When it comes to Japan's economic development, no one can help but marvel at the rapid development of Japan after World War II, and in just 20 years, it completed the task of healing the wounds of war and catching up with the old Western countries. The reason why Japan was able to achieve world-renowned economic achievements after World War II is inseparable from its own unique development model - the financial organization system and the trading company model.
How strong is the Japanese consortium? In summary, there are six well-known conglomerates in Japan, namely Mitsui, Mitsubishi, Sumitomo, Fuji, Miwa, and Daiichi Gin, who control more than 60% of Japan's total assets. According to the 2019 Fortune Global 500 list, Japanese companies occupy one-tenth of the seats, with a total of 52 on the list. Among them, Toyota, Honda, Sony and other companies that are familiar to Chinese are also included. But what few people know is that more than 40 of the 52 companies on the list belong to these six major consortiums.
The ever-expanding Japanese consortium is terrible! Taking oil as an example, Saudi Arabia, as a major oil producer in the Middle East, has top petrochemical technology, but its petrochemical technology, petrochemical power plants, seawater desalination equipment and other industrial supporting facilities are not independently developed, and the Japanese general trading company headed by Mitsui and Mitsubishi is the real controller of the country's petrochemical industry, that is, the master of commercial power. They usually enter a country's industrial market with very low equity and quickly import their own technology, finance, and trade, making themselves the real masters behind the industry.
From pre-World War II chaebols to post-war conglomerates, how did Japanese conglomerates evolve from family-controlled corporate pyramids to modern conglomerates? In the process of equity diversification of Japanese consortiums, how can U.S. capital contribute to it? Today, we will pull a timeline for the Japanese consortium
The Meiji Restoration of 1868 put Japan on the road to prosperity, and the protagonist of the Japanese economy at this time has always been the chaebol company, which is the predecessor of the Japanese foundation.
These chaebols were large monopolistic holding companies (also known as chaebol Kanzeen) that gradually developed after the Meiji Restoration due to government support, and chaebols were also common names for Japanese financial capital groups before the war. They were formed during Japan's industrial revolution, were closely linked to the strong feudal family, and had the characteristics of combining commercial capital, financial capital and industrial capital. At that time, the Meiji government provided the first impetus for the growth of Japan's traditional family businesses and emerging family businesses into large chaebol conglomerates, and with the support and help of the state, more than a dozen foundations appeared in Japan at this time, the most powerful of which were Mitsui, Mitsubishi, Sumitomo, and Yasuda. These four are collectively known as Japan's "four chaebols".
Founded in 1590 and 1673 respectively, Sumitomo and Mitsui are the oldest Japanese family-owned chaebols. Before the Meiji Restoration, when Japan was in a period of slow-moving feudal society, companies like Mitsui, which had lasted for more than 200 years, were almost 100% completely controlled by the family, and the basic principle of these corporate governance was a complete and strict family charter.
After the defeat of Japan in World War II, the US government did not relax its control and influence on Japan for its own economic interests. The US occupation forces believed that the chaebols were the reason for pushing Japan onto the path of militarism, so the United States, in the name of anti-monopoly, implemented a policy of suppression of the old chaebols, dissolved the Chaebol organizations in Japan, sold the shares held by the Chaebol families to the public, and exported a large amount of capital into Japan, but retained the existence of its banking organizations. During this period, the total number of shares transferred from chaebol families to the public accounted for 40% of the total number of shares in Japanese companies, which also made japan's historical period with the highest proportion of public ownership of corporate equity in the early years after the war.
The old chaebol model was broken and replaced by an Anglo-American corporate system. At this time, Japan had a brief pattern of separation of industry and finance, and its economy was also controlled by the United States, and it was colonized in disguise. Not only is the economy in recession, unemployment is rising, but there are also frequent labor booms, the government is extremely unstable, and the original economic order has also been chaotic. At this time, Japan was completely and utterly reduced to a puppet of the United States.
At this time, the sudden Korean War slowly eased Japan from the recession. Beginning in 1951, the United States relaxed its grip on Japanese monopoly capital in response to the needs of the Korean War and the Cold War. Since the banks had not yet disintegrated, Japan's industry and finance began to re-aggregate, and new consortia slowly emerged. Subsequently, the United States gradually adopted a policy of supporting monopoly capital, which also prompted the regrouping of Japanese chaebol organizations.
In the new policy environment, the financial institutions of the old chaebol re-aggregated the original subsidiaries, and based on the high integration of financial capital, industrial capital and commercial capital, gradually evolved into a new consortium in Japan, and since then, step by step, a trinity of industry, commerce and integration has been formed.
The Japanese consortium that was regrouped after World War II was different from the original chaebols. After this round of rebirth, both the feudal nature and the closed nature of the Japanese chaebols have been greatly weakened. On the one hand, after the original family members were expelled, the business was run by professional managers, on the other hand, in order to adapt to the Anti-Monopoly Law introduced by the United States, the Japanese foundation changed from a direct control of one company to a joint shareholding of multiple companies.
At this time, the shareholding structure has changed from the original pyramid type to the mesh sphere type of holding structure. This cross-shareholding system has become an important basis for the existence of the consortium and the most powerful means of combination, the members of the consortium, the enterprises have formed a circular mutual shareholding, which makes the capital connection between the member enterprises of the consortium have been unprecedentedly strengthened, the higher the proportion of mutual shareholding, the stronger the cohesion of the consortium.
However, it is worth mentioning that the cross-shareholding of Japanese companies after the war is directly the "legacy" of the chaebols. In the case of relying mainly on self-financing, relative shortage of capital and maintaining control, there have long been a large number of cross-shareholding phenomena between the subordinate enterprises of the chaebol. This cross-shareholding is the result of its unique institutional, cultural heritage and historical conditions.
In the environment of the government-led market economy, Japan's large enterprises have gradually formed a corporate system with distinctive characteristics. For example, shareholders have weakened their checks and balances on operators, and the shockers are in a dominant position. At the same time, it has also produced a unique corporate incentive mechanism, such as the lifelong employment system, the annual work sequence system, and the trade union in the enterprise has become a unique incentive mechanism in Japan, and has played an active role in motivating operators and employees for a long time.
This system also gave birth to Japan's famous six major consortiums, namely Mitsui, Mitsubishi, Sumitomo, Hibiscus, Daiichi Gin, and Miwa. Among them, the three major groups of Mitsubishi, Mitsui and Sumitomo, because of the inheritance of the chaebol, are more cohesive than the other three, just like the same "business" that has been inherited for hundreds of years, and no matter how you look at it, it is more like a self-contained family. The other three, on the other hand, are relatively loose and more like a club model centered on huge financing from banks.
In popular language, in these new types of enterprise groups, the host bank or financial group plays the role of father, usually determining the blood relationship and surname attribution of family members (generally the majority shareholder of the member enterprise), which is a stable economic source for family members and can provide capital support for member enterprises. The integrated trading company serving the industry plays the role of a mother, responsible for bearing children, taking care of the living of family members, influencing the education and growth of children (supporting many manufacturing enterprises), and planning for the children to go out to study and develop when they grow up (overseas expansion, information acquisition), and even selecting objects and arranging marriages for their children (starting joint ventures). Industry plays the role of children, and when older siblings (mature industries) have sufficient financial resources and savings, they will invest their funds in newly conceived younger siblings (new industries), or deposit surplus funds into their parents' cash boxes for the whole family to coordinate.
With the constraint of lack of shareholder sovereignty and the strong support of banks, this wave of Japanese companies is also easy to play. The new consortium invested heavily, bought a lot of real estate and stocks, and also blew up the two major bubbles of real estate and stocks, which buried the high growth that lasted for decades, and brought about more than a decade of disorientation and arduous and painful adjustments, leading to the end of the post-war Japanese model.
After a period of relative downturn, the Japanese economy only showed new vitality in 2003, showing the momentum of the re-emergence of the consortium. In the past decade, Japanese companies have mainly used their assets to accumulate resources and intellectual property rights. This kind of consortium system can make technology quickly transform into commodities, and finally earn money back from commodities, forming a virtuous circle, and then using local affiliated enterprises in the industrial chain for global expansion.
When a Japanese consortium expands, it usually enters a country's industrial market with a very low stake, imports its own technology, finance, and trade at full speed, and makes itself the real controller behind the industry.
Of course, the Japanese bureaucracy and the Japanese consortium share common interests. These foundations are the six pillars of Japan's federation of business organizations, play a pivotal role in the Japanese government's economic decision-making, and are the semi-official "prime ministers of the financial circles." Therefore, it is absolutely not to be underestimated.
bibliography:
"Deciphering the Mystery of Japan's Six Major Consortiums" - "Financial Archives"
"A Brief Analysis of the Japanese Consortium Model" Li Jun, Wang Zhi, Liu Wenqian
"Analysis of the Japanese Corporate Consortium Model" Bai Yimin
"Six Major Consortiums Influence Japan's Internal and Foreign Affairs" Guo Yina and Min Changfu