2005

Investment in Beijing BOE Investment Development Co., Ltd. and Strategic Alliance with Beijing Orient Electronics Group

Mar. 1. 2005
Marubeni Corporation

Marubeni Corporation ("Marubeni") has acquired a 10% equity stake (worth over 2 billion yen) in Beijing BOE Investment Development Co., Ltd. ("BOEI"), a holding company of BOE Technology Group Co., Ltd. (listed on the Shenzhen Stock Exchange, "BOET"), which is the core company of the Beijing Orient Electronics Group (the "BOE Group"). Marubeni has also concluded a strategic partnership agreement for the purpose of further bolstering its alliance with the BOE Group, a leading IT company in China.

Marubeni and the BOE Group have been expanding their business together under a friendly relationship through the operation of Beijing Asahi Glass Electronics Co., Ltd., which was established in 1993 jointly with Asahi Glass Co., Ltd.
The BOE Group has under its umbrella TPV Technology Limited, the world's largest manufacturer of displays for personal computers. It also acquired Hydis (the former TFT-LCD business unit of Hyundai Electronics Industries Co., Ltd., Korea) at the end of 2002, based on a policy of focusing on the display industry with the mainstay LCD business in the future. The BOE Group also launched a fifth generation LCD business at the end of 2004 in China.

The BOE Group has been considering a full-scale alliance with a leading foreign company, as a means of promoting corporate vitalization and internationalization by introducing foreign capital, based on Chinese government policy of reforming state-owned enterprises. The Group was impressed with the diverse strengths of Marubeni, with which it has long had close ties, including its global information network, stable materials procurement capability, strong coordination ability and sophisticated and transparent corporate governance in a globalized environment.

Marubeni, meanwhile, has been positioning China as a high priority market with particular attention paid to the electronic materials segment as a growth area, and has been allocating resources to this market. Marubeni took an equity stake in BOEI through the tie-up with the BOE Group, which focuses on the core TFT-LCD business, a market that enjoys significant growth potential. The decision to take the equity stake was made with an eye to the opportunity to participate in the various businesses of the BOE Group, including its planned foray into the market for color filters, as well as to the expanded opportunities in handling materials, as the electronic material industry has been showing remarkable growth in China. Marubeni will use the stronger relationship with the BOE Group as an opportunity not simply to construct a scheme for supplying peripheral materials to the BOE Group, but also to provide support and cooperation for the advancement of leading material producers into China, working as a bridge builder. Marubeni will dispatch one director to BOEI and is also considering dispatching a director to BOET, the core company of the BOE Group. Marubeni plans to increase the amount of electronic materials it handles to 100 billion yen in fiscal 2005, by focusing on the Chinese market through its new relationship with the BOE Group.

BOEI is a state-owned holding company, and is majority owned by Beijing Electronics Holding Co., Ltd, which itself is wholly owned by the city of Beijing. Marubeni's investment in BOEI is the first time that a Japanese company has acquired equity in a state-owned holding company, and reflects the policy of the Chinese government to reform government-owned enterprises.
This is a new method of attaining business opportunities in China, responding quickly to the country's changing situation. Marubeni believes that this is of great significance for the future economic exchanges between Japan and China.

[Company profile]


  Beijing BOE Investment Development Co., Ltd. (BOEI)
  Location : Beijing, China
  Paid-in capital : 681 million yuan
  Chairman & CEO : Mr. Dongsheng Wang
  Established : January 1956 (founded as Beijing Electron Tube Factory)
  Business : Manufacture and sale of electronic products, telecommunications equipment and computers and investment in these fields, etc

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