But the way to know
Ph.D. HDR Excelia
& Ahmed HAMDI
Ph.D. Rabat Business SchoolMaroc
Since the launch of the Emergence plan in 2005, the Kingdom of Morocco has increased government initiatives aimed at identifying, creating and boosting the Moroccan industrial fabric in global professions. According to a study of Moroccan industry published by Dr. El Assimi Mohamed in 2023, the average annual growth rate (CAGR) displayed by the main economic figures during the period 2005-2020 is rather positive: 5.4% for exports industrial, 5.9% for industrial production, only 0.8% for industrial investment, 5.4% for industrial value added, and negative growth for industrial jobs (-3.2%). These progressions are mainly boosted by the automobile industry as well as the chemical and parachemical industry thanks to the OCP. It is clear that to achieve economic and social take-off, a strong and competitive secondary (industrial) sector is essential. This article proposes to examine how Moroccan companies can draw inspiration from the Japanese keiretsu model to strengthen their industrialization and competitiveness.
In the business world, certain industrial models stand out for their efficiency and success. The Japanese industrial model, based on the concept of keiretsu, is often cited as an example.
Contrary to popular belief, Japanese consumer products were not always of high quality during the 1950s and 1960s. By adopting the quality principles of Edward Deming and Joseph Duran, the Japanese industrial sector became transformed thanks to concepts such as quality circles, lean management and Kaizen. These changes allowed Japan to dominate global markets in the 1970s and 1980s, even surpassing American giants.
Joseph H. Duran, in a 1993 Washington Post article, described this transformation this way: “What I said to the Japanese was what I had been saying for years in the United States. The difference was who listened. Those in attendance at my two-day conferences in Japan were 140 CEOs of the country’s largest manufacturing companies. After these sessions, two other groups, each consisting of 150 senior Japanese executives, spent two weeks with me. When I gave lectures in the United States, the audience was made up of engineers and quality control people. Never before my 1954 trip to Japan — and never since — had the industrial leaders of a great power paid me so much attention.” The success of this Japanese industrial transformation is largely based on models of collaboration and extensive integration between companies, which have made it possible to strengthen the competitiveness and efficiency of the industrial sector. It is in this context that the concept of keiretsu emerges as a central element of Japanese economic success. Understanding this model and its advantages could offer interesting perspectives for Moroccan companies wishing to improve their industrial performance.
What is keiretsu?
Keiretsu is a Japanese business structure where interconnected businesses maintain relationships and shared ownership to work collectively. These groups include manufacturers, suppliers, distributors and banks who support each other financially and operationally. Keiretsu can be categorized into two types: horizontal and vertical. Horizontal keiretsu are diverse groups of companies connected by cross-shareholdings and common financial institutions, while vertical keiretsu consist of a large company and its suppliers working together in a specific industry.
The keiretsu revolution
1. Preferential trade relations: Members of a keiretsu often engage in preferential trade with each other, stabilizing demand and supply within the group.
2. Financial support: The main bank within a keiretsu provides financial stability and low-cost capital to member companies, helping them weather economic fluctuations.
3. Efficiency and coordination: Long-term relationships and mutual trust among keiretsu members improve operational efficiency and coordinated business strategies.
Application of Keiretsu in Morocco
Adapting the keiretsu model to Morocco could significantly improve the country’s industrial landscape by fostering stronger links between suppliers and manufacturers, creating robust, competitive and cohesive supply chains.
1. Development of local supply chains: Moroccan industries can form alliances similar to keiretsu, fostering close relationships between local manufacturers and their suppliers. This can ensure a reliable supply of materials and components, reducing dependence on international supply chains and strengthening local resilience.
2. Financial collaboration: Following the Japanese model, Moroccan companies could collaborate with banks to create financial networks offering easier access to credit and financial stability. This could be particularly beneficial for SMEs which often encounter financing difficulties.
3. Operational efficiency: By adopting the keiretsu principles of mutual trust and long-term cooperation, Moroccan companies can improve their operational efficiency. Regular personnel exchanges, joint training programs, and collaborative R&D projects can be instituted to strengthen overall supply chain capabilities.
4. Sharing resources and innovations: Keiretsu members often share research, innovations, and technologies. Moroccan companies can implement similar practices to collectively invest in R&D and share technological advances, thereby fostering innovation and remaining competitive in international markets.
5. Government and policy support: The Moroccan government can facilitate the formation of keiretsu-like structures by providing regulatory support, tax incentives, and subsidies to companies that engage in such collaborative practices. Creating economic zones with simplified regulations can also attract more investment and foster industrial growth. To dominate African and local markets, Morocco must create a world-class supply chain. This involves establishing long-term, cooperative and trusted partnerships with local suppliers, encouraging collaborative innovation from the early stages of product development, and providing educational support and training to improve supplier efficiency and quality. By adopting and adapting keiretsu principles, Morocco can not only strengthen its local economy, but also increase the competitiveness and international recognition of its products and companies. By creating support structures similar to the Japanese Sōgō shōsha, Morocco could help its companies explore and penetrate new markets, particularly in Africa. Innovation, cooperation and strong institutional support will be the keys to transforming challenges into opportunities for sustainable development and positioning Morocco as an industrial leader in Africa and beyond.
