Many American and European businesspeople argue that the keiretsu system in Japan acts as a barrier to foreign companies entering the Japanese market. Why do you think they believe this?

According to the Wikipedia "a keiretsu, keiretsu is a set of companies with interlocking business relationships and shareholdings. It is a type of business group" (Wikipedia, n.d.) The character of these groups is to cooperate, to support and supply each company within the group in order to protect companies from growing world competition. Japanese businesses in keiretsu protect domestic market from foreign investments and inflow of competitors. From Japanese point of view, there is high level of business protection. Moreover, the cultural aspect of Japan is important to mention. Japanese culture is high context culture where decision making process is within the group and loyalty to business group is on very high level of the scale. (Griffin, Pustay, 2005) Therefore, these groups are viewed as positive.

On the other hand, foreign businesses those want to enter the Japanese market feel discrimination because these "cultural" barriers have no formal form such as NAFTA or other trade organizations; therefore, it is hard to negotiate. Foreign investors entering Japanese market need to face cultural barrier, while Japanese companies face "only" formal barriers. That is why American and European businesspeople feel keiretsu as the barrier with no way to overcome.