Enterprises owned by Koreans have been the largest minority businesses in Japan. Although Lotte and Softbank are now the two most notable companies among them, most Korean-owned firms have historically been small and invisible. This paper aims to illustrate the structural characteristics of Korean-owned enterprises in Japanese economy since World War II.
After the de-colonization at the war's end, Koreans, many of whom had emigrated to the Kinki region before the war, started small businesses of their own, partially because they were excluded from the regular labor market because of widespread discrimination. Given their shortage of capital, they utilized the only resources they possessed, i.e., the knowledge accumulated in their prewar experiences as blue-collar workers.
For the most part of postwar decades, thus, Korean businesses confined themselves to labor-intensive segments of such limited industries as rubber and plastic footwear, secondary metal processing, textile processing, hosiery making, and civil engineering. They also exhibited an interesting pattern of regional concentration for many of their major industries. Footwear businesses are mostly located in the western part of Kobe city, while the southern part of Osaka prefecture became the center of hosiery making.
The development of Korean industries took two forms in the long run. First, particularly since the 1970s, Korean businesses started expanding in such new spheres such as money lending, real estate, and even professional services. Second, throughout the postwar decades, Koreans increased their presence in the pinball (pachinko) entertainment industry, which became a symbol of Korean businesses in Japan. Koreans now control the entire vertical chain of the pachinko industry from machine making to pinball halls.
In the economic environment that has not necessarily been friendly, Korean businesses adapted relatively well to open up their own niches, particularly in non-manufacturing sectors. But their position did not follow the developmental direction that Japanese economy took. While the economy exited from labor-intensive industries, Korean enterprises have remained in that economic segment, which is not necessarily conducive to new business dynamics.