Computers and the Coming of the U.S. Keiretsu

If US and European companies continue business as usual, they will either fail outright or become, in effect, local design and marketing subsidiaries of Japanese companies that will dominate a $1-trillion world hardware industry. The world market share of the US computer systems industry has modestly declined from 70% in 1980 to approximately 60% in 1990. Japan may well control more than 50% of the hardware content of worldwide personal systems markets within 5 years. The computer trade balance with Japan went from a small surplus 10 years ago to a $6-billion deficit in 1988. A uniquely American or Euro-American variant of the Japanese keiretsu (business society) could yield powerful competitive advantages. Such alliances must preserve entrepreneurship, market discipline, and flexibility. They should entail technical and operational cooperation as well as financial transfers to establish strong linkages and incentives.