Korean Businesses Sleep While Chinese Firms Hunt in Japan

  • By Chosun Ilbo columnist Kim Ki-cheon

    March 03, 2010 11:11

    Honma brand golf clubs are so popular in Korea that some say the Japanese company makes most of its money from Korean golfers. The company is known for its high-end handmade clubs, with a complete set costing up to W35 million (US$1=W1,154). But the famed Japanese brand is now under the umbrella of Marlion Holdings Ltd., a holding company backed by Chinese firms. Honma had fallen on tough times at home and filed for bankruptcy as the number of golfers in Japan shrank due to the low birth rate and aging population.

    Several other Japanese companies have become the targets of Chinese corporate hunters. In January, China's Ningbo Yunsheng acquired Nikko Electric Industry, a Japanese auto parts maker that was established in 1933. Ningbo Yunsheng started off making music boxes, but expanded into the automotive components industry and needed Nikko's technology to improve product quality.

    Ningbo Yunsheng acquired 80 percent of Nikko's shares and dispatched five of its executives to the Japanese parts maker. But all of them are in absentee positions and have no direct say in management affairs. Nikko's management team remained and all 200 of its workers kept their jobs. Ningbo Yunsheng said it was not concerned with Nikko's poor business performance and was not interested in stock dividends or investment returns -- it only wanted to tap into Nikko's know-how to boost the quality of its own goods.

    There are reportedly some 70,000 small and mid-sized manufacturers on the auction block in Japan as for various reasons they cannot hand family businesses down to children or face financial difficulties. The field is ripe for Chinese investors to pick. Last year, Chinese businesses spent 28.5 billion yen (W370 billion) to buy up Japanese companies, a four-fold increase from 2008. There are rising fears in Japan that Chinese companies may only be interested in acquiring corporate secrets.

    At the end of last year, Korean companies deposited a record W215 trillion into bank accounts. Because of the weak won and low interest rates, their profits have surged, but economic uncertainties have deterred them from investing their money into new ventures. They may have good reason to take a wait-and-see attitude toward investments, but it is frustrating that so much money is inactive. And it is all the more frustrating to watch Chinese competitors use their money to buy Japanese corporate gems to obtain valuable technology.

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