Japan is not known as a popular acquisition destination for mainland companies, whose multibillion-dollar deals in resource-rich nations have made more news headlines. Yet troubled Japanese companies and their famous brands are increasingly being taken over by mainland firms. Teikoku Databank, Japan's credit and market research house, reports that in the first half of this year 611 Japanese companies have accepted investments from Chinese enterprises, 2.6 times the figure for the same period five years ago. Mergers with, and acquisitions of, Japanese firms by Chinese companies totalled 28.5 billion yen (HK$2.56 billion) last year, more than a fourfold jump from 2008, said an Asahi Shimbun report that cited figures from Japanese mergers and acquisitions adviser Recof Corp. Many Japanese businesses, which traditionally embrace the concept of lifetime employment, have dreaded being taken over by mainland firms, fearing large-scale restructuring and job cuts. But Japan's tough economic plight has brought a shift in attitudes. Of those 611 companies that drew mainland investment in the first half, 323 were in the retail sector, highlighting the desire of Japanese businesses to expand mainland sales amid stagnant or falling sales in developed markets. It also demonstrates mainland firms' ambitions to leverage off established foreign brands to boost sales and improve product quality. Even in the manufacturing sector, where there is traditionally greater concern about proprietary technology and expertise, about 69 Japanese businesses have accepted investment from mainland companies. Japanese apparel maker, Renown, famed for its D'urban brand, earlier this month agreed to sell a 41 per cent stake to Shandong Ruyi Science & Technology Group - one of the mainland's 10 largest textile firms - for US$45 million. The two plan to introduce Renown's brands to the mainland, and to acquire local Chinese brands and set up a distribution joint venture with a target of establishing at least 2,000 shops by 2021. Renown was founded more than a century ago, but lost money over the past four financial years owing to weak domestic, US and European demand. It hopes to triple sales in 10years to US$22 billion, with half coming from Japan and the remainder from China and the rest of Asia, Nihon Keizai Shimbun reported. Tokyo-based Honma Golf, recognised as a premium brand in the high-end golf-club market for more than 50 years thanks to its hand-made clubs, was bought out by a mainland private equity fund established by Creat Fund in February. Even though Honma has 'always been profitable', Creat Fund founding managing partner Wan Hongchun said Honma was forced into debt-restructuring after its owner encountered financial problems. Set up in July last year, Creat took over Honma from two financial institutions that were unfamiliar with running manufacturing operations and were not keen to invest in building the brand. Wan said that Honma was unable to boost sales because of the financial crisis, and China offered it growth prospects. He told the Post that he had bargained hard for Honma. 'When I negotiated the deal I didn't give the brand any value, because brand value is realised only if it can bring in above-normal profits.' He used the private equity fund vehicle Merlion Holdings to buy just over half of Honma. The US$55 million fund, to which Creat has contributed US$20 million, included five other partners, the biggest of which is small home-electrical appliances maker Shanghai Povos Enterprise (Group). 'Shanghai Povos started as distributor and then became a manufacturer for other brands, before building its own brand and attaining China's number-three market position,' Wan said. 'It will use its brand-building expertise to expand Honma's sales in China.' Noting Japanese people's nationalistic trait and differences with Chinese business practices, Wan said skilful integration of the company after the acquisition was the key to long term success. 'We are careful not to highlight the fact that they now have Chinese bosses; there is no need to arouse their feelings. The most important thing is to create synergies and multi-win situations.' He said Merlion had left day-to-day management to original managers, but had set performance targets for Honma and increased bonuses when targets were exceeded. 'We can't be the day-to-day managers, especially in Japanese firms, where employees treat their firms as families. If there is a new person coming in as a parent, they will certainly be unhappy, but for us, we maintain the same parent for them, but his thinking is already following our way.'