Chinese firms target Japan

18 April 2012

TOKYO: Brand owners from China are increasing their investment in companies based in Japan, in an effort to leverage the advantages both partners can offer the other.

Lenovo, the IT giant, has long been a forerunner of Chinese corporate expansion, and last year spent $175m to take a 51% stake in a joint venture with NEC, a Japanese player in the same sector.

Sakae Takatsuka, president of NEC Personal Computers, argued that his organisation's initial worries about this alliance were soon assuaged.

"When we embrace the strength of global companies like Lenovo, Japan's technological expertise receives a further boost," he told the Wall Street Journal.

Hon Hai, a Taiwanese electronics firm trading under the name Foxconn and boasting a major presence on the Chinese mainland, also paid $808m for a 10% share of electronics group Sharp in March 2012.

Many observers have suggested this tie-up is a result of these two operators wanting to work on a hotly-anticipated TV product from Apple, the maker of the iPhone and iPad.

"We believe the Hon Hai/Sharp deal is due to Sharp's increasing importance to Apple and iTV," said Peter Misek, an analyst at Jeffries, the investment bank.

Elsewhere, Haier, the home appliances manufacturer, last month finalised the estimated $130m takeover of Sanyo Electric, a unit of Panasonic making goods like washing machines and refrigerators.

"Our dual-brand strategy was designed to leverage Sanyo Electric's competitive advantages while enhancing the new markets' offerings through Haier's strengths in innovation, quality and design," said Du Jingguo, a vice president at Haier.

The Futong Group, a communications specialist, also splashed out $78m for a 19% stake in SWCC Showa Holdings, a fibre cable specialist, in September 2011.

Meanwhile, Hony Capity, a Chinese private equity firm, is currently bidding alongside TPG, a US counterpart, for ailing microchip manufacturer Elpida Memory.

"Japanese companies have long assumed they would not be bought by Chinese companies," Takashi Nomura, of law firm Nishimura Asahi, said. "Now, receiving capital injections from Chinese companies and seeking their help in penetrating the Chinese market is seen as a viable option."

Data sourced from Wall Street Journal; additional content by Warc staff