Author: Kobo-Daishi
Date: 04-16-12 16:52
Dear all,
The following is an April 15, 2012 article titled "In a Shift, Chinese Capital Flows to Japanese Firms" found at Murdoch's Wall Street Journal newspaper's web site:
By YUKA HAYASHI
TOKYO—As the fortunes of Asia's two largest economies diverge, Chinese companies are stepping up acquisitions in Japan—a trend likely to accelerate as it relies on China's growing wealth to help rebuild Japan's businesses.
Over the past several months, Chinese companies have stepped in to save a string of Japanese companies that were desperate for funding.
Chinese private-equity firm Hony Capital is bidding with U.S.-based TPG for Japanese semiconductor maker Elpida Memory Inc. Last month Taiwan-based Hon Hai Precision Industry Co., better known as Foxconn and which operates extensive contract-manufacturing facilities in China, said it would take a 10% stake in Japanese electronics manufacturer Sharp Corp. Also last month, Panasonic Corp. sold some of its household-appliances operations to China's Haier Electronics Group Inc. Chinese computer maker Lenovo Group Ltd. last year formed a personal-computer joint venture in Japan with NEC Corp.
Such deals signal a new phase in the investment dynamics between the two countries. For decades, capital flowed one way—from Japan to China—led by Japanese companies building factories in China. Such investments are continuing, and even picking up speed as Japanese companies flee rising manufacturing costs at home.
But now, capital is flowing the other way, too, as Japanese companies—with domestic sales hurt by a shrinking market and exports pummeled by a strong yen—seek to unload unprofitable operations or raise funds for restructuring.
"Japanese companies have long assumed they would not be bought by Chinese companies," says Takashi Nomura, an attorney specializing in Chinese businesses at Nishimura Asahi, a large Japanese law firm. "Now, receiving capital injections from Chinese companies and seeking their help in penetrating the Chinese market is seen as a viable option."
Sakae Takatsuka, president of NEC Personal Computers, the joint venture in which Lenovo owns a 51% stake, said NEC executives initially were nervous about working with a Chinese company but were reassured by its world-wide presence. "When we embrace the strength of global companies like Lenovo, Japan's technological expertise receives a further boost," he said.
It is hard to calculate how Chinese investment in Japan has grown as investments are often made through third countries, such as Singapore, the Cayman Islands and Hong Kong, in part to avoid attracting attention and friction, economists say. Net direct investments from mainland China hit a record of ¥27.6 billion ($341.1 million) in 2010—more than 20 times the level of five years earlier, according to Japan's Finance Ministry. That still was small compared with investment from countries such as the U.S., with ¥278 billion. Investments from all countries into Japan dropped sharply last year because of the March earthquake and tsunami but appear to be recovering.
Experts tracking individual deals say Chinese money already is a significant presence. From April 2003 to March 2011, Chinese companies accounted for 89 of the 901 inward investment deals coordinated by the Japan External Trade Organization, a government trade and investment-promotion body. That placed China in second place, after the U.S. with 272 deals. Mikihiko Shimizu, a Jetro director in charge of promoting inbound investments, says he expects to see more Chinese money hitting Japan's shores.
Chinese companies investing in Japan often are attracted by their targets' technology and reputation, says Kotaro Masuda, a senior researcher at the Institute for International Trade and Investment, which is affiliated with an industry association of trading companies. "They want to leverage Japanese technology and brand imageto better compete with their domestic rivals and gain share in the home market," he says.
Some of Japan's largest banks, such as Mitsubishi UFJ Financial Group Inc., are expanding services to help Chinese companies seek out investment opportunities in Japan.
And the Japanese government has begun offering incentives to attract foreign investment, such as tax breaks for foreign companies that set up research facilities or regional headquarters in Japan.
Alarmed by the exodus of Japanese manufacturers to lower-cost nations, some regional governments and business communities also are wooing Chinese investors—an activity unthinkable in the past, since xenophobic sentiment tends to run particularly deep outside Japan's big cities. Some of the recent investments aided by Jetro, albeit small, took place in rural prefectures.
"As we look across the country, we see far fewer allergic reactions to foreign capital," Mr. Shimizu says.
A company from Jiangu, China, recently signed a ¥1 billion deal to build a new factory in Kochi prefecture on the western island of Shikoku to make hydraulic-drive systems used in construction machinery. And Jinglong Plastic Compound Color Printing Co. of Qindao, China, is opening a plastic-wrapping factory this month in an abandoned elementary school building in the western Japanese city of Tottori.
XXXXX
The article may be found at the following link:
http://online.wsj.com/article/SB10001424052702303624004577339231693607396.html
Interesting bits from the article:
As the fortunes of Asia's two largest economies diverge, Chinese companies are stepping up acquisitions in Japan-a trend likely to accelerate as it relies on China's growing wealth to help rebuild Japan's businesses.
Over the past several months, Chinese companies have stepped in to save a string of Japanese companies that were desperate for funding.
Chinese private-equity firm Hony Capital is bidding with U.S.-based TPG for Japanese semiconductor maker Elpida Memory Inc. Last month Taiwan-based Hon Hai Precision Industry Co., better known as Foxconn and which operates extensive contract-manufacturing facilities in China, said it would take a 10% stake in Japanese electronics manufacturer Sharp Corp. Also last month, Panasonic Corp. sold some of its household-appliances operations to China's Haier Electronics Group Inc. Chinese computer maker Lenovo Group Ltd. last year formed a personal-computer joint venture in Japan with NEC Corp.
Such deals signal a new phase in the investment dynamics between the two countries. For decades, capital flowed one way-from Japan to China-led by Japanese companies building factories in China. Such investments are continuing, and even picking up speed as Japanese companies flee rising manufacturing costs at home.
But now, capital is flowing the other way, too, as Japanese companies-with domestic sales hurt by a shrinking market and exports pummeled by a strong yen-seek to unload unprofitable operations or raise funds for restructuring.
XXXXX
I read somewhere that last year's tsunami, earthquake and nuclear plant disaster has only helped to hasten the hollowing out of Japanese manufacturing.
A Greater East Asia Co-Prosperity Sphere but with Chinese firmly in control? ;-)
Bwaaaah haaaah haaah!!!! Bwaaaah haaaah haaah!!!!
Kobo-Daishi, PLLA.
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