Japanese Manufacturing Disruption Continues in China

Due to large anti-Japan protests, some Japanese automotive plants in China remained closed on Thursday. However, a number of factories and stores have begun to reopen as the demonstrations decrease in size. The two countries’ territorial dispute and the associated protests have resulted in significant losses for many Japanese manufacturers.

The Japan Times reported that Honda had reopened some of its factories on Thursday. Nonetheless, production was still halted at two plants to ensure the safety of employees. Nissan and Honda postponed the reopening of factories in Hubei, Guangdong, Guangzhou, and Zhengzhou on Wednesday, according to the official Xinhua News Agency. Protesters set fire to a Panasonic plant days earlier, adding to safety concerns.

The production halts have prevented Japanese companies from manufacturing roughly 14,000 automobiles. Reuters reported on Thursday that the reduction in output was valued at approximately $250 million. Boycotts by the Chinese public may result in major additional losses that could affect corporate earnings for months or years to come. The automakers’ stocks have fallen in value since the protests began.

Although some Japanese stores reopened on Wednesday and Thursday, many car dealerships remained closed. Protesters have attacked several dealerships and destroyed cars in the streets. State media reported that Chinese motorists canceled over 2,000 orders for new vehicles in recent days. Some fuel stations stopped serving customers with Japanese cars.

The tensions between Japan and China could have a major impact on the economies of both nations. Annual bilateral trade totals $340 billion, according to BusinessWeek. China imported nearly $200 billion worth of Japanese products in 2011, including many vehicles and electronic devices. Some analysts predict that Japanese companies will become reluctant to build new plants in China.

The anti-Japan protests began last weekend and spread to over 140 cities by Tuesday. Hundreds of Japanese stores closed, camera factories shut down, and airlines canceled flights to Japan. The demonstrations were triggered by Japan’s decision to purchase disputed islands in the East China Sea. Japan has demanded compensation for the damage to its consulates and embassies in China, according to BBC.

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