies, however, was not radically changed, and to some extent the coordination and control of the previous organization remained.

      After the signing of the peace treaty in 1951, many companies began associating into what became known as enterprise groups (kigyō shūdan). Those created with companies that were formerly part of the big zaibatsu— Mitsubishi Group, Mitsui Group, and Sumitomo Group (qq.v.)—were more loosely organized around leading companies or major banks; they differed most significantly from the old, centrally controlled zaibatsu in the informal manner that characterized each group's policy coordination and in the limited degree of financial interdependency between member companies. The cooperative nature of these groups became a major factor in Japan's tremendous postwar economic growth, because, in the pooling of resources, the investments made by these groups in developing industries were large enough to make these industries competitive worldwide.

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