More Chinese capital flowing into Japan than vice versa: report

Japanese capital has flowed into Chinese corporations over the past few decades but this has shown signs of change as Chinese companies are stepping up acquisitions in Japan.

According to the Wall Street Journal on Sunday, the trend of Japanese capital flowing into China to build plants there has been reversed, though many Japanese companies are still entering China to cut domestic production costs and the flow of Japanese capital to China likely to increase steadily.

Hony Capital, a Chinese private equity company, is bidding with the U.S.-based TPG for Japanese semiconductor maker Elpida Memory. Last month, Taiwan-based Hon Hai Precision Industry said it would buy 10 percent of Japanese electronics giant Sharp.

Panasonic, another Japanese electronics giant Sharp, sold its home electronics unit to China`s largest home electronics maker Haier. Chinese computer maker Lenevo has also set up a joint PC venture with Japan`s NEC.

The Wall Street Journal said Japanese companies are disposing of faltering business lines or launching a corporate overhaul to overcome a weak domestic market and the strong Japanese yen.

Nomura Takashi, an attorney at the Japanese law firm Nishimura & Asai, said, "Nobody expected Japanese companies to get overtaken by Chinese capital. From now on, Japanese companies are likely to get investments from Chinese companies to make inroads into the Chinese market."

According to the Wall Street Journal, Chinese capital is increasing investments in Japan via third countries including Singapore, Hong Kong and the Cayman Islands.

esprit@donga.com