Zaibatsu is a Japanese term that refers to diversified family businesses in Japan whose influence and size allowed control over parts of the Japanese economy until the end of World War II.
A few of these powerful families controlled businesses that rose to power before World War II include Furukawa, Mitsubishi, Mitsui, Sumitomo and Yasuda. After the war, these monopolies were broken up by the General Headquarters of the Allied Powers (GHQ). Once disbanded, they reorganized again quickly due to expansion of the Japan economy. Zaibatsu by definition means “wealthy clique.”
In 1946 authorities ordered the Zaibatsu dissolved. Individual companies from the Zaibatsu empires were freed from the controls of their parent companies. Many companies evolved into enterprise groups and included Fuji Electric (Fujitsu), Hitachi, Mitsubishi Electric, Nippon Electric (NEC), Matsushita Electric (Panasonic), Sanyo, Sharp and Toshiba. These companies were like trade associations with a similar business approach and product lines. They started by manufacturing home appliances such as washing machines and refrigerators, and expanded to electronics and entertainment equipment. When one company rolled out a new product, the others commercialized similar products within a couple of years. Product lines included TVs, tape recorders, semiconductors, VCRs, CD players, Japanese word processors, personal computers, cellular phones, digital cameras, flat panel TV and more. Sony and Canon were two new companies that formed during this time and quickly were competing in the Japanese market.
They were all fat and happy during the second half of the 20th Century. Japanese companies maintained their leadership role on the technological scorecard, along with the lion’s share of the global market. This came to a grinding halt at the turn of the century. Korean companies (Samsung Electronics) and Taiwanese companies entered the global market and raced to the top of the list as OEM and EMS manufacturers. Some produced their own products and branded them with their own names. China was the third country to grab business from Japan during 2008 by offering lower prices. Unfortunately, Japanese electronics companies could not survive with razor-thin margins needed to compete. Their market share has dwindled in a short amount of time. They have not diversified, and now face serious financial difficulties.
Sanyo Electric was the first victim in the industry. About to file bankruptcy, they were sold to Panasonic a few years ago. The brand name “Sanyo” was sold to a Chinese company, so products with a Sanyo label can be found online and in stores.
Sharp is on the verge of bankruptcy. Several reports say that Hon Hai Precision, the largest EMS company in Taiwan, has agreed to acquire Sharp for $6.3 billion. Hon Hai Precision Industry chairman Terry Gou was quoted in The Japan Times as saying “We are 90% there; the remaining 10% are legal matters and are not a big deal”.
Toshiba is in the middle of a $1.9 billion accounting scandal. Profits over the past few years were positive, but auditors found some accounting irregularities (downright fraud) and found close to $1.9 billion in profit overstatements over seven years. Toshiba’s stock dropped on this news, and regulators hit it with a record fine ($60 million). Can it survive lawsuits from shareholders as well as the fierce competition from Taiwan, Korea and Japan? We don’t know.
Three members of the club have not renewed their memberships – Sanyo, Sharp, and possibly Toshiba. Industry analysts are wondering who is next. Most of the electronic companies are reporting profits due to a weak yen against the US dollar. But this may be a only be a band aid; only time will tell.
Dominique K. Numakura, This email address is being protected from spambots. You need JavaScript enabled to view it.
DKN Research, www.dknresearchllc.com
DKN Research Newsletter #1608, March 27, 2016 (English Edition) (Micro Electronics & Packaging)
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Headlines of the Week (Contact This email address is being protected from spambots. You need JavaScript enabled to view it. for further information.)
- 1. Toppan Printing developed a flexible e-paper display. It can change colors by simple switching between white, black and red.
- 2. AIST developed a heater material with nano-coils made on carbon nano tube. IR laser irradiation generates uniform heat in the material.
- 3. NEDO codeveloped a catalyst sheet for an artificial photosynthesis process with Tokyo Univ. and TOTO. It accelerate the hydrogen generation from lighting.
- 4. Toyota Motors started a field test of hydrogen fuel cells with forklift trucks. The hydrogen is generated by wind power and does not produce carbon dioxide.
- 5. Taiyo Yuden rolled out a metallic power inductor series “MCOIL MB Series” for mobile equipment with a small package of 1.6 x 0.8 x 1.0mm.
- 6. Mitsubishi Material developed a recycling process for rare earth elements with a purification technology. The process recycles rare earth minerals from home appliances at high yields.
- 7. Toshiba will invest 360 billion yen over the next three years to expand manufacturing capacity of flash memory devices.
- 8. AIST developed a piezo material from aluminum nitride with a high Q value adding Mg and Nb. It does not need expensive rare earth minerals.
- 9. Tohoku University codeveloped a magnetic memory device with high response speed introducing spintronics technology.
- 10. Euglena codeveloped a process for extracting fuel oil from botanical oils without hydrogenation.
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