Cash-rich Chinese firms urged to take acquisition trail to Japan

Going to Japan

According to figures from the Ministry of Commerce, China's outbound direct investment in the first half surged by 48.2 percent from a year earlier to $35 billion.

Regions and nations including Hong Kong, ASEAN and the United States witnessed rapid growth.

TCL Corp, one of the world's biggest producers of televisions and other consumer electronics, is already making strong progress overseas.

TCL's chairman, CEO and founder, Li Dongsheng, said: "Now is such an important period for Chinese companies to increase their footprint overseas."

In 2003 and 2004, TCL announced it was setting up joint ventures with global heavyweights Thomson SA of France and Alcatel.

And the company said it is now looking more closely at Japan.

"On the one hand, Japan's consumer electronic goods and home appliances market is huge, and right next to China; but on the other hand, many Japanese companies in the sector are struggling and on the way down," said Li.

"And this is where there are fantastic business opportunities to be had."

During the past few years, China has been expanding its influence in Japan mainly through mergers and acquisitions, and both countries have been working hard to form meaningful business partnerships.

For example, in March, Taiwan-based Hon Hai Precision Industry Co agreed to buy a 46.48 percent stake in the liquid crystal manufacturing plant of Japan's Sharp Corp in Sakai, western Japan, and also the nation's most advanced panel factory.

And in May, Sharp announced it will supply technological know-how to Hon Hai for a plant that will produce panels for the latter's clients including Apple Inc's iPhone.

Also in March, Haier wrapped up the deal of buying Panasonic Corp's Sanyo Electric washing machine and refrigerator units in Japan and Southeast Asia for about $130 million.

But Chinese businesses are all well aware of Japan's weaknesses, as well as its strengths.

The country's economy has been troubled by deflation and an aging population for years, and the appreciation of the yen, the tsunami and earthquake, and Europe's debt woes have all provided challenges to the highly export-reliant economy.

Amid fragile economy conditions home and abroad, Japanese companies of all size have suffered.

Statistics released by Tokyo Shoko Research showed that in 2010, a total of 13,321 Japanese companies went into bankruptcy, owing more than 7.1 trillion yen, including 10 listed enterprises.

"This wave of bankruptcies has created great opportunities for Chinese investors hunting for assets in Japan," said Jiang Xiaosong, secretary-general of New China-Japan Friendship 21 Century Committee.