What was Rakuten thinking?

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Last week Japan’s Amazon equivalent, Rakuten, announced it was dropping almost $250mn on the sponsorship of Barcelona FC over 4 years. While Rakuten has long wished for global ambitions, it has often turned into expensive failed ventures.

One recent Spanish newspaper’s take on the deal was rather grim but perhaps not in the way that Rakuten was expecting. Spain’s AS newspaper wrote a piece yesterday on how the Japanese online shopping giant sold whale meat and ivory products, somewhat at odds with the image Barca fans would endorse.

The Environmental Investigation Agency (EIA), a UK based lobby group, has denounced Rakuten and called on Barça to put pressure on their new sponsor to stop the sales. The ivory trade is allowed in Japan, with the EIA estimating it as the largest market for elephant ivory in the world. The online sale of ivory (often used in inkan (individual or company engraved chop seals)) has seen demand soar, incentivising the illegal hunting of the animals.

Over an above the trade of ivory and whale meat, the bigger question is how Rakuten thinks such expenditure on Barca makes any sense for its global fortunes. It bought Kobo for its version of Kindle which has gone nowhere. It entered China in 2010 to take on AliBaba before getting its head handed to it on a platter and pulling out in 2012.

I don’t think there are enough Japanese fans of Barca to get a decent return nor enough global supporters who will actively shop on Rakuten.The stock market hasn’t warmed to it either with the shares shedding around $600mn in market cap.

Or is Japan paying premiums for such assets a sign we’re toward the market peak? Japan is infamous for the perfect melon syndrome. Anyone that has frequented a premium supermarket food hall in Japan will wince at the sight of a $250 Yubari melon encased in a silk lined pine box. The equivalent melon costs a fraction but the packaging ensures it is a premium product and Japanese are willing to fork out the premium. Yubaricelona perhaps?

 

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