Chinese companies are rapidly expanding into a new market, the international sale of home appliances and they're doing it by buying their way in. They're acquiring Japanese home appliance manufacturers -- specifically Toshiba and Sharp -- which, despite decades of international marketing, have been running deficits for several years.

Industry insiders say the sale to Midea doesn't so much mean that Toshiba wants to give up its technology.

"The production chain of the electronics industry is quite long. It includes core parts and lower-end parts. China already has the capability to produce the basic parts and Japan still has the advantages on core parts. If the company cuts the production chain to invest in other high-end areas such as medical appliances, it will bring the company more profits," Yuan Tangjun, director of Investment & Trade Inst., Fudan University, said.

According to the Japanese finance paper Nikkei, another home appliance giant Sharp faced a deficit of 200 billion yen last year -- that's about 11.6 billion yuan. Last week, Taiwan-based manufacturer Foxconn became Sharp's largest shareholder -- acquiring 66 percent of its shares.

"When companies find they are facing dangers in the market and can't ensure their future development, they should definitely use their advantages in talent, technology and experience to enter into new areas. Facts show that if manufactuerers only produce traditional home appliances or low-profit products, they can't avoid being eliminated," President of Fujitsu Shanghai Shimomura Makio said.

Another major factor for the Japanese divestitures is probably rising costs in China. Both Toshiba and Sharp have factories in China, which were set up when Chinese labor costs were much lower than they are now.

Japanese home appliances were many people's choice in the last century -- good quality and cheap, but Chinese companies are now expanding their business overseas. Midea, for example, has established six factories from India to Vietnam. The company will manufacture under its own brand, but buying rights to the Japanese brands will give it instant access to the distribution networks and the goodwill that the Japanese brands have built up over decades.