Will Softbank’s Investments Start Asian Stampede?

Softbank Corp., Japan’s No. 1 software distributor, said last week it will pump $1.6 billion (US$) in three venture capital funds that will only invest in Internet-related startups.

This comes only two years after Asia’s financial crisis brought to a halt the Japanese operations of many U.S. high-tech companies. But today, the same companies are experiencing a powerful revival that is pushing up profits. In fact, Oracle Corp., Hewlett-Packard Co., Dell Computer Corp. and Microsoft Corp. have all reported double-digit increases in Asian revenues.

Since 1996, the company has pumped $1.7 billion in more than 100 Internet companies. Softbank’s venture group sank $906 million into eight Internet companies that have gone public — an investment now worth $14 billion. It holds 27 percent stake in E*Trade, 28 percent of Yahoo! and 85 percent of ZDNet. It also owns 51 percent of Yahoo! Japan, which controls 80 percent of portal traffic in the country.

Nasdaq Japan?

Part of Softbank’s game plan is to create a public market in Japan for promising e-commerce startups. It and the National Association of Security Dealers just announced plans to jointly set up a Nasdaq market. Moreover, Softbank also announced last week it, Bandal Co. Ltd, Yahoo! Japan and five other companies would form a joint venture to sell toys via the Internet. The venture will begin in July and will be up and running by November in time to cash in on the Christmas season.

Long term vs. short term

But what’s fascinating is that Masayoshi Son, Softbank’s visionary CEO, told Forbes Magazine in its latest edition that he’s just getting started in creating an Internet empire on what he calls a “300-year business plan.” Son said he envisions a wired world and a digital revolution that will continue improving people’s lives — creating wealth for the next 300 years. In the article, E*Trade’s founder Christos Cotsakos said Son’s long term view is responsible of his success:

“He has a clear vision of how technology is going to connect everyone globally in the next 50 years and doesn’t let, daily, weekly or monthly fluctuations get in the way,” Cotsakos said.

Taking the long-term approach has been the trademark of Japanese companies’ past success in making and marketing everything from cars to VCR’s. Some analysts believe that Softbank’s recent investments and stellar results in e-commerce will be enough to start a new stampede of Asian investment in the Internet and e-commerce.

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