Chinese Companies Moving To Buy Japanese Companies
Leading Chinese companies, in a move to quickly expand
their research and development and product lines, are
moving to buy distressed Japanese companies, which have
suffered during the long Japanese recession.
While Japan's economy has picked up in the past year,
largely from growth in the Chinese economy and demand
from Chinese companies, there are still many Japanese
zombie companies which do not have earnings, and have
not been profitable for years. The challenge for many
Chinese companies is the mirror opposite: they have earnings,
but little research, and few products to fill their pipelines.
For Chinese business owners, the answer seems obvious:
buy distressed Japanese companies, get their R&D and
product lines, then plug their products to their Chinese
customers. The Japanese companies, traditionally strong
on the backend, get a whole new front end: Chinese consumers.
It is beginning now with the proposed purchase of Kanebo
Pharmaceuticals by the Sanjiou Group, China's largest
pharmaceutical company. This would be the second purchase
of a Japanese company by the Chinese group, which had
previously purchased a leading Chinese medicine maker
in Fujiyama prefecture.
In the six-month period ending on Sept. 30, 2003, Kanebo
had sales of 8.66 billion yen, but had a loss of 141 million
yen. The company specializes in sales of non-prescription
drugs and Chinese medicines.
Sanjiou has already informed Japan's Industrial
Revitalization Corporation (IRC) , which is charged
with re-organizing Japan's distressed companies, of it's
intention. Kanebo's bank is Mitsui Financial Group.
Even though the Chinese yuan is tied to the US dollar,
and the Japanese yen has gone up to new records against
the US dollar, the deals still look attractive to the
Chinese.
As Chinese companies expand, more Chinese business owners
will ask the question: Expand or buy?
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