In this paper I will take a look at two economically leading countries in Asia Pacific - Japan and South Korea and evaluate more in detail their conglomerates that have been said to be the greatest contributors to their success - keiretsu and chaebol. In their development state as well as historical and macroeconomic factors have had a very high influence. The interaction of the three has led to a miraculous development and prosperity and enabled the conglomerates to become the driving forces of the economies. For example, 50% of Japanese capital is held by the 18 keiretsu and the top four chaebol accounts for in-between 40% and 45% of the South Koreas GNP.
The recent Asia crises have changed the world’s perception of the miracle of Asia Pacific countries, however the conglomerates still play and will do a very important role in the economies. Nevertheless, the recent past has provided a more critical insight in the region and proved that to hold onto their reputation in the future the Asian tigers will need to redevelop their key characteristics to build back the trust. Japan and South Korea, being the leading countries have a cascade effect on all the other countries in the region, so the change is sought in the reconstructi
. . .
The central figure in a chaebol is a family owned holding company with about 20 - 30 subsidiary companies and in 1996 the top 30 chaebol included 819 separate companies. During the 50-year period after the war Japan has exercised “spider-web strategy” and made the world as economically dependent on Japan as it is on them. As a result, the main six keiretsu - DKB, Fuyo, Mitsubishi, Sanwa and Sumitomo were created. Second, US realised the power of Japan’s heavy industry and the 15 largest zaibatsu assets were frozen for inventory and reallocation because of being in the war industry and the families had to give up their positions and personal assets. Chaebol is more similar to the old-fashioned western model of business organisations and the structure is much more centralised and formalised and can be defined as a combination of “hierarchical and networked” co-ordination and control. It seems that the government planning was only based on the regular five-year plans and failed look at the negative factors that future could bring about or to concentrate on long term strategies. Those served for import and domestic project financing and the risk was minimal as the government guaranteed to repay all the Chaebol debts. Japanese industries were dependent on the MITI, but the fact that the banks were the centres of keiretsu and they didn’t have to borrow money from the government gave Japanese industries more independence. The relations within the keiretsu are rather personal than company bound. In the next paragraphs I will explain the main factors that have been important for the success of South Korea, different from Japanese because of the different government structure.
Within a Keiretsu, there is a high degree of communication and solidarity among the personal - they do not compete within and do not co-operate outside the group and the relationships between the companies within it are based on mutual trust.
Ironically enough the Japanese economy started to grow during the Korean War when the US used Japan as a base for their military supplies. The government can not sustain the cheabol through the financial systems in South Korea as before.
Approximate Word count =
2203
Approximate Pages =
9 (250 words per page double spaced)
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