Sony Corp.’s share price up, forms two joint ventures with Shanghai Oriental Pearl to compete with Microsoft and Nintendo

Sony Corp. has reached an agreement with Shanghai Oriental Pearl as a part of its Chief Executive Officers strategy to bring a new life to the company after it forecast a sixth loss in a period of seven years. Under the terms of the deal, Sony will form two joint ventures with Shanghai Oriental Pearl, which will be oriented towards manufacturing and selling Sonys games console PlayStation on the territory of China.

The announcement takes place after China lifted a 13-year ban on the sale of games consoles. In September 2013, China officially announced that foreign companies will be able to sell consoles and games in case they operate within the free-trade zone in Shanghai.

Sony Corp. said that one of the joint ventures will be focused on providing the hardware for PlayStation, and the other is set to work on the consoles software. In addition, according to the filing with the Shanghai Stock Exchange, Sony will own 70% stake in one venture and 49% stake in the other. Both of the two new entities will be situated in the Shanghai free trade zone.

The move of Sony Corp. follows some of its competitors decision to take advantage of the fact China lifted the ban over the video-game sector. For example, Microsoft Corp. said that it plans to release its Xbox One on the Chinese market, while Nintendo Co. shared that it seeks further expansion in emerging markets through the launch of its new devices.

Now the joint ventures formed by Sony Corp. and Shanghai Oriental Pearl will enter the highly-competitive video-game industry in China, which is considered to be able to generate about 10 billion dollars in sales in 2015. According to the filing, one of the ventures will have registered capital estimated to 10 million yuan (1.6 million dollars), while the other will have registered capital that amounts to 43.8 million yuan.

One of the spokesmen of Sony Corp. – Satoshi Fukuoka commented on the companys decision to enter the competitive video-game market in China, saying in a phone interview, which was cited by Bloomberg: “We think mainland China is an attractive market, we will consider various possibilities in the market.”

Sony Corp. added 3.13% to close at 1,683 Japanese yen per share on Friday, marking a one year change of -21.65%. According to the information published on the Financial Times, the 19 analysts offering 12-month price targets for Sony Corp. have a median target of 2,170, with a high estimate of 2,800 and a low estimate of 1,400. The median estimate represents a 34.45% increase from the last price of 1,614.