Japanese Tech Giant Booms in China; Eyes Massive Search Engine Market

Despite its relative anonymity, a company called Softbank is to Japan as Google (News - Alert) is to us U.S. citizens - and it's now targeting the larger Asian market, IT insiders say.

Actually, Softbank offers far more than a search engine. The company also runs the 'fastest-growing mobile phone carrier in Japan and operates its largest broadband network,' reports Hiroko Tabuchi of the New York Times.

'Softbank is also the sole Japanese carrier for the Apple (News - Alert) iPhone; in addition it is the only company providing data service for the iPad,' Tabuchi adds.

Many of us cannot imagine life without our infamous search engine, never mind the fact that it has been transformed into a verb as commonly used as 'xerox' and 'Twitter.' Even though Softbank's (News - Alert) popularity has skyrocketed since its founding in 1981 by CEO Masayoshi Son, there is one thing standing in the way of the company's leadership in the Asian market.

Unfortunately, that one little thing is China, which has been a tough nut to crack for foreign Internet companies. Corporations such as the aforementioned 'Google, eBay and Yahoo, not to mention social networking sites like Facebook, MySpace (News - Alert) and Twitter, have all struggled there, because of strong domestic competition as well as government blocking and censorship,' says Tabuchi.

China has already had its fair share of problems in the privacy department with our own Google. Jon Arnold (News - Alert), a service provider columnist for TMCnet.com, believes that 'the Google/China issue is really drawing this into focus right now. The original Internet vision was global, with all of us interconnected under one cloud, so to speak. I suspect that China will not back down… [and as a result] the Internet devolves into parallel universes, seriously diluting the intended concept.'

On the other hand, Softbank has made some smart investments in prominent Chinese Web companies where there is much potential for the almost-30-year-old business.

Its investments include Alibaba, a Web retailer that they backed in 2000, which thereby lead founder Jack Ma to start up a new Web company called Taobao three years later.

Ma's side project went on to become the biggest e-commerce site in China and still operates as a subsidiary under Alibaba Group Holding Ltd., according the Businessweek.com.

Regardless, Softbank still owns 34 percent of the company and remains one of Alibaba's leading investors.

The company doesn't stop there. TMCnet Contributor Raja Singh Chaudhary has reported that Taobao will embark on a joint venture with Yahoo! JAPAN (owned by Softbank) sometime in 2010.

Tabuchi writes, 'At the same time, Softbank has established itself as a bridge between Silicon Valley innovations and the growing Asian market, investing in American start-ups in exchange for rights to bring their services to Asia.'

The company also forecasts operating profit of 500 billion yen [about $5.5 billion], and plans to raise capital spending by 180 billion yen [about $2 billion], to 400 billion yen [about $4.4 billion], experts say.

While making its way into China, Softbank has managed to stay drama-free along the way by keeping focus on e-commerce, local social networking site and online gaming; which also helped them avoid complications with government censorship.

They have also managed to stay away from the animosity and hostility that many Japanese companies face when first emerging in China which is due to the rocky relationship between the two technological giants.

Even though Softbank's endeavors in the Chinese market seem lucrative at this point, 'revenue streams are mostly still in the future,' said Nathan Ramler, a technology analyst for Macquarie in Tokyo.