Japan and US to keep a close eye on Rakuten following Tencent investment
Japanese and U.S. authorities are set to keep a close eye on the operations of Rakuten Group after a subsidiary company of Tencent acquired stakes in the e-commerce giant, according to Japanese media.
Concerns have been raised in Tokyo and Washington about Japan’s national security, with the potential of consumer data falling into the hands of Chinese authorities, the Japan Times reported on Wednesday.
Image Frame Investment, a Hong Kong-based company fully owned by Tencent, recently acquired a 3.65% stake in Rakuten in an effort to boost its financial base. Other investors include Japan Post Holdings and Walmart.
A foreign investment law in Japan requires the government to conduct regular interviews with Rakutan following Tencent’s acquisition, the newspaper reported. Information would be shared with U.S. authorities, it added.
“It was a shock that Chinese capital was injected into a critical Japanese corporation with so little fuss,” a Japanese government source told Nikkei.
Japan amended a law last year to require foreign investors planning to take a stake of 1% or higher in companies in sensitive areas, such as telecommunications, to seek prior approval from the government. The previous threshold was 10%.
Image Frame Investment would need to show Japanese authorities by mid-May that it did not intend to appoint any representatives to Rakutan’s board, the Japan Times reported.
Image Frame Investment was established in Hong Kong in 2016. Its directors include Tencent founder Pony Ma and Charles St. Leger Searle, the CEO of Tencent’s major shareholder Naspers.
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