Japan’s curbs on tech investment won’t affect Chinese firms

Japan’s new restrictions on foreign direct investment (FDI) in key technology areas, a move widely seen as more closely monitoring investment from China, will dent its attraction to foreign capital – a key force in the world’s third-largest economy – and obstruct international cooperation, experts told the Global Times.

The changes won’t affect FDI from China, which rarely has ownership stakes in listed Japanese companies with exposure to national security, which the new rules involve, experts said.

Japan’s Ministry of Finance on Friday released a document saying that foreign investors purchasing a stake of 1 percent or more in Japanese companies in 12 areas deemed crucial to national security will be subject to pre-screening, compared with the 10-percent threshold previously.

The rules, which took effect on Friday, focus on such areas as oil, railways, utilities, arms, space, nuclear power, aviation, telecoms and cybersecurity.

The document designated 518 listed businesses including Toyota Motor, SoftBank and Sony – 14 percent of the nation’s publicly traded companies, according to Nikkei Asian Review.

“The changes will not affect Chinese investors since we didn’t have access to those sensitive areas in Japan in the past, but the move sends a negative signal that is not beneficial for globalization or for China-Japan economic and trade ties,” Chen Zilei, director of the Research Center for Japanese Economics at the Shanghai University of International Business and Economics, told the Global Times on Monday.

Japan is concerned that China’s intensifying research and development into key technologies over recent years would shake its position as a global high-end manufacturing power, said Chen.

In 2017, the Japanese government took the lead in buying Toshiba’s memory-chip unit after expressing concerns about technology transfer to Chinese buyers. The $18 billion deal closed in 2018 and Toshiba sold the unit to a consortium led by US private equity firm Bain Capital.

Japan’s move will block any win-win scenario for Chinese investors eagerly seeking technologies and talent, and hurt Japanese firms that need a boost in the sluggish economy, said Chen.

China’s cutting-edge digital economy could also contribute to Japanese society’s transformation, Chen added.

There are many industrial issues that require multinational cooperation, a spokesperson of Chinese tech start-up Dorobot said.