Sony (NYSE: SNE) Ventures into China with PlayStation Consoles

Sony, Venture, Microsoft, PlayStationSony Corp (NYSE: SNE) took the initial steps toward its PlayStation sales in China. Kazuo Hirai, the Chief Executive Officer of the Japanese company wants to capture players in the biggest market of the world. He wants Sony to bounce back after the company is projected to make losses for the sixth year out of its seven-year run.

Ventures with Chinese company

Sony and Shanghai Oriental Pearl (Group) Co consented to create two ventures. The Shanghai Oriental Pearl is the owner of Oriental Pearl Tower. As per the ventures, the two companies agreed on making and selling PlayStation consoles after a 13-year old ban on sales of the gaming units was lifted. According to a statement filed with Shanghai Stock Exchange, the Tokyo-headquartered company will enjoy a 70 percent share ownership in one venture. The other venture will see 49 percent shares controlled by Sony.

Market

Sony made its move after an announcement by Microsoft Corporation (NASDAQ: MSFT) that the American company will sell Xbox One units in China. Nintendo also announced its intention of increasing its presence in emerging markets. It aims to market new devices to achieve the same. According to PricewaterhouseCoopers LLP, the video game industry in China is expected to generate approximately $10 billion of sales in 2015. The console manufacturers are striving to distract the Chinese from playing games on tablet computers and smartphones.

According to Ryosuke Katsura, Analyst, UBS AG Tokyo (NYSE: UBS), Sony is trying to widen its sales by entering the Chinese market. The online network service of PlayStation 4 can assist the company to avoid the piracy issues, which are frequently the bane of packaged games.

Shares end higher

In Tokyo, Sony shares rose 3.1 percent and touched 1,683 yen (USD16.51). The shares were down about 7.8 percent in 2014, compared with 8.3 percent decline in benchmark Topic index.

A free trade zone was inaugurated by Shanghai with easier investment and financial controls. This formed part of an effort by China to unleash the market forces within itself. This will help attract a wide swathe of companies – from banks to console manufacturers – to invest in China.

Japan’s largest brokerage, Nomura Holdings Inc. (NYSE: NMR), and Shanghai Luijiazui Financial Holdings inked an agreement to create a venture in the concerned free trade zone. According to the Sony spokesman, Satoshi Fukuoka, the Japanese company holds the opinion that China constitutes an attractive market,and there are a number of possibilities to profit from the market.

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