Japanese enterprises target emerging markets

While American and European firms are scaling down their global investments amid the financial crisis, Japanese enterprises are going on the offensive in key areas of the global market with cross-border mergers and acquisitions.

Since the financial crisis broke out, not only have Japanese financial firms been engaging in spectacular bottom-fishing acquisitions, but enterprises are looking abroad to take cross-border mergers and acquisitions. The difference is that these enterprises will target the emerging markets with a population of 2.7 billion. The mergers and acquisitions will be concentrated in the sectors of food, pharmaceuticals, nuclear power, biological energy, solar power, transportation and communication, targeting the command points of future industrial competition.

Confronting the crisis, Japanese enterprises, rich with overseas experience, are realizing that the rise of emerging markets is creating a new "middle class" whose income level and consumption propensity is approaching that in the developed world, where consumption and product quality are higher. A bunch of famous Japanese enterprises, such as Itochu, Shinmei Co. Ltd, and Asahi Beer, are diving headlong into emerging markets, especially China, opening up multi-national operations and trying to secure a monopoly. For example, Itochu signed a mutual grain procurement agreement with China National Cereals, Oils and Foodstuffs Corp, and invested last autumn in Tinghsin Group, which boasts the largest share in the Chinese food market. Itochu aims to build a cross-border industrial chain in food production through international business links and the introduction of Japanese food into the Chinese market. Shinmei Co, a Japanese rice wholesaler that has traditionally specialized in the domestic market, started an overseas venture in Langfang development region, an industrial zone near Beijing. Shinmei Co acquired a 36 percent share in a Chinese rice processor, using the rice from Changchun to equal Japanese quality with the requisite rice-processing techniques and safety standards, in order to target the high-income stratum. Capitalizing on the Chinese milk powder scandal, Asahi Beer acted quickly in China to produce "Japanese standard" milk powder for high-income earners.