With the $3.5bn sale of Sharp to Taiwan’s Foxconn last week, any wishful thinking that the state would rescue Japan Inc from foreign takeovers proved to be an illusion.
Yet it is too soon to celebrate the complete end of state bailouts and protectionism in Japan. The government of prime minister Shinzo Abe has been active in streamlining underperforming industries through mergers of regional banks and oil refiners. Ministers have also encouraged consolidation in consumer electronics, automobile and other sectors, as Japanese companies compete to survive in an era of artificial intelligence and connected devices.
The government’s role, however, is more controversial when it uses the guise of “national interest” to justify injecting taxpayers’ money into troubled companies through vehicles such as the Innovation Network Corp of Japan.
Despite being armed with $18bn in investment capability, the state-backed fund was outbid by Foxconn’s Terry Gou in its pursuit of Sharp. But it has assisted Renesas Electronics and other struggling businesses even when there were competing offers from private investors.
It may be no coincidence that Japan’s fair trade watchdog last week released guidelines on state assistance to companies, just a day after the landmark Sharp takeover by Hon Hai Precision Industry, the parent of Foxconn, was announced. While a foreign buyout could not be avoided this time, state-backed funds such as the INCJ are already looking for their next big deal.
The guidelines are aimed at preventing distortions to competition caused by state aid. It comes after criticism that the government bailout of Japan Airlines following its 2010 bankruptcy had unfairly strengthened the carrier compared with ANA Holdings, its main rival.
State assistance to the volatile airline industry is not unique to Japan. It has occurred repeatedly across the world, and some efforts have proven woefully ineffective, as in the case of Alitalia, the struggling Italian flag carrier that is 49 per cent owned by Etihad Airways, the Abu Dhabi-based airline.
By contrast, JAL reduced headcount and also rationalised its fleet of aircraft, and it has become one of the most profitable carriers in the world, giving the government a significant return on its money.
But critics say Japanese government assistance to JAL — totalling nearly Y1tn ($9bn) through a combination of capital injection, loans and debt waiver — was far too generous and resulted in it becoming far stronger than its rival.
Latest financial figures show JAL’s net profit was twice that of ANA. JAL’s equity ratio — a measure of capital strength — stood at 56 per cent compared with ANA’s 36 per cent. ANA, Japan’s largest carrier in terms of revenue, had interest-bearing debt 9.4 times bigger than JAL.
Given six years have elapsed since JAL filed for bankruptcy protection, it appears late to undo the competitive advantage the carrier enjoys. Mr Abe’s government has tried to favour ANA in the allotment of new landing slots at airports.
ANA has also taken stakes in Asian airlines, even as JAL remains restricted on making investments until March 2017. ANA is also seeking to look beyond its domestic rival to become a globally competitive carrier.
Still, Kazuyuki Sugimoto, chairman of the Japan Fair Trade Commission, worries that cases such as JAL’s bailout lead to “moral hazard” because company management feel they can count on the government to come to the rescue, while competent rivals are left comparatively weaker by their own lack of state aid. Japan’s new guidelines call for state assistance to be temporary, minimal and limited to situations where private investors are absent. More transparency is called for in assessing the impact of state aid on competition.
The Japanese commission used comparatively strict EU rules that limit state support in compiling its guidelines. Yet the blueprint still lacks sufficient teeth to enforce the conditions on state assistance to help ensure that rivals are not disadvantaged.
Without effective safeguards against state intervention, the Sharp deal may turn out to be an exception rather than a turning point for companies choosing between overseas buyers and the cosy hands of the government.
尽管可投资的资金达到180亿美元，但在竞购夏普时，这家政府基金的报价低于富士康的郭台铭(Terry Gou)。不过，该机构对瑞萨电子(Renesas Electronics)和其他陷入困境的企业提供了支持，即便是在有私人投资者参与竞购的情况下。
在富士康母公司鸿海精密(Hon Hai Precision Industry)收购夏普这桩具有里程碑意义的交易宣布一天之后，日本的公平贸易监管机构发布了关于政府援助企业的指导方针。这或许并非巧合。尽管这一次日本企业被外企收购不可避免，但INCJ等政府基金已开始在物色下一宗大交易。
尽管如此，日本公平贸易委员会(Japan fair trade commission)委员长杉本和行(Kazuyuki Sugimoto)担心，救助日航之类的案例会产生“道德风险”，因为公司管理层会觉得他们可以指望政府伸出援手，而能力强的竞争对手则因缺少政府支持而处于相对弱势的地位。日本新出台的政府援助企业准则提出，政府援助应是暂时和最低限度的，并且仅限于私人投资者缺席的情况。准则中要求，在评估政府援助对竞争的影响时，要更加透明。