Investment Would Be Largest Investment By Chinese Investor In A Public Japanese Company
Shandong Ruyi's planned investment in Renown is a first for a Chinese textile maker (Image: Ruyi logo)
Despite Japan’s traditional resistance to foreign takeovers of its companies, investment in Japanese companies by Chinese ones has increased by leaps and bounds, particularly in recent years as China scours the globe for foreign technological know-how and smoother entrance into new markets. Last year, as an Economist recently pointed out, the number of Japanese firms purchased by Chinese ones nearly doubled, from around 20 in 2009 to nearly 35 in 2010. Despite the admittedly low base at which these acquisitions started, the psychological effect of these acquisitions in Japan is clearly the story here. As the Economist article goes on to explain:
One of the aspects of recent acquisitions that we find interesting is the increasing number of high-end Japanese companies being eyed by Chinese companies. Much like Honma, mentioned in the Economist article, many premium Japanese brands — particularly cosmetics makers like Shiseido or Shu Uemura — enjoy a certain prestige in China, one that Chinese companies desperately want to co-opt as they set their sights on global — not just local — consumers. This week, the acquisition of Renown, one of Japan’s most well-known clothes makers, by Shandong Ruyi — a Chinese textile maker known for its cotton and wool — illustrated the importance that Chinese companies place on acquiring not just the name, but also the technological processes, managerial skill and global reach of established Japanese companies.
From the Financial Times:
We’ll have to see whether this deal ends up actually going through, but considering the pressure that Renown’s largest shareholder, Neoline Holdings, has been putting on it to raise capital and increase overseas expansion, the influx of Chinese funds and greater access to the growing China market that this deal would bring Renown will likely weigh heavily on the board’s decision.