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Japan's top 3 carmakers to halve Chinese output

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Who will suffer most from reduce production after Communist Chinese Government hostile campaign against Japanese in China? Only ordinary Chinese working family will suffer most from result of Communist Chinese Government hostility toward Japanese. Communist Chinese Government must understand about consequent of peoples losing job or dropping income will affect its country stability. Communist Chinese leaders are fooling around with their unreal day dream policy. On the other hand, Japanese companies need to careful about expansion of their business in Communist China and producing high tech products in Communist China. Japanese Companies should focus their business investment opportunity in other South East Asia like Vietnam and Burma.

0 ( +8 / -8 )

I suppose it depends on how long the production cuts last. If the disputes go on its only a matter of time before manufacturers start laying off workers. Big shame but possibly inevitable given the nature of China/ Japan relations.

5 ( +5 / -0 )

It's amazing sales only dropped 50% in China. Sure, it's a big country, but would you risk driving a Japanese car there after last month's events?

2 ( +3 / -1 )

Kobuta Chan: " Japanese Companies should focus their business investment opportunity in other South East Asia like Vietnam and Burma."

It seems pretty clear from the article that it's Japan suffering more than China here. Yes, it is harmful to China in terms of employment of Chinese nationals, but these companies, that have already been shut down for some time, are losing production and sales of up to 40,000 units. Turning to other nations would have the benefit of lower labour costs, and of course no protests (at the moment, anyway), but it would require not only moving the companies, but they would have to assist in the development of these nations, which would cost a fortune both short and long term. It would not be such an easy thing at all.

0 ( +2 / -2 )

Patrick Smash

Japanese factories in China are famous for underpaying Chinese workers, so any who lose their jobs can find better ones elsewhere.

You do understand that this is an oxy moron statement. If they were underpaid and were able to find jobs elsewhere then they won't be working there in the first place.

3 ( +6 / -3 )

Patrick SmashOct. 08, 2012 - 03:40PM JST

Japanese industry suffers most.

Good post Patrick and totally on the mark. The Korean, German and US automakers must be toasting Ishihara in the best champagne that the remimbi can buy.

The Japanese media and some posters on here make me laugh with this inflated importance of Japan to China.

The trade relationship of Japan and China has always been a distorted one and very much to Japan's advantage. Chinese produced goods in China are sold by both Japanese and Chinese companies, while Chinese produced goods sold in Japan are almost exclusively sold by japanese companies. The profits, because of the low salaries, has hardly trickled down to the manufacturing workforce and the Japanese have earned big, both in the number of sales and the profits from sales.

Japan is going to learn the hard way, but the sad thing is that Japan will probably learn nothing from this folly and in a years time, when all the big item producers are running deficits, just play the vicitm card and continue to live their collective lives in the passive tense, bemoaning that bad things are done to them.

5 ( +9 / -4 )

smithinjapan

Even if you do not live in Japan, you should know if you read the articles here at JT you would know that Japan had announced commitment towards Myanmar to copperate in developing their infrastructure.

http://www.japantoday.com/category/politics/view/tokyo-meeting-to-pledge-1-bil-for-myanmar

If it hurts the individual Chinese workers it will also hurt the Chinese government as well since unemployment rate rises directly connected to amount of income tax, unemployment insurance and pension.

0 ( +5 / -5 )

Actually its not the Japanese suffering the most but maybe the Japanese big companies that are suffering the most but who cares because these big companies never really shared their wealth to the ordinary people in the last economic boom. No one really benefited in the last economic boom except big companies in Japan...

-1 ( +1 / -2 )

China made this fur and started rejecting Japanese goods. But in reality all Japanese goods which they get in China are made in China...... LOL... Now come to Japan most of the goods in Japan are made in China If Japanese stop eating those stuffs then ultimately Chinese will loose job... When the factory is closed the Chinese are going to loose the jobs.

0 ( +2 / -2 )

Patrick Smash, your analysis is right, but only to a point. Chinas growth has slowed to well below 8%, inward investment from Europe and the US is shrinking very quickly and the construction industry, one of Chinas biggest drivers is in such a parlous state that the Chinese government is propping it up with subsidies and is looking for more money for greater investment in infrastructure. These aren't signs of long term health. China needs all the jobs it can create to support its new focus on domestic growth. There are no winners in the ongoing dispute. It'll be costly for both China and Japan. In recent years Japan has leaned heavily on China for manufactured goods and agriculture but as time goes on it makes less sense putting all your eggs in one basket. Japanese industry is wise to start looking to diversify.

7 ( +8 / -1 )

Here we are again, let's see who suffer the most. I was thinking how many here actually from China or Japan as the ones that would suffer the most are Japanese and Chinese who works together for their future but thanks to some politician there goes harmony.

I think it's still too early to tell whether production would continue to hamper for the next upcoming months. If other companies are able to take this opportunity to grab all those potential customers, let's imagine where does the 50% went to, we all heard from another article in JT where BMW has their sales up 55% if I'm not mistaken?

The key word here is "choices". If such thing become a "trend" in China, sooner or later they might not be interest in Japanese car anymore. I believe from this article we could see that Japanese companies are indeed affected but the situation in China as well their competitors, only time will tell.

0 ( +0 / -0 )

If drivers of Japanese cars in China are going to be assaulted like the poor Chinese man in Xian, who was paralyzed after being beaten by an enraged mob, then the only ethical thing to do is for the Japanese automakers to shut down their plants. Let this be a lesson to capitalists who think they can make money by investing in factories in countries run by amoral dictatorships.

2 ( +4 / -2 )

Patrick Smash, yes Chinas growth puts all the mature markets to shame but thats not the whole story. At its curent state of development China is a vast yet relatively immature economy, without huge growth numbers the economy is effectively shrinking, 71/2% growth isn't enough for Chinas long term health. With reduced inward investment and reduced exports to its major markets, China is currently spending its treasure to artificially create domestic demand. It's a short term fix at best and one that created only a small impact at the start of the banking crisis. Coupled with its rapidly rising cost base, China is highly likely to discover just how finite and interdependent the global economy is. There are no winners in the dispute over the islands, only degrees of loss.

3 ( +3 / -0 )

The issue of more than trade. Many Chinese would like to have China attack Japan over the islands. Territorial disputes like this can expand into other areas of unresolved greviances such as the memories of Nanjing and the Japanese brutalities in WW2, etc.

It is best for both governments to put a stop to the island issue but forbiding citizens from both countries to visit the disputed islands and declare that this issue be best postponed to a future generation to resolve. Also, if both governments forbid their fishermen to fish in those waters, that will effectively avoid further flare ups.

Both countries will lose out in an escalated dispute and the rest of Asean will be drawn in too.

1 ( +1 / -0 )

I'm afraid to say that this really does show the shortsightedness of the actions on the part of nationalist politicians like Ishihara.

It would have been much more astute to adopt a more magnanimous disposition in dealing with this touchy issue, which dates back to the Meiji era.

Assuming that the cars produced in China were only for sale in China, this is nothing but lost opportunity and market share for Japanese makers.

If Japanese manufacturers' products become taboo in China, the real cost for the energy resources around those rocks will lead to a loss overall.

0 ( +0 / -0 )

SamuraiBlue: I know full well the commitment Japan has made to Myanmar, but that does not mean it will not cost a lot of money.

2 ( +3 / -1 )

Toyota, Honda and Nissan executives must be secretly pissed at Ishihara.

1 ( +2 / -1 )

Bot secretly at all. They have a number out on his head. But the number is bigger from the Chinese. If someone takes him out they automatically becomes Chinas best friend. Who knows someone might try it. It's just to risky to go against that loud mouth Ishihara.

-1 ( +0 / -1 )

The good side of this bad story for both Japan and China is that the Ishihara's corporates envelopes will get thinner and thinner.

0 ( +1 / -1 )

Patrick Smash

others increase production there to feed the enormous domestic market, which is where the new jobs will come from, alongside increased Chinese innovation.

Again an oxy moron statement, if there is an enormous domestic market with many Chinese domestic competition the n why would underpaid worker cling on to their post at a Japanese company? The princple of demand and supply should eradicate any presence of Japanese companies long before the Senkaku issue had taken place.

1 ( +1 / -0 )

It's amazing sales only dropped 50% in China. Sure, it's a big country, but would you risk driving a Japanese car there after last month's events?

Not all Chinese people are dumb.

The Japanese cannot simply pick up production somewhere else that is cheaper than China and save money because there isn't anywhere cheaper.

Cost is (no longer) the only issue. A stable (political) environment is becoming more important.

1 ( +1 / -0 )

Open Minded

The good side of this bad story for both Japan and China is that the Ishihara's corporates envelopes will get thinner and thinner.

Tokyo has the lowest household ownership of automobiles within the 47 prefectures(one car per two households). Why would auto manufacturers provide political contribution to Ishihara the governor of Tokyo when they see the least impact from it? Toyota is based in Toyota Aichi, Nissan is based in Kanagawa. The only automobile manufacturer with it's HQ in Tokyo is Honda but most of it's manufacturing facilities are in Tochigi so there is not much benefit for any of these manufacturers to provide political contributions towards Ishihara.

1 ( +1 / -0 )

Perhaps they need to take a leaf out of the Audi marketing strategy in PRC, and get their dealers to stand in front of a showroom smiling with a big banner saying "we must exterminate all of ourselves".

0 ( +0 / -0 )

The row between Japan and China is being widely reported arround the world. When the Chinese people were persecuted by their own government, the world felt sorry for them, and the Chinese government was rightly seen as a bunch of thugs.

When they cracked down down on the Tibetans, members of Falun Gong, Uyghurs, and anybody who opposed the status quo, the Chinese government was rightly seen as a bunch of thugs.

Let's not forget recent cases of industrial espionage either.

China has a richly deserved bad reputation brought on entirely by themselves. Waffle on about other countries taking advantage of Japan's problems in China, the world is watching and the Chinese can kiss any new investment goodbye in what's an obviously unstable country. In fact, they are well on their way to becoming a pariah nation.

Keep it up and new investment will go somewhere else. Once it becomes a trend, investors will wonder why they followed each other by lemmings by going there in the first place. Have a look at a world map sometime, there's more countries than fingers on your hands that are more than willing to take advantage of China's problems and once investment moves elsewhere, it won't come back.

Shove your statistics where they belong. One fools refer too them when anybody who really knows what they're talking about will agree that it's trends that drive things. Smart companies like stability and the more stories they hear about China, the more they will look for alternatives. It's common sense.

0 ( +2 / -2 )

@smithinjapan

I know full well the commitment Japan has made to Myanmar, but that does not mean it will not cost a lot of money.

As did China. It's not just the infarstructure either. Most maninland Chinese have no clue about business, and their work ethic is not very good either. That's why there are so many managers from Hong Kong or Maylasian/Singaporean Chinese running things because the locals are not reliable.

Done business with Mainlandd Chinese companies? I have for years. None of the above is an exaggeration. Rush into investing in China at your peril, assume and prepare for the worst. Or even better, look elsewhere.

-3 ( +1 / -4 )

Swiss Toni, I mainly agree with you

And yet you completely disregard the contents of Swiss Toni's remarks especially in the beginning when he/she stated that China's perceived "wealth" is not sustainable in the long term.

China's domestic consumption as a % of GDP is at a woeful 33.8% in 2010 which has been declining. Therefore, the so called enormous domestic market is quite significantly less than that of Japan. Hence, the GDP growth are sustained by capital investment which accounts for 46.2% which is will rely on government spending since the FDI have been decreasing 3 months straight despite Japan increasing her FDI to China before the incidents.

If the "rare earth" exports are historical examples, Japanese businesses will no doubt adapt rather quickly without too much damage. And with the major insurance companies not insuring the welfare of these businesses, it's another added incentive to move out of China as soon as possible.

And as SamuraiBlue summed it up, your comments/analysis are simply an "oxy moron".

-1 ( +2 / -3 )

Even with their vehicle sales decreased by 50% these car companies are not talking about leaving the Chinese market as some Japanese reports and posters here said they would/should? It is simple, for all the economic downturns in China, it is still one of the fastest large economy in the world with sound and stable economic and political policies. The japanese car corporations just can't ignore a huge market like this without losing major competitive edge to their competitors.

1 ( +1 / -0 )

with sound and stable economic and political policies.

Right, the one with government-instigated anti-Japanese mass riots. Stable? Are we talking about the same country??

1 ( +1 / -0 )

The value of the Chinese auto market to the big three ( Toyota, Nissan & Honda ) lies in its attractiveness on market share buildup & brand awareness ( the loyalty to brand takes time to secure like Mercedes Benz, BMW ) in the longer run and immediate contributions on sales volume & profit.

Some posters above tend to mix up China vs Chinese average consumers -- Not sure if a farmer in remote China, riding on bike in the past 50 years, could easily differentiate a Honda from a Hyundai, but money spent from their pocket on auto purchase is an individual behavior as per personal criteria -- these first time buyers comprise the important targets towards whom fierce competition are undergoing. 'made in Japan' supported by good image of the brands' nation used to be a selling point over the Korean made.. that turns out to be a probable hindrance -- not because of the J citizens but the act of a few J politicians.

Back to gain / loss resulted from the collective boycott -- ALL J-car companies operate in China, without exception, through respective 50-50 partnership. The same Chinese partners ( all stare-owned ) form other auto JVs simultanously with European & US brands. Hence, would be possible ( admittedly not easy ) for the partners to play among brands..and they may not suffer seriously without Toyotas on the assemble lines.

0 ( +0 / -0 )

nigelboy's info is incorrect as i pointed out to him a couple weeks ago! geez

China's domestic consumption as a % of GDP is at a woeful 33.8% in 2010 which has been declining.

IN FACT:

http://news.xinhuanet.com/english/china/2012-09/26/c_123766523.htm China to speed up service sector development "The statement said the service sector provided 34.6 percent of jobs in China in 2010. From 2005 to 2010, the sector created 5.79 million new jobs on average annually." "Government data shows that China's tertiary industry accounted for 43.1 percent of the country's GDP in 2011, up from 40 percent in 2005. "

http://english.peopledaily.com.cn/90778/7966979.html From Russian expert: "China's economy transferring to new growth engines: Russian expert" MOSCOW, Oct. 1 (Xinhua) -- China's economy has started transferring to new growth engines and searching for new incentives, a Russian expert said.

The economic restructuring itself was one of the most significant achievements made over the last decade, Yakov Berger, an expert from the Far East Institute of the Russian Academy of Science, told Xinhua in a recent interview.

China used to rely its economic growth heavily on export, investment and cheap labor. Chinese leaders have long been aware of shortages of such an export-oriented economy and looking for a more sustainable growth model, Berger said."

Enjoy ! :) "

0 ( +1 / -1 )

This story indicates Big big trouble for Japan car companies: a. ANY sales dropped in these companies are PICKED up by China;s domestic car companies, Korean and German car companies. b. China's car companies are accelerating their innovation rapidly. c. This will AFFECT other japanese enterprises in China.

I already stated couple of weeks ago, Japan will be the Bigger loser! It's math and reality. China will fill ANy Vacuum left by Japan companies with its own domestic companies doing innovation or in immediate term replaced by Korean or German or US companies.

0 ( +0 / -0 )

Even with their vehicle sales decreased by 50% these car companies are not talking about leaving the Chinese market as some Japanese reports and posters here said they would/should? It is simple, for all the economic downturns in China, it is still one of the fastest large economy in the world with sound and stable economic and political policies. The japanese car corporations just can't ignore a huge market like this without losing major competitive edge to their competitors.

Japan has now lost the GOODWILL among the Chinese ppl. The loss of Japan car industries in China is looking like the mathematical n! factorial, where: n! = n x (n-1) x (n-2) x (n-3)x... x 1

This yeat it will lose 50%, and the following year, it will lose ANOTHER 50% of that remaining market share, and in a few years, it will be like 10-15%, thats right.

Sorry to be blunt, but the Chinese ppl are now basically saying: good riddance! and this time, they will make sure their conviction stands their grounds.

You can do all kinds of marketing etc etc.. but it wont work. This is JApan's own doing, unfortunately.

-1 ( +0 / -1 )

The following data also shows that Chinese ppl are being Exposed to other countries and they understand better about freedom and global exchange in trading and social/cultural issues.

Some travel data: [you can verify these via google]

each year 70 (seventy) millions Chinese travel overseas! each year about 3.5 millions Japanese visit China each year about 1 million Chinese ppl visit Japan
-2 ( +0 / -2 )

nigelboy's info is incorrect as i pointed out to him a couple weeks ago! geez

No mano2012. You didn't respond. (You couldn't) geez.!!

http://www.japantoday.com/category/national/view/china-pushes-japan-with-sea-claims-trade-threats#comment_1405523

"Government data shows that China's tertiary industry accounted for 43.1 percent of the country's GDP in 2011, up from 40 percent in 2005"

And this is something to brag about??? Wake me when China reaches a 70 percentile like most developed nations (U.S., Japan, U.K. Germany, France, etc.)

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

Enjoy ! :)

Don't worry. I'm laughing.

1 ( +2 / -1 )

My point is your data that you have been peddling is incorrect! and I told u so then:

China's domestic consumption as a % of GDP is at a woeful 33.8% in 2010 which has been declining.

but the reality: "Government data shows that China's tertiary industry accounted for 43.1 percent of the country's GDP in 2011, up from 40 percent in 2005. "

http://news.xinhuanet.com/english/china/2012-09/26/c_123766523.htm

--

Definition of 'Tertiary Industry' The segment of the economy that provides services to its consumers. This includes a wide range of businesses including financial institutions, schools, transports and restaurants.

Also known as "tertiary sector of industry," or "service industry/sector".

http://www.investopedia.com/terms/t/tertiaryindustry.asp

--

PS Im not interested in comparing with other countries, thats another topic, another day ;)

My point is to debunk the garbage you have been hauling all these weeks.

-1 ( +1 / -2 )

My point is your data that you have been peddling is incorrect! and I told u so then:

Perhaps I should of clarified myself by using the term "private" consumption since this is what we're talking about here. So no. The figure is not wrong. China's private consumption is one of the lowest and is pitifiul.

http://roundtable.newamerica.net/blogposts/2011/putting_china_s_low_household_consumption_in_perspective-46600

1 ( +3 / -2 )

There is a saying: small minds think small ;)

nigelboy said: "And this is something to brag about??? Wake me when China reaches a 70 percentile like most developed nations (U.S., Japan, U.K. Germany, France, etc.)

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

I dont even need to put my arguments against your above statement.

the BIGGER picture is:

China started a New Model 10 yrs ago (as stated by the Russian expert in my previous link) This new model has now reached a Perfect Storm for its launch, which is this year 2012! Since China's tertiary sector is only 43.1% of its GDP in 2011, THAT MEANS it has HUGE HUGE HUGE opportunities to grow and Replace and Push Aside the export industries...

Sorry again to the Japan fanboys every where ;) and to be blunt.. the Chinese ppl are now GETTING RID of Japanese products starting this 2012.. and this is IRREVERSIBLE no matter how much marketing or P.R. etc etc..etc..

-1 ( +1 / -2 )

nigelboy Oct. 09, 2012 - 12:30AM JST China's domestic consumption as a % of GDP is at a woeful 33.8% in 2010 which has been declining.

A key source of underestimation of service consumption in China is the consumption of housing. The estimate of the consumption of housing accounts for only about 3% of personal consumption in China. This seems too low to be even close to the reality. As a comparison, consumption of housing represents about 16% of personal consumption expenditure in the U.S. and 6.6% in India. The important reason for the seemingly low housing consumption in China is that the imputed rent of owner-occupied housing is not appropriately accounted for. In other words, the statistical methods used in the U.S. and China to estimate the consumption of housing are quite different. The fact that the house-ownership ratio in China is over 80% suggests that the potential underestimation in this regard could be quite substantial.

Another important source of underestimation of service consumption in China is personal spending on healthcare. While the share of spending on healthcare in the U.S.is 16% of total PCE (personal consumer expenditure), this share in China is only about 6%.

0 ( +0 / -0 )

sfjp330

Again, you took this right from the below link "word for word" without provding the source.

http://www.morganstanley.com/views/gef/archive/2009/20090915-Tue.html

And yet,

"Investment in real estate accounted for more than 13 per cent of China’s gross domestic product in the first half of the year and the sector has been a key growth driver for most of the past decade.

But forests of empty apartment blocks cover much of the country and land purchases for new residential housing were down 24.3 per cent in the first seven months from the same period a year earlier, suggesting future investment will not hold up.

Housing prices in many large cities rose for the first time in almost a year in June and were up again marginally in July.

But that is not necessarily good news since the government has spent the past two years trying to suppress surging prices that have put home ownership out of reach for most of the population and a strong rebound could provoke even tighter restrictions on real estate."

http://www.ft.com/intl/cms/s/0/cc05e828-e860-11e1-8ffc-00144feab49a.html#axzz28je9B5yX

It appears China has a lot of things "not appropriately accounted for" like basic urban planning based on "demand". Again, this is a classic example of what's keeping the GDP up, a "if you built it, he will come" concept except that this isn't a Field of Dreams but a cruel reality.

1 ( +1 / -0 )

nigelboy Oct. 09, 2012 - 03:24AM JST. Perhaps I should of clarified myself by using the term "private" consumption since this is what we're talking about here. So no. The figure is not wrong. China's private consumption is one of the lowest and is pitifiul.

Huh? Even with the annual average income of $5K-7K in China, they are buying 18 million cars a year. By the year 2030, there are estimates that China might buy 30 million cars annually . They are the biggest car market in the world. Where is Japan, buying 1/4 to 1/5 of cars compared to China?

0 ( +0 / -0 )

All readers back on topic please and refrain from bickering.

0 ( +0 / -0 )

China is a communist country. Govern with discipline and her economics boom. Japan is a government being haunted by the Right Winger. No doubt the Right Wing is......... Ask Ishihara

China today is not a China of yesterday. Japan to day is just like Japan of..........Who will suffer most?

0 ( +0 / -0 )

Japan is still TRYING to recover from the Tsunami,and Nuclear disaster.Nuclear contamination.. This is gonna nail the coffin shut so to speak for Japan. We can thank Ishihara for all this......

-2 ( +0 / -2 )

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