Japan carmakers in China told to lie low

THE economic fallout from territorial disputes involving Japan, China and South Korea continues to spread, with the latest manifestation being a request from the Chinese authorities for Japanese carmakers to slow sales campaigns in China in order to avoid becoming targets of anti-Japanese demonstrations.

This was reported yesterday by an executive of one of Japan's leading vehicle producers, Nissan Motors, while at the same time Bank of Japan governor Masaaki Shirakawa warned yesterday of the danger of a prolonged economic slowdown in China.

Tokyo has said that it is considering economic retaliation against South Korea following the controversial visit last month by President Lee Myung-bak to the Takeshima islands, which are claimed by both South Korea and Japan.

As reported on Wednesday, a former senior Finance Ministry official told

The Business Times that there was "no obvious way out" of the territorial conflicts. "I don't see any solution as (none of the involved countries) is willing to back off," said the official, who declined to be named.

Reflecting growing concern over the situation, a group of Japanese members of parliament plans to travel to China later this month, Reuters quoted an aide to one of the lawmakers as saying, though he added that the trip had not yet been finalised.

Prime Minister Yoshihiko Noda, however, will not hold a formal summit with Chinese President Hu Jintao on the sidelines of an Asia-Pacific leaders' gathering in Vladivostok, Russia this weekend, although the two may have a short chat, Kyodo news service reported yesterday.

The diplomatic row between Japan and China is having "some impact" on Japanese car sales in China, Reuters quoted a Nissan executive as saying in the south-western Chinese city of Chengdu.

Nissan chief operating officer Toshiyuki Shiga said Japanese car manufacturers were having difficulty in holding big, outdoor sales promotion campaigns, which may have hurt August sales.

"Overall, not only for Nissan but also all Japanese makers, we have been hit by a drop in sales, especially August sales. That means there is some impact," Mr Shiga said. "It is very difficult to conduct big sales promotional campaigns, especially promotional events outdoors."

Nissan and other Japanese manufacturers were advised by local government officials to tone down their sales campaigns and slow other sales activities to avoid becoming targets, Mr Shiga added. "I heard that local authorities requested (some stores) not to do big campaigns."

In addition to the impact of the territorial disputes, Japanese businessmen need to be aware of the possibility of a continuing slowdown in the Chinese economy, Mr Shirakawa said.

"China is experiencing a somewhat prolonged slowdown", while Japanese exports and factory output are weakening, he said.

Mr Shirakawa acknowledged, meanwhile, that "current yen rises have a big negative impact on exports, corporate profits and business sentiment".

"When there is strong uncertainty over the overseas economic outlook, we are more mindful of the potential damage of a strong yen," he said.

Source: http://www.businesstimes.com.sg/premium/world/japan-carmakers-china-told-lie-low-20120907

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