J.P. Morgan Grows in China, Facebook Struggles in Japan

by Derek Loosvelt | January 10, 2011

If you're interested in a future in finance and haven't already signed up for Mandarin classes, now would be a good time to enroll.

This past Friday, underlining Wall Street's shifting focus on the Far East, J.P. Morgan received approval to underwrite debt and equity deals in China, hoping to catch up to the likes of UBS, Goldman Sachs, and other banks that have already secured approval to underwrite Chinese-issued securities.

J.P. Morgan's foray into China is no small matter, especially considering that IPO volume in the country exceeded $70 billion last year and Hong Kong IPO volume neared $60 billion; in comparison, volume in the U.S. was about $45 billion. In fact, the largest IPO in history -- Agricultral Bank of China's $19.2 billion offering, lead-underwritten by Goldman -- came in July of 2010.

And analysts are predicting that there are alot more ABCs in the pipeline, meaning there's tons more yuan to be made, and Jamie Dimon and Co. are going to need additional bodies to haul it all back home.

(WSJ)

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Further East, in Japan, another big American firm is having a bit of trouble gaining traction. That company is none other than your mother's favorite social network, Facebook, and its problem seems to be finding Japanese friends. That is, Facebook, a majority of the free world's choice to post pet and party photos, is not too popular among the young trendsetting Japanese.

The issue seems to be a cultural one: Japan's Internet users are, for the most part, "fiercely private," which is why other social media sites are the ones the kids in Japan are turning to. Sites like Mixi and Gree "let members mask their identities, in distinct contrast to the real-name, oversharing hypothetical user on which Facebook’s business model is based."

Of course, Zuckerberg and Co. are not sitting in front of the their laptops and twiddling their young and nimble thumbs; they're fighting back, and, to that end, Facebook recently set up offices in Tokyo to address the not-enough-friends-in-Japan issue.

Despite Facebook's brainpower, it won't be easy to play catch up. The top three social networking sites in Japan have more than 20 million users each in the country, while Facebook has less than 2 million.

Still, Zuckberberg and Co. seem to be making steps in the right direction (and assimilating). "Facebook's Japanese site, for example, [now] allows users to display their blood types, considered an important personality trait here."

Facebook's success in Japan (and in other countries where its user base is not all that high, such as Albania, Namibia, Fiji, and Sierre Leone) will no doubt have an affect on its valuation when it (reportedly) will go public, sometime in 2010.

Incidentally, if you find yourself in Japan on business soon, and haven't yet seen The Social Network, the excellent film loosely based on the controverserial founding of Facebook, it opens in theaters of the island nation this week.

(DealBook)

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Finally, regarding Facebook's recent valuation, this, from SmartMoney, is worth more than a glance: 10 Things Facebook Won't Say.

Filed Under: Finance


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