Toshiba in final talks with China's Midea to sell white goods unit

Japan's key consumer electronics brand Toshiba is in the final stage of talks with Chinese major home appliance manufacturer Midea Group to sell its white goods business. The deal, if goes through, will be the second major takeover of a Japanese firm by Chinese capital following Hon Hai Group's acquisition of Sharp. The news has sent shockwaves throughout Japan with people saying it is a blow to the pride of the Japanese electronics sector.

Japanese media including Nikkei said Tuesday that Toshiba is likely to sell a majority stake in its subsidiary Toshiba Lifestyle Products and Services for tens of billions of yen (hundreds of millions of dollars). Both parties are currently in talks on details regarding the sales amount and employment succession. White goods business account for about 16 percent of Toshiba's total revenue.

The news of a potential takeover of a Japanese consumer electronics firm by a Chinese capital has sent jitters within Japan. One of Japanese people who posted a message on the news said, "What is left in Toshiba if it does away with consumer electronics? I hope Japanese name electronics products don't disappear."

The Japanese government is also losing face. On concerns of technology leak to China, it had devised plans to integrate the white goods businesses of Sharp and Toshiba through a public-private fund. However, Sharp was sold to Taiwan-based Hon Hai and Toshiba is following suit. Japan is helpless to the power of China money.

Toshiba is Japan's key electronics maker with 130 years of history. With guidance by Thomas Edison in 1890, Toshiba introduced Japan's first incandescent bulb. Between 1930 and 1931, it developed Japan's first refrigerator, washing machine and vacuum cleaner, pioneering the white goods business in the country. Since then, Toshiba has expanded into semiconductors and computers, launching the world's first laptop computer in 1985 and displaying its technological prowess.

However, its home appliance business started to lag behind Korean and Chinese makers since 2010 and by 2014 fiscal year(April 2014-March 2015) it was suffering 2.2 trillion yen (1.95 billion dollars) in losses.

Worse yet, Toshiba was suffering from revelations of a massive accounting fraud last year, putting itself on brink of breakup. In response, Toshiba decided to sell off its symbolic consumer electronics unit. Toshiba also recently agreed with Canon to sell its medical equipment unit at around 7 trillion yen (6.2 billion dollars), and is negotiating with Fujitsu and VAIO to integrate its laptop business with these companies.

도쿄=장원재특파원 peacechaos@donga.com