August 28, 2014 12:00 am JST

Global acquisitions hold key to competitiveness

MAKOTO KAJIWARA, Nikkei senior staff writer

TOKYO -- Southeast Asian companies' acquisitions within the region have been aimed at building stronger business foundations, reflecting their defensive stance. But it is crucial that they also maintain an offensive strategy through purchases elsewhere, particularly in industrialized countries.

     Businesses from developed countries are expanding into Southeast Asia to capitalize on growing consumption. With pressure likely to mount on the region to open its markets, local companies could end up losing share.

     Tapping overseas markets through acquisitions is an effective way to compensate for this. Philippine brandy maker Emperador agreed in May to buy Scottish whisky distiller Whyte & Mackay, which offers its products in more than 50 countries.

     Buying companies based in developed countries can also offer a boost at home by providing access to top-notch personnel and technology as well as experience in tougher consumer markets.

     Firestone Tire and Rubber's acquisition by Japan's Bridgestone in 1988, the purchase of Zenith Electronics by South Korea's LG Electronics in 1995 and China's Lenovo Group's 2005 purchase of IBM's PC business all coincided with periods of ascendancy for the buyers' home countries. Southeast Asia is the next candidate.