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Published on : Jan 21, 2015

Thailand's largest private company Charoen Pokphand Group (CP) and Japan’s trading house Itochu Corp have announced their plans to jointly invest US$10 billion in Citic Ltd, a subsidiary of China’s biggest and largest business.

CP group and Itochu are planning to jointly gain a stake of 20% in Citic Ltd, in an attempt to increase their exposure in the world’s second-biggest economy even as it is slowing down as compared to the very fast growth it experienced in yesteryears.

The deal will help Critic to broaden its base of investors in the private sector as part of Chinese President Xi Jinping's reforms for state-owned companies. 

Critic’s chairman Chang Zhenming stated about the developments in this regard in a statement that the company has not only been able attract private investors but also attractive global companies who will extend to its reach. 

Critic Ltd has only recently completed a restructuring that involved investing US$36 billion worth of assets in a Hong Kong-based unit as a part of the reform. 

Itochu’s investment in Critic will count as the biggest investments ever done by a Japanese company in China. The company emphasized its close relationship with China, a country that has always maintained political ties with Tokyo.

China has regarded Itochu as a friendly trading house. The country has trading experience with the company since 1972. 

CP group also has a long record of trading with the country. The company was the first multinational company that invested in China’s agri-business in 1979. This helped the country modernize its farming industry. The company is controlled by one of Thailand’s richest persons and has investments in China’s retail and finance sector as well.

Deals between Japanese and Chinese companies have become quite frequent in the past few years. But this is a bold bet by Itochu, also the biggest ever by a Japanese company in China.