Zaibatsu (a financial clique or group, or a company syndicate) (財閥)

The word Zaibatsu means a tremendous exclusive capitalist or enterprise of the pre-disposition of the era of financial cliques, but generally it is defined as a business group in which a parent company (holding company) capitalized by a family or its kinship forms the core of the group and has its subsidiaries run a variety of businesses, some of which hold monopoly positions in their respective fields or industries. In Japanese it is also referred to as a Konzern (originally a German word).

Incidentally, before the modern times the word zaibatsu was also used for areas in which many wealthy merchants had been born. Examples include Koshu Zaibatsu and Hanshin Zaibatsu.

Zaibatsu in Japan

In Japan, there were several zaibatsu prior to World War II, including Mitsui Zaibatsu, Mitsubishi Zaibatsu, Sumitomo Zaibatsu and Yasuda Zaibatsu, but after the war they were dismantled by the order of the General Headquarters of the Allied Powers (GHQ) (i.e., the dissolution of Zaibatsu). These zaibatsu were also called en-zaibatsu overseas.

Emerging Konzern in the Showa Period

Unlike the zaibatsu mentioned above, emerging Konzern in the Showa period were mainly started by engineers-turned-entrepreneurs. Accordingly, the major sector of the zaibatsu is heavy industry; they have strong production relationships among companies, which is called the 'Imozuru' system (one-after-another system). The development of the existing zaibatsu was promoted as revolving around the limited chemical industry. Aiming for overseas markets, Nissan Konzern Company Group and Nicchitsu Konzern Group developed their businesses such as mining ventures in Manchuria and Korea respectively, which left a strong mark on modern society. The RIKEN conglomerate, however, was a unique Konzern established in order to procure capital for the activities of RIKEN (a major natural-science research institute in Japan); it was not managed by members of a single family but instead worked out a policy of 'industrialization of rural areas' and strived for that purpose in rural areas such as that of Kashiwazaki City, Niigata Prefecture.

Conversely, many other Konzerns lost their status during World War II, before the dissolution of Zaibatsu, because they had eroded due to their weaker financial sector compared to that of the existing zaibatsu, by economic control and a syndicate of banks that had already been zaibatsu.

Regarding the management policy, the emerging zaibatsu in the Showa period (except for the RIKEN conglomerate) were run by families or their kinships, like the existing zaibatsu, and in that sense they can be called 'emerging zaibatsu.'

RIKEN conglomerate
Nissan Konzern Group
Mori Konzern Group
Nicchitsu Konzern Group
Nisso Konzern Group

Other zaibatsu

There were some medium-size zaibatsu, other than the emerging zaibatsu, that grew from the early Showa era through the middle of World War II. These zaibatsu included Chugai Konzern Group, which was led by Yasusaburo HARA and developed its business in Korea; Fujiyama Konzern Group, which was mainly formed by Dai-Nippon Sugar Co., Ltd. and developed plantation and mining business on Okinawa and the Daito Islands; ISHIHARA SANGYO KAISHA, LTD., which developed businesses in mining, maritime industry and chemical operations based in Malaysia and Singapore, all of which grew by developing a variety of businesses, mainly in Korea and the south. However, because the financial institutes and holding companies of these zaibatsu were relatively less effective than those of the existing zaibatsu, and because the technical strength and the linkages of their businesses were inferior to those of the emerging zaibatsu, these zaibatsu remained small or moderate in size.

Nakajima Airplane was a zaibatsu that grew rapidly during World War II and later expanded its business from military aircraft production to non-aircraft businesses such as mining, trade and commercial fishing. Incidentally, South Manchuria Railways may be included in the zaibatsu due to the fact that it also promoted the diversification of its business.

Nakajima airplane (after the dissolution of Zaibatsu, major five companies jointly established Fuji Sangyo (now Fuji Heavy Industries Ltd.))
ISHIHARA SANGYO KAISHA, LTD.
Fujiyama Konzern Group (Dai-Nippon Sugar Co., Ltd.)
Chugai Konzern Group (the old Chosen Boshoku, Nippon Kayaku, Chugai Mining, etc.)
Yokogawa Group
Its status as a zaibatsu wasn't very significant.

Central zaibatsu and local zaibatsu

A central zaibatsu is generally defined as a zaibatsu whose headquarters are located in Tokyo, Yokohama, Osaka or Kobe, while local zaibatsu are the other zaibatsu; however, there are some zaibatsu whose size and range of activities are as great as those of the central zaibatsu - such as Tatsuuma Zaibatsu - and thus central zaibatsu can also be defined as a zaibatsu that has developed nationwide corporate activities; contrastingly, a zaibatsu that has developed activities limited to a specific area can be defined as a local zaibatsu. Moreover, because small and medium-size zaibatsu are concentrated in the cities of Osaka and Kobe, these zaibatsu are said to be Hanshin Zaibatsu. The typical process of forming a zaibatsu shows, as seen in an example of Katakura Zaibatsu, that entrepreneurs concentrate on a single business, such as the silk-reeling industry, and then expand the business through the imozuru system. However, there is also the diversified investment zaibatsu, such as Gokindo Zaibatsu and Ozone Zaibatsu, which doesn't have a core production business but is instead a holding company as the controlling headquarters, which invests in various enterprises to form a zaibatsu. The Konoike zaibatsu, as the wealthiest merchant in Japan during the Edo period, did not expand its business from finance to other fields due to the family rule that prohibited the business expansion to other than the family business; however, it can be said that the Konoike zaibatsu had the characteristics of an investment zaibatsu because the Konoike family ultimately founded various enterprises in response to requests from financial communities that had tried to acquire the family reputation after the Meiji period, and consequently the family had the status of a major shareholder.

There were many cases in which zaibatsu didn't get dismantled but instead remained as surviving companies, such as Matsuzakaya Co., Ltd., the old Tokai Bank, Ltd. (UFJ Bank Limited -> now Bank of Tokyo-Mitsubishi UFJ, Ltd.) (both of which used to be Ito Zaibatsu) and Kikkoman Corporation (Mogi Zaibatsu).

The 15 major zaibatsu

The four major zaibatsu, together with the 11 zaibatsu that were ordered dismantled by the General Headquarters of the Allied Powers (GHQ) are referred to as the 15 major zaibatsu. Most of them were dismantled, and this necessitated their absorption by the six major bank groups.