Hitachi, Ltd. (ADR) (HTHIY) Aims To Become A Global Conglomerate Through Inorganic Growth Beyond Japan


Hitachi, Ltd. (ADR) (OTCMKTS:HTHIY)’s management has sensed that focusing only on becoming Japan’s No. 1 won’t take them where they want to be. As such, the company is looking to pursue global expansion aggressively, mostly through acquisitions into promising markets of Europe, China and the Middle East. Hitachi is run by Hiroaki Nakanishi, best-known as a turnaround business leader.

Given that the Japanese consumer electronics market is fast-losing its luster, players are looking for new opportunities in the global space. However, competition in the global market is so intense that those considering competing there must find a way to fend off competition to remain profitable. Hitachi’s Nakanishi believes they can attain success in the global market, with the right approach.

Europe’s rail sector

For Hitachi, Ltd. (ADR) (OTCMKTS:HTHIY), there are opportunities to go for in Europe’s railway sector. Nevertheless, the company faces the challenge that it has to become an insider to exploit opportunities beyond the U.K., where it already has a track record. This explains why the company will be looking for more businesses to acquire and also enter into strategic partnerships to deepen its European penetration.

Hitachi has plans to relocate the headquarters of its Hitachi Rail unit to London and establish a train assembly plant in the north-east region of England. The company recently inked an 809 million euro deal to acquire rail assets of Finmeccanica. The move helped Hitachi to up its competition so that it gets closer to the three market leaders, namely Siemens, Alstom and Canada’s Bombardier in the rail signaling segment. Hitachi hopes that the acquisition of the rail signaling equipment arm of Finmeccanica will support its position in Europe and accelerate expansion in Australia, New Zealand, India and the Middle East.

Competition in China

Besides the difficulty of taking it strong in Europe, Hitachi, Ltd. (ADR) (OTCMKTS:HTHIY) also faces competition from Chinese rivals, both at the domestic and global level. Chinese rivals, such as CNR and CSR Corp, are consolidating. The companies are bringing their businesses together in a merger so that they can build larger clout to attract more business and save on costs. Such deals put Hitachi on the receiving end, especially considering that the company generates 11% of its revenue from China. Hitachi has annual revenue of $80 billion.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.
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