What is 'Keidanren'

Keidanren is a Japanese abbreviation for the Japan Federation of Economic Organizations. The Keidanren was created in 1946 to address the issues and concerns of Japanese businesses in the postwar world. The organization consisted of over 1,000 Japanese businesses, over 50 of which were foreign firms.

BREAKING DOWN 'Keidanren'

The Keidanren was incorporated into the Japanese Business Federation in May of 2002. This organization was joined by the Nikkeiren, the Japanese Federation of Employers' Associations. The Keidanren was historically considered the most conservative of the three major business associations in Japan. Unlike the United States, Japan does not have a culture of individual lobbying, where each company lobbies politicians. Instead, companies lobby collectively, considering this route more effective. Lobbying was a primary activity of the Keidanren.

History of the Keidanren

The Japan Federation of Economic Organizations (Keidanren) was established Aug. 16, 1946, a year after Japan surrendered to the Allied Forces to end World War II. The occupation authorities had banned Japan from creating a business organization for one year.

The body was created to gather the opinions of businesses and to have their views reflected in the government’s economic decisions and other policies. It used to be comprised of major Japanese businesses and influential industry organizations, but in recent years more foreign companies, as well as venture businesses and non-banking institutions have joined. For example, pharmaceutical firm Pfizer Japan Inc. and U.S. financial institution Goldman Sachs Group, were members.

Membership has mostly reflected Japan’s economic development over the years. For example, immediately following the war, steel and auto industries were active members. But following the oil crisis in the 1970s, retailer Aeon Co. as well as high-tech firms including Matsushita Electric Industrial Co. (the current Panasonic Corp.) and Hitachi Ltd. joined.

The group historically regarded political donations as "the cost of maintaining democracy." They lobbied politicians for liberalization and deregulation, as well as corporate tax cuts. They enjoyed a cozy honeymoon period with administrations led by the Liberal Democratic Party (LDP).

However, after the economy crashed in 1993, the LDP was driven into opposition upon the revelation of major bribery scandals involving general contractors. Then chairman of the Keidanren, Gaishi Hiraiwa, suspended the business group's mediation of political donations. Instead, he asked that donations be made at the discretion of each company and organization." This change in policy led to waning influence for Keidanren. However, in 2004, chairman Hiroshi Okuda resumed Keidanren's mediating of political donations.

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