Japan dissolved its family-owned conglomerates after the war, and they quietly reassembled.
The Japanese term zaibatsu (財閥) combines zai (財), meaning wealth, and batsu (閥), meaning clique or group.1 The word entered common use after World War I to describe the family-controlled industrial conglomerates that had dominated the Japanese economy since the Meiji era (1868-1912).
The Big Four zaibatsu, in order of founding, were Sumitomo, Mitsui, Mitsubishi, and Yasuda. Two had roots in the Edo period. By the start of World War II, the Big Four directly controlled more than thirty percent of Japan's mining, chemical, and metals industries.2
After Japan's surrender in 1945, the Allied occupation forces targeted the zaibatsu for dissolution. Assets were seized, holding companies eliminated, and interlocking directorships outlawed.3 The breakup was never completed. Cold War priorities led the United States to reverse course, and individual companies began regrouping.
The new formations were called keiretsu (系列), meaning series or grouping. Unlike the vertically integrated zaibatsu, keiretsu were organized around horizontal relationships, coordinated through a core bank and cross-shareholding rather than a single family's chain of command.4
Uemura Kōgorō, a former president of Keidanren, Japan's most influential business organization, acknowledged that the zaibatsu dissolution was a major factor in Japan's high postwar growth. Freed from group strategy, companies could make decisions based on their own advantage.5
By the 1960s, six major keiretsu had emerged: Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Dai-Ichi Kangyo. The Korean chaebol and the Japanese zaibatsu share the same Chinese characters (財閥), but chaebols retained the family control structure that the keiretsu had abandoned.6