SoftBank has China and the US singing its tune

 

 

 

 

 

Billionaire Masayoshi Son has pulled off another clever deal involving Japan, China and the United States.

Mr Son, the founder and CEO of SoftBank, has announced that his company will buy $2 billion worth of stock in the internet portal Yahoo Japan.

Unlike in Europe and the US, where Yahoo has long been out of fashion, Yahoo Japan is still the main site through which Japanese people access the internet, including news and social media. Bloomberg says Yahoo Japan is a “cash cow” that reliably generates $2 billion of pre-tax earnings per year.

Grand ambition

Mr Son is an ambitious investor who has spent a vast fortune buying stakes in tech companies.

Reuters points out that this deal with Yahoo Japan is funded by money from the Chinese internet giant Alibaba, channelled through an investment fund which is listed on the New York Stock Exchange.

Mr Son is adept at keeping a foot in both the Chinese and American camps, despite the rivalry between the countries which recently led to an all-out trade war over tech.

Asian plan

So what will Mr Son do with Yahoo Japan? I expect he will try to integrate it into a network of businesses which are broadly based on “the internet of things”.

An important aspect of his investment strategy is to make the most of economic growth in Asia. So I wasn’t surprised to read on Bloomberg that SoftBank will try to use its investment in Yahoo to target vibrant markets such as India.

New competition

Over the past five years, SoftBank has completed $89 billion of deals. The Economist says this makes the SoftBank Vision Fund, which is managed out of London, the most important investor in the world.

The Financial Times recently published an article which said that the Chinese have been watching Softbank’s strategy and have set up a rival, modelled on its business. The FT says that a state-owned company called China Merchants Group has been enlisted to buy up technology, especially Chinese tech start-ups. The FT says the China New Era Technology Fund will be launched in direct competition with SoftBank’s $100bn Vision Fund.

But I wonder – is it really is a rival to SoftBank? Given Mr Son’s careful diplomacy with the Chinese government and his ties to the business establishment, isn’t it possible that he would quietly support a project that has many of the same goals as SoftBank?

Perhaps he would also be a good person to advise on how to prevent the trade war escalating and damaging the economic and business interests of America, China and Japan.

 

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