For Bankrupt Companies, Happiness Is A Warm Keiretsu

It has become a grim ritual in Japan. Each month, Teikoku Data Bank Ltd., a leading research firm, reports on bankruptcy trends. Sure enough, the latest figures show bankruptcies for the first half of the fiscal year at the highest level in five years.

Yet things would be much worse if not for the vast mutual-aid networks that most large Japanese companies can tap into. More than ever, the fabled keiretsu, or business families, that form the backbone of Corporate Japan are rising to the defense of their weaker members with financial backing, management savvy, or favorable contracts (table). Many companies that got carried away in the booming '80s still are suffering the consequences. Plagued by overexpansion and debt, they are unable to bounce back on their own in the face of a flat economy. Some observers had predicted that hard times might break up the keiretsu. Instead, they are drawing together.