A Weekly Digest of The World's Financial Press: Fortune

Western investment is beginning to flood into the Japanese markets

conventional wisdom has it that there are some great deals to be done in Japan these days. Last year foreign firms spent a record $6.9bn (pounds 4.3bn) acquiring Japanese companies; a sixfold increase over 1997, according to KPMG. Yes there is change afoot in Japan, but the numbers are deceptive. Has the purchaser bought gold or dross?

In fact most of what the foreigners have bought so far are prestigious names attached to sick, debt-laden institutions. As Daimler-Chrysler discovered recently when it walked away from merger talks with troubled Nissan Motors, it's sometimes hard to figure out where the timebombs are inside a Japanese company.

It's understandable that Western dealmakers are attracted to Japan.But to many Japanese such thinking is a threat. What will force Japan to change its attitude? More hard times. Today Japanese corporations still rely on close relationships with a "main bank". For that particular institution the beginning of the end is in sight.

- Michael Zielenziger, of Knight Ridder