Chinese state conglomerate Citic 0267.HK +0.56%’s discussions to bring in foreign strategic investors is a big deal for the mixed-ownership reforms China has been pushing to create a more dynamic and return-oriented state sector. But should Itochu 8001.TO -0.62% Corp’s bid to buy a multibillion-dollar stake in Citic come to fruition, the Japanese company could count a thawing in China-Japan relations as another achievement of the deal.
Itochu Corp’s bid to buy a multibillion-dollar stake in Citic could thaw China-Japan relations.
Bloomberg News
The Itochu-Citic tie-up could be the largest Japanese acquisition in China, surpassing Nissan Motor Co.7201.TO -0.26%’s $1 billion purchase of a 50% stake in Dongfeng Motor Corp. in 2002, the largest stake acquisition so far by a Japanese company in a Chinese one by value, according to Dealogic data. Japanese companies have been major investors in China, but have usually chosen to do so via foreign direct investment rather than acquiring stakes in local Chinese companies.
Formed in 1979 by China’s State Council to promote international trade and joint ventures, Citic has long had a focus on Japan, a dominant source of trade in the early days of China’s opening up. In 1981, Citic formed a joint-venture financial leasing firm with Japan’s Orix Corp.8591.TO -0.73% that was among the first big efforts aimed at helping finance the import of foreign machinery to upgrade China’s outdated factories.
Those early ties persist to this day.
Citic Chairman Chang Zhenming studied Japanese at a Chinese university in the early 1980s. When he first joined Citic, he served as an aide to more senior Citic officials as they formed and managed partnerships with their Japanese counterparts.
While other big Chinese companies have often looked to the U.S. or Europe as a model, Citic has carved itself a niche by cultivating ties with major Japanese firms. For example, when China Citic Bank Corp.601998.SH -0.87% went public in Hong Kong in 2007, the float included Japan’s Mizuho Corporate Bank as a cornerstone investor, or an investor that commits to holding its stake for months after the stock is listed. Earlier this year, Mizuho also invested in Citic Ltd. as part of funding Hong Kong-listed Citic Pacific’s $37 billion deal to buy assets from its unlisted parent before changing its name to Citic Ltd. Citic’s private equity arm is active in Japanese dealmaking and has managed two funds to specifically target deals in Japan.
Itochu is no stranger to China, either. It became the first of Japan’s trading houses to resume shipping goods between China and Japan in 1972, even before China’s Communist Party and the Japanese government formally re-established diplomatic ties. It has had a representative office in Beijing since 1979. Itochu is “committed to expanding its businesses in China,” which it calls the most important market in Asia on its website. In 2011, it signed a deal to invest $100 million in one of Citic’s asset management arms and explore other partnerships with Citic.
On the heels of Japan and China’s presidents meeting in Beijing last month, the Citic-Itochu deal could be a sign of more to come between the two largest economies in Asia.
Itochu’s Talks for Citic Stake Could Provide a Boost to Japan-China Ties - MoneyBeat - WSJ
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Comment: It appears to me that the intensity of bilateral integration between Japan and China cannot be emphasized enough. Glad to see the key players in Japan seizing the initiative to integrate further with the Chinese market. This proves that Japan's economic interdependency with China is undeniable. @TaiShang , i thought you'd be interested in reading this article.
Itochu Corp’s bid to buy a multibillion-dollar stake in Citic could thaw China-Japan relations.
Bloomberg News
The Itochu-Citic tie-up could be the largest Japanese acquisition in China, surpassing Nissan Motor Co.7201.TO -0.26%’s $1 billion purchase of a 50% stake in Dongfeng Motor Corp. in 2002, the largest stake acquisition so far by a Japanese company in a Chinese one by value, according to Dealogic data. Japanese companies have been major investors in China, but have usually chosen to do so via foreign direct investment rather than acquiring stakes in local Chinese companies.
Formed in 1979 by China’s State Council to promote international trade and joint ventures, Citic has long had a focus on Japan, a dominant source of trade in the early days of China’s opening up. In 1981, Citic formed a joint-venture financial leasing firm with Japan’s Orix Corp.8591.TO -0.73% that was among the first big efforts aimed at helping finance the import of foreign machinery to upgrade China’s outdated factories.
Those early ties persist to this day.
Citic Chairman Chang Zhenming studied Japanese at a Chinese university in the early 1980s. When he first joined Citic, he served as an aide to more senior Citic officials as they formed and managed partnerships with their Japanese counterparts.
While other big Chinese companies have often looked to the U.S. or Europe as a model, Citic has carved itself a niche by cultivating ties with major Japanese firms. For example, when China Citic Bank Corp.601998.SH -0.87% went public in Hong Kong in 2007, the float included Japan’s Mizuho Corporate Bank as a cornerstone investor, or an investor that commits to holding its stake for months after the stock is listed. Earlier this year, Mizuho also invested in Citic Ltd. as part of funding Hong Kong-listed Citic Pacific’s $37 billion deal to buy assets from its unlisted parent before changing its name to Citic Ltd. Citic’s private equity arm is active in Japanese dealmaking and has managed two funds to specifically target deals in Japan.
Itochu is no stranger to China, either. It became the first of Japan’s trading houses to resume shipping goods between China and Japan in 1972, even before China’s Communist Party and the Japanese government formally re-established diplomatic ties. It has had a representative office in Beijing since 1979. Itochu is “committed to expanding its businesses in China,” which it calls the most important market in Asia on its website. In 2011, it signed a deal to invest $100 million in one of Citic’s asset management arms and explore other partnerships with Citic.
On the heels of Japan and China’s presidents meeting in Beijing last month, the Citic-Itochu deal could be a sign of more to come between the two largest economies in Asia.
Itochu’s Talks for Citic Stake Could Provide a Boost to Japan-China Ties - MoneyBeat - WSJ
------------------
Comment: It appears to me that the intensity of bilateral integration between Japan and China cannot be emphasized enough. Glad to see the key players in Japan seizing the initiative to integrate further with the Chinese market. This proves that Japan's economic interdependency with China is undeniable. @TaiShang , i thought you'd be interested in reading this article.
