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Business trends

Chinese buyers snag small but vital links in Japan supply chains

Record pace of deals helps hard-up parts makers but poses trade war risks

China's BYD acquired this auto press mold plant from Japan's Ogihara in 2010, and Chinese companies have since made a string of acquisitions of small and midsize Japanese component suppliers.

TOKYO -- Chinese investment is flowing into the backbone of Japanese industry: small and midsize component makers that supply major manufacturers like automakers and electronics brands. In 2018, buyers from China acquired a record 25 unlisted companies in Japan.

Many of the target businesses have been pushed to the brink by slumping sales and an inability to find successors for aging leaders. For some, backing from China not only keeps them afloat but also unlocks new sales channels across Asia. But there are also concerns about how the U.S.-China trade war might affect them, and Japan Inc. is under pressure to do more to shore up its supply chains.

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