Rakuten buys British e-retailer Play.com

LONDON Wed Sep 21, 2011 1:44pm BST

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LONDON (Reuters) - Rakuten, Japan's biggest Internet retailer, has agreed to buy UK online shopping site Play.com for about 25 million pounds, giving it a presence in Europe's biggest e-commerce market as it ramps up its global expansion.

Play.com, Britain's second-biggest online retailer after Amazon, specialises in entertainment, electronics and books and will be Rakuten's third European acquisition following France's PriceMinister and Germany's Tradoria.

Rakuten needs to expand abroad as Japan's shrinking population and weak consumer spending drag on profits, and hopes to compete with Amazon and eBay by bringing a wider range of services to consumers.

In Japan, the company offers services ranging from online golf reservations to Internet banking. It also differs from Amazon by encouraging merchants who sell through its site to develop direct relationships with their customers.

"Of course Amazon is our competitor. But instead of doing very direct competition with Amazon, our mission is to create a unique experience for the merchant and the customer," Chief Executive Hiroshi Mikitani told Reuters on Wednesday.

"You cannot just find a product but communicate with people who are making the products or who have a very strong attachment to the product that they sell, like for example a wine seller," he said in an interview in London.

Rakuten makes about 10 percent of its sales abroad but wants to raise this to 70 percent. It is present in 10 countries, many thanks to acquisitions and joint ventures including one with China's top search engine Baidu.

As he pushes the global expansion of the company that he founded, Mikitani is also switching its official language to English -- an unusual step, even for large Japanese multinationals like Sony or Toyota.

"Japanese companies cannot keep doing what they have been doing. I think it's very critical for Japanese companies to become more global, externally and internally," he said.

Earlier this year, Mikitani quit Japan's main business lobby Nippon Keidanren, which is centred around traditional manufacturers, after it refused to back a breakup of the country's nuclear-heavy electric power industry.

"I'm a little bit tired of this old lobbying body," he said on Wednesday. "It was very important for me to communicate that Kaidunen is not representative of the entire business world, which was the general consensus among Japanese politicians and bureaucrats."

"We need to change the mindset of every single Japanese person," he said. We need to become more global and in order to do that Rakunen becoming a globally successful company is the best contribution I can do for Japan as a country."

(Reporting by Georgina Prodhan; Editing by Jon Loades-Carter)

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