More and more frequently, Japanese companies become targets for Chinese ones. If the trend would continue, for the end of 2010 more than 30 companies will be acquired by Chinese firms. Twenty companies were purchased last year, 8 in 2007, and 2 in 2004. The growth is extremely notable (unless the starting was very poor).
These transactions brought to Japanese ex-owners an amount of 2 billions of Yen in 2004 and 17 blns Yen in 2009. Actually, China accounts for the 27% of total M&A operations in Japan. Unless it hasn’t been already ratified, the last one is probably the most impressive. Ruyi, the textile giant of Shangdong, has reached an agreement for the acquisition of the 41% of the Japanese company Renown, so becoming its biggest shareholder. The Japanese company (that last year has sold the historical English company “Aquascutum”) needs capitals, reductions of costs, opportunities of growth, possibly in new markets. China seems to be the opportunity at hand. This is the first investment in the Japanese textile sector.
Others occurred in different segments. BYD, a Chinese company operating in the electric/automotive sector (and where Warren Buffett has a 10% equity), has acquired a Japanese moulds producer. Suning, a Chinese white goods distribution chain has acquired the majority of Laox, a Japanese competitor. The goal was twofold: reorganize shops distribution in Japanese cities and open new shops in China using the prestigious name of Laox. Apart from very well known names, generally operations involve small companies and limited amounts of money.
Chinese entrepreneurs don’t seem interested in the Japanese market, stagnant and sick of production over-capacity. Their goal is to get to know how and the management. They want to give more quality to an already solid production base. For Japanese companies, facing slow consumptions and an old population, Chinese capitals are oxygen to breathe and new partnerships represent a promise of dynamism. So it seems that the pragmatism is overcoming the historical tensions between the two countries. Wounds coming from the Japanese occupation and the WWII are still bleeding and politics is amplifying these effects. On the contrary, the economic world is trying new directions and wants to state its autonomy.
Since 2007 China is the first commercial partner of Japan. Japan is the first supplier and the third customer of China. Moreover, the crisis is overcoming the traditional obstacle for the Japanese companies to open their property to China that is a reliable partner, due to the fact that it presents purchasing capacity and also growth margins.