Billionaire Akira Mori, the owner of
Japan’s most profitable closely held developer, said he has
formed a company to invest in China and advise Japanese
companies on expanding there.
“Japan’s environment is getting difficult; I want to build
a company that is willing to take risks,” said Mori, 76, in an
interview in Tokyo. Mori said he plans to expand the assets of
MA Platform Group, set up with 16 billion yen ($202 million) of
capital, to 50 billion yen in five years. MA Platform has
invested 18 billion yen including financing so far.
Mori seeks to invest in educational services and mass media
in China, he said. The company became the second-largest
shareholder in closely held Beijing-based Tsingda eEdu Corp.,
which offers classes over the Internet.
Japan’s more than a decade of deflation and sluggish
economic growth has forced the Bank of Japan (8301) to keep interest
rates near zero. In contrast, China surpassed Japan as the
world’s second-largest economy in 2010 and has introduced a
series of tightening measures to keep its economy from expanding
too rapidly. Mori plans to take advantage of the near-zero
interest rates in Japan to invest in one of the world’s fastest-
growing economies.
Mori’s company can borrow at 1 percent whereas corporations
in China will need to pay at least 6.5 percent for debt, he said.
“It’s easy to invest in China and other places because the
financing is cheap and the yen is strong,” said Mori.
Yen Advantage
The Japanese yen has strengthened 35 percent against the
dollar in the past five years, from 122.96 on July 18, 2007. The
yen rose 0.2 percent to 78.61 per dollar today in Tokyo.
Tokyo-based MA Platform, or MAP, will generate about 1
billion yen of profit this business year, he said. MK Trust, a
Tokyo-based consulting firm, will work with MAP to provide
advice on potential mergers and acquisitions for Japanese and
Chinese companies.
MAP also has placed capital in CICC Growth Capital Fund I,
which invests in companies in Greater China, an area that
includes Hong Kong, Taiwan and Macau. China International
Capital Corp., the fund manager, is 43.4 percent owned by
Central Huijin Investment Ltd., the investment arm of China
Investment Corp.
Mori said he set up the company to follow investment
opportunities amid growing difficulties in the domestic market.
Japan’s current-account surplus was the smallest for the month
of May since at least 1985 and machinery orders fell the most in
more than a decade.
Office Vacancies
Tokyo’s office vacancy rate has been rising due to an
increase of new supply. The vacancy rate in June rose for a
third straight month, to 9.43 percent, a record high, according
to Miki Shoji Co., a closely held office brokerage company.
“Japan’s real estate market is getting difficult,” said
Mori. “We can continue as it is, but it’s better to invest in
China and in other sectors.”
The Topix Real Estate Index was the second-worst performer
among the Topix index’s 33 industry groups today, declining 0.3
percent. The Nikkei 225 Stock Average rose 0.8 percent in Tokyo.
Mori Trust, of which Mori is chief executive officer, made
16 billion yen of profit for the year ended March 31. That is
almost double the profit generated by Mori Building Co., which
was run by his older brother, Minoru Mori, who died on March 8,
even though the Mori Trust revenue was half of Mori Building’s
for the same period.
Mori Trust manages 68 buildings in Japan, including the
Tokyo Shiodome Building in a commercial district near Tokyo Bay,
and operates about 30 hotels, the company said on its website.
Mori has no plan to combine the two companies in the near term,
he said.
Quicker Decisions
“The concept of an investment company and a developer are
completely the opposite, so it’s better to separate the two
entities,” said Mori. “If the plan with MAP goes well, then
that will help support the future of Mori Trust.”
Another reason that prompted Mori to form a new company is
that he wants to be able to make decisions quickly, he said.
“Japanese companies tend to need a lot of time to come to
a decision; all they do is have meetings and are reluctant to
take on risks,” said Mori. “China’s environment changes so
rapidly. The chance passed you by just as you were considering
it.”
Competing Globally
In terms of global competitiveness, Japan fell three places
to rank ninth this year, according to the World Economic Forum.
China advanced one place to rank 26th, the report showed.
Mori said he wants to use his experience in real estate and
hotels in Japan to expand in China, where entrepreneurship
flourished in the 1990s, he said. Many business owners are now
faced with companies that are getting too big to manage or have
difficulty with financing, he said.
“Many Chinese business owners have reached a plateau,”
said Mori. “People want to know what to do next. I will be able
to provide my 40 years of experience in running a business and
provide advice through different business cycle.”
Mori may also work with companies in China that are
interested in investing in Japan by providing consulting on a
fee basis, he said.
“I want to create something that adds value to our
society,” said Mori. “The existence of a company is to design
something that our society needs, then one can expect profit
that way.”
To contact the reporters on this story:
Kathleen Chu in Tokyo at
Kchu2@bloomberg.net;
Takako Taniguchi in Tokyo at
Ttaniguchi4@bloomberg.net
To contact the editor responsible for this story:
Andreea Papuc at
apapuc1@bloomberg.net;
Chitra Somayaji at
csomayaji@bloomberg.net