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Talk about a little fish in a big pond. After Japanese airbag manufacturer Takata filed for bankruptcy protection in Japan and the United States, along comes a virtually unknown Chinese company to gobble up one of the world’s largest safety parts suppliers—albeit one saddled with liabilities estimated at more than ¥1 trillion ($8.98 billion).

China’s Ningbo Joyson Electronic, an upstart auto parts maker virtually unknown even at home, will use a US subsidiary to get Takata back on track after the company imploded following a massive recall due to faulty air bags that resulted in a series of fatalities.

Takata filed for bankruptcy with Tokyo District Court on June 26. At the same time, its Michigan-based subsidiary, TK Holdings, Inc. filed for Chapter 11 bankruptcy in the United States. Takata will aim for a business turnaround under major US auto parts maker Key Safety Systems, which is owned by Ningbo Joyson.

A component used in Takata’s air bag inflator.

Takata and its 14 affiliates have all filed for court protection, with the group’s total liabilities as of the end of March at ¥380 billion. The figure is estimated to balloon to over ¥1 trillion when recall costs shouldered by automakers are added, making it the biggest failure of a Japanese manufacturer in the postwar era.

Typically, when the Chinese come to the rescue of an ailing Japanese company, it is a large corporation making the play, such as home appliance maker Midea Group’s acquisition of Toshiba’s white goods business last year, or Haier Group Corporation’s purchase of Sanyo Electric’s white goods division in 2012.

But not this time. An executive of a major Japanese auto parts maker stationed in China says he has never heard of Ningbo Joyson, and the company is hardly known even in the Chinese auto industry.

Founded in 2004, Ningbo Joyson started out as a small manufacturer of electronic parts for autos, with annual sales in 2011 of just over 3.3 billion yuan ($482 million). But the company changed drastically after founder and Chairman Wang Jianfeng visited a German parts factory.

Astonished by the state-of-the-art facility, Wang asked his staff whether they could create the same given 10 years. The answer was no, as they hadn’t a clue how to do it.

That’s when Wang changed his tune, from that of copycat to shark. Rather than trying to catch up with the competition, he decided to devour it, immediately acquiring a string of foreign companies—including Takata, his eighth.

Virtually unknown auto parts maker Ningbo Joyson Electronic still does business with majors such as BMW.

BUYING THE BLING
While seemingly odd that such a relatively small company could—or would even want to—take over a troubled behemoth like Takata, it jibes with how some Chinese business moguls view acquisitions.

As opposed to Japanese corporate managers, who carefully consider every angle of a buyout—from synergy and complementary relations to liability and profitability—their Chinese counterparts like to make splashy plays that grab headlines.

Ningbo Joyson is listed on the Shanghai Stock Exchange, an unusual market in that individual investors account for over 80 percent of transactions. Unlike institutional investors, who buy after carefully assessing performance, potential, and risk, Chinese tend to buy stocks of companies that are the talk of the town, according to a Chinese securities firm executive.

This means companies are sometimes overvalued, and Ningbo Joyson is no exception. While its 2015 sales were only eight billion yuan, its market capitalization reached 36.3 billion yuan in June 2015, due largely to the company making some well-publicized acquisitions of small and midsize European and US companies.

Small, listed Chinese companies are gluttons for attention, knowing that a nicely timed acquisition will have hungry investors swooping in, raising share prices and market capitalization. This naturally helps their financing power rise as well. When companies succeed in buyouts, says a market source, offers from investment funds increase. Just look at Ningbo Joyson: Its share price surged almost 15 percent over the past month.

In other words, Chinese companies push post-acquisition restructuring plans and synergy way down the priority list. Their preference for fast deals and tolerance to high risk is manna for struggling Japanese companies in need of a quick fix.

Takata’s corporate value and technology make the company a bad fit for Japanese investors, says an executive of a Japanese auto-related firm in China. That said, the company still has enough value to attract the right kind of investor. In contrast to the struggling Japanese electronics industry, which has been clobbered by years of slumps and sell-offs, Takata excited the Chinese, who see the company as a great way to gain entry into the Japanese auto industry.

“Buyouts have been going well [since I started actively acquiring companies in 2011], and I’ve become hooked on it,” said the high-flying Wang, who is on Forbes’s 2014 list of the world’s richest people. His personal wealth has reached $1.2 billion.

Takata has been in business 84 years. Now it finds itself depending on a spry young Chinese upstart of only 13 years for survival. But this combination of decades-long experience with the brash boldness of youth might just work.

Takata will aim for a business turnaround under major US auto parts maker Key Safety Systems.