By Bloomberg News - 2012-09-18T02:16:07Z
China and Japan’s worst diplomatic crisis since 2005 is putting at risk a trade relationship that’s tripled in the past decade to more than $340 billion.
Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Nissan Motor Co. halted production at some plants while Panasonic Corp. (6752) reported damage to its operations in China as thousands marched in more than a dozen cities on Sept. 16. Shares of automakers fell in Tokyo after protesters called for boycotts of Japanese goods and in some instances smashed store fronts and cars after Japan last week said it will purchase islands claimed by both countries.
Tensions between China and Japan further complicate policy makers’ efforts to fortify growth in Asia’s biggest economies as the European debt crisis saps demand for exports. Panasonic and Canon Inc. (7751) yesterday said they’re shutting some plants in China through today and the China Automobile Dealers Association said the protests will hurt sellers of Toyota, Honda and Nissan cars in China more than Japan’s March 2011 earthquake.
“The escalating dispute is adding one more layer of uncertainty,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. (ANZ), who previously worked at the World Bank. “Japan is now more reliant on China for economic growth than vice versa. Its already weak economic recovery may falter. China will suffer less.”
In 2011, China was the largest market for Japanese exports, while Japan was the fourth-largest market for Chinese exports. China’s shipments to Japan totaled $148.3 billion last year as it imported $194.6 billion of Japanese goods, according to Chinese customs data.
[h=2]Shares Slump[/h]Tokyo Governor Shintaro Ishihara triggered the dispute in April when he said he may use public funds to buy the islands, known as Diaoyu in Chinese and Senkaku in Japanese, from a private Japanese owner. Tensions escalated after Japan’s cabinet approved the purchase of the islands for 2.05 billion yen ($26 million) on Sept. 11. China has said it doesn’t accept the move.
Nissan (7201), the biggest Japanese automaker by sales in China, fell as much as 5.2 percent, the biggest drop since May 7, to 700 yen before trading at 723 yen as of 9:49 a.m. in Tokyo. Toyota declined as much as 1.2 percent and Honda dropped as much as 3 percent. Japan’s benchmark Nikkei 225 Stock Average was little changed today after markets were closed yesterday.
Sales of Japanese-branded passenger cars fell last month in China, compared with gains of more than 10 percent for German, American and South Korean vehicles according to the China Association of Automobile Manufacturers. China is the world’s largest car market.
[h=2]Damaged Plants[/h]Toyota and Honda both reported that fires damaged their dealerships in the eastern Chinese city of Qingdao. Separately, Phoenix Satellite Television Holdings Ltd. (2008) showed footage of Japanese cars that had been overturned, with their windshields smashed by protesters.
Nissan halted production at two factories in China today, spokesman Chris Keeffe said by phone. Toyota halted output at some China plants, according to spokesman Joichi Tachikawa.
Honda suspended production in China until tomorrow and Mazda Motor Corp. (7261) halted output at its Nanjing plant until Sept. 21. Mitsubishi Motors Corp. (7211) halted production at a factory in Hunan province, according to spokesman Yuki Murata.
Many dealerships in China that sell Japanese cars have shut after some outlets were attacked and vandalized, said Luo Lei, deputy secretary general of the China Automobile Dealers Association.
[h=2]Ransacked Stores[/h]“We don’t know how far damages on Japanese companies will extend while all they can do is just hold still,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors will take a wait-and-see attitude toward companies related with China such as retailers and autos.”
Protesters in Qingdao ransacked a Jusco supermarket and a Heiwado Co. (8276) department store in the city of Changsha was attacked, the Kyodo News Agency reported.
Jusco is operated by Aeon Stores (Hong Kong) Co. (984), the Hong Kong-listed unit of Japan’s Aeon Co.
Shares of Ajisen China Holdings Ltd. (538), an operator of Japanese ramen restaurants in China, fell 1.2 percent to HK$4.95 as of 11:25 a.m. in Hong Kong trading after yesterday slumping the most in four months.
The declines were the result of concerns that the two companies’ sales would be hurt by the dispute over the islands and that some of their stores may be vandalized, Linus Yip, chief strategist at First Shanghai Securities, said by phone.
[h=2]Stores Closed[/h]Fast Retailing Co., owner of the Uniqlo clothing brand, fell the most in three months as of 10:28 a.m. in Tokyo after closing 42 stores. Seven & I Holdings Co. closed 211 stores and Aeon Jusco has shut 30 outlets as of today.
In the southern city of Guangzhou, police said they detained seven people for vandalizing a Japanese-brand car on Sept. 16 and held another three for smashing an unidentified store front. The northern city of Xi’an banned “illegal” protests in some areas and said any vandalism in the name of “national interest” won’t be allowed, according to a statement posted on the local public security bureau’s website.
Panasonic yesterday said it’s temporarily closing plants in the cities of Qingdao, Suzhou and Zhuhai. The electronics maker is checking on damage at its Qingdao and Suzhou facilities, spokesman Atsushi Hinoki said.
Canon spokesman Hirotomo Fujimori said the company was closing two of its plants in Guangdong province and one in Jiangsu province through today to ensure the safety of employees. No damage has been reported at the plants, he said.
[h=2]Manchurian Incident[/h]September 18 is the anniversary of the Mukden Incident, also known as the Manchurian Incident, which took place in 1931 near what is now the Chinese city of Shenyang and led to the Japanese invasion of the northeastern portions of China.
The protests this month have come as economic growth in China moderated in the second quarter to the slowest pace in three years.
That’s already led Komatsu Ltd. (6301), the world’s second-biggest maker of construction equipment, to cut its annual profit forecast as a Chinese government campaign to rein in home prices has depressed demand. Of Komatsu’s 1.98 trillion yen revenue in the year through March, about 14 percent came from China, according to data compiled by Bloomberg.
Hitachi Construction Machinery Co. (6305), the third-biggest maker of building equipment, said in July that it expected sales of excavators built by foreign suppliers in China to drop 20 percent to 56,000 units in the year to March 2013, following a 37 percent slide the previous year.
[h=2]Japanese Investment[/h]That hasn’t stopped Japanese investments in China. Foreign direct investment by companies from Japan surged 19.1 percent from a year earlier to $4.73 billion in the first seven months of this year, according to the Chinese Ministry of Commerce. By comparison, investment from the European Union fell 2.7 percent and funds from the U.S. rose 1 percent during the same period.
Protesters also called for a boycott of Japanese goods after demonstrations swept Chinese cities in 2005 in a row over school textbooks that critics said downplayed Japan’s wartime atrocities, prompting some companies from the nation to reconsider investment plans for China.
That didn’t prevent Chinese imports from Japan surging 15.2 percent in 2006, almost triple the previous year’s pace.
The trade and economic interests of the world’s second- and third-biggest economies have become increasingly intertwined, said ANZ’s Liu. An escalation of the dispute could deal “a blow to the Asian economy and the global one as a whole,” he said.
To contact Bloomberg News staff for this story: John Liu in Beijing at [email protected]; Zheng Lifei in Beijing at [email protected]
To contact the editor responsible for this story: Frank Longid at [email protected]
Enlarge image
[h=3]China-Japan Dispute Over Islands Clouds $340 Billion Trade Ties[/h]
Protesters in Qingdao ransacked a Jusco supermarket.
Protesters in Qingdao ransacked a Jusco supermarket. Photographer: STR/AFP/Getty Images
China and Japan’s worst diplomatic crisis since 2005 is putting at risk a trade relationship that’s tripled in the past decade to more than $340 billion.
Toyota Motor Corp. (7203), Honda Motor Co. (7267) and Nissan Motor Co. halted production at some plants while Panasonic Corp. (6752) reported damage to its operations in China as thousands marched in more than a dozen cities on Sept. 16. Shares of automakers fell in Tokyo after protesters called for boycotts of Japanese goods and in some instances smashed store fronts and cars after Japan last week said it will purchase islands claimed by both countries.
Tensions between China and Japan further complicate policy makers’ efforts to fortify growth in Asia’s biggest economies as the European debt crisis saps demand for exports. Panasonic and Canon Inc. (7751) yesterday said they’re shutting some plants in China through today and the China Automobile Dealers Association said the protests will hurt sellers of Toyota, Honda and Nissan cars in China more than Japan’s March 2011 earthquake.
“The escalating dispute is adding one more layer of uncertainty,” said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. (ANZ), who previously worked at the World Bank. “Japan is now more reliant on China for economic growth than vice versa. Its already weak economic recovery may falter. China will suffer less.”
In 2011, China was the largest market for Japanese exports, while Japan was the fourth-largest market for Chinese exports. China’s shipments to Japan totaled $148.3 billion last year as it imported $194.6 billion of Japanese goods, according to Chinese customs data.
[h=2]Shares Slump[/h]Tokyo Governor Shintaro Ishihara triggered the dispute in April when he said he may use public funds to buy the islands, known as Diaoyu in Chinese and Senkaku in Japanese, from a private Japanese owner. Tensions escalated after Japan’s cabinet approved the purchase of the islands for 2.05 billion yen ($26 million) on Sept. 11. China has said it doesn’t accept the move.
Nissan (7201), the biggest Japanese automaker by sales in China, fell as much as 5.2 percent, the biggest drop since May 7, to 700 yen before trading at 723 yen as of 9:49 a.m. in Tokyo. Toyota declined as much as 1.2 percent and Honda dropped as much as 3 percent. Japan’s benchmark Nikkei 225 Stock Average was little changed today after markets were closed yesterday.
Sales of Japanese-branded passenger cars fell last month in China, compared with gains of more than 10 percent for German, American and South Korean vehicles according to the China Association of Automobile Manufacturers. China is the world’s largest car market.
[h=2]Damaged Plants[/h]Toyota and Honda both reported that fires damaged their dealerships in the eastern Chinese city of Qingdao. Separately, Phoenix Satellite Television Holdings Ltd. (2008) showed footage of Japanese cars that had been overturned, with their windshields smashed by protesters.
Nissan halted production at two factories in China today, spokesman Chris Keeffe said by phone. Toyota halted output at some China plants, according to spokesman Joichi Tachikawa.
Honda suspended production in China until tomorrow and Mazda Motor Corp. (7261) halted output at its Nanjing plant until Sept. 21. Mitsubishi Motors Corp. (7211) halted production at a factory in Hunan province, according to spokesman Yuki Murata.
Many dealerships in China that sell Japanese cars have shut after some outlets were attacked and vandalized, said Luo Lei, deputy secretary general of the China Automobile Dealers Association.
[h=2]Ransacked Stores[/h]“We don’t know how far damages on Japanese companies will extend while all they can do is just hold still,” said Kenichi Hirano, general manager and strategist at Tachibana Securities Co. in Tokyo. “Investors will take a wait-and-see attitude toward companies related with China such as retailers and autos.”
Protesters in Qingdao ransacked a Jusco supermarket and a Heiwado Co. (8276) department store in the city of Changsha was attacked, the Kyodo News Agency reported.
Jusco is operated by Aeon Stores (Hong Kong) Co. (984), the Hong Kong-listed unit of Japan’s Aeon Co.
Shares of Ajisen China Holdings Ltd. (538), an operator of Japanese ramen restaurants in China, fell 1.2 percent to HK$4.95 as of 11:25 a.m. in Hong Kong trading after yesterday slumping the most in four months.
The declines were the result of concerns that the two companies’ sales would be hurt by the dispute over the islands and that some of their stores may be vandalized, Linus Yip, chief strategist at First Shanghai Securities, said by phone.
[h=2]Stores Closed[/h]Fast Retailing Co., owner of the Uniqlo clothing brand, fell the most in three months as of 10:28 a.m. in Tokyo after closing 42 stores. Seven & I Holdings Co. closed 211 stores and Aeon Jusco has shut 30 outlets as of today.
In the southern city of Guangzhou, police said they detained seven people for vandalizing a Japanese-brand car on Sept. 16 and held another three for smashing an unidentified store front. The northern city of Xi’an banned “illegal” protests in some areas and said any vandalism in the name of “national interest” won’t be allowed, according to a statement posted on the local public security bureau’s website.
Panasonic yesterday said it’s temporarily closing plants in the cities of Qingdao, Suzhou and Zhuhai. The electronics maker is checking on damage at its Qingdao and Suzhou facilities, spokesman Atsushi Hinoki said.
Canon spokesman Hirotomo Fujimori said the company was closing two of its plants in Guangdong province and one in Jiangsu province through today to ensure the safety of employees. No damage has been reported at the plants, he said.
[h=2]Manchurian Incident[/h]September 18 is the anniversary of the Mukden Incident, also known as the Manchurian Incident, which took place in 1931 near what is now the Chinese city of Shenyang and led to the Japanese invasion of the northeastern portions of China.
The protests this month have come as economic growth in China moderated in the second quarter to the slowest pace in three years.
That’s already led Komatsu Ltd. (6301), the world’s second-biggest maker of construction equipment, to cut its annual profit forecast as a Chinese government campaign to rein in home prices has depressed demand. Of Komatsu’s 1.98 trillion yen revenue in the year through March, about 14 percent came from China, according to data compiled by Bloomberg.
Hitachi Construction Machinery Co. (6305), the third-biggest maker of building equipment, said in July that it expected sales of excavators built by foreign suppliers in China to drop 20 percent to 56,000 units in the year to March 2013, following a 37 percent slide the previous year.
[h=2]Japanese Investment[/h]That hasn’t stopped Japanese investments in China. Foreign direct investment by companies from Japan surged 19.1 percent from a year earlier to $4.73 billion in the first seven months of this year, according to the Chinese Ministry of Commerce. By comparison, investment from the European Union fell 2.7 percent and funds from the U.S. rose 1 percent during the same period.
Protesters also called for a boycott of Japanese goods after demonstrations swept Chinese cities in 2005 in a row over school textbooks that critics said downplayed Japan’s wartime atrocities, prompting some companies from the nation to reconsider investment plans for China.
That didn’t prevent Chinese imports from Japan surging 15.2 percent in 2006, almost triple the previous year’s pace.
The trade and economic interests of the world’s second- and third-biggest economies have become increasingly intertwined, said ANZ’s Liu. An escalation of the dispute could deal “a blow to the Asian economy and the global one as a whole,” he said.
To contact Bloomberg News staff for this story: John Liu in Beijing at [email protected]; Zheng Lifei in Beijing at [email protected]
To contact the editor responsible for this story: Frank Longid at [email protected]
Enlarge image
[h=3]China-Japan Dispute Over Islands Clouds $340 Billion Trade Ties[/h]
Protesters in Qingdao ransacked a Jusco supermarket. Photographer: STR/AFP/Getty Images