China IT Most Exposed in Japan

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Word from Chinese firms with Japan operations is slowly trickling back after the devastating earthquake, with tech firms showing the most vulnerability. In the universe of companies we follow, two IT services firms, HiSoft (Nasdaq: HSFT) and Camelot Information Systems (NYSE: CIS) have both issued statements saying they expect no serious impact to operations from the quake. (HiSoft release; Camelot release). We have yet to hear from other big tech names like Alibaba (HKEx: 1688), Baidu (Nasdaq: BIDU) and Lenovo (HKEx: 992), all of which have relatively small but still sizable operations in the country. While all these companies could suffer some small negative effects in the short run, some could actually benefit in the longer term as Japan Inc seeks their goods and services to rebuild following the disaster.

Bottom line: Look for small disruptions in the near-term for names like HiSoft, Camelot and Alibaba in Japan, but a nice business bump could come when rebuilding gets underway.

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