By on October 24, 2012

Sales of Japanese cars in China dropped 40 percent in September as a result of the islands rumpus. The shares of Nissan, Toyota and Honda shares lost about 10 percent of their value. Chinese state-owned enterprises lost much more.

“State-owned Dongfeng Motor Group Co., China’s second-largest automaker by vehicle sales, and sixth-ranked Guangzhou Automobile Group Co. saw their stock prices slide 16 percent since mid-September,” reports The Nikkei [sub]. Why? The Chinese companies are much more dependent on Japanese cars than Japanese carmakers on the Chinese market

As outlined two weeks ago, Dongfeng Motor makes cars in joint ventures with Nissan and Honda. Guangzhou Automobile has joint ventures with Honda and Toyota. Says The Nikkei [sub]: .

“Japanese brands account for 40 percent of Dongfeng’s sales and 90 percent of Guangzhou’s. Some 3.5 million Japanese-brand cars were sold in China last year, giving them a 20 percent market share. Of those, 90 percent were made in China. With a local content ratio of around 90 percent Japanese-brand cars are essentially made in China.”

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12 Comments on “Chinese Boycott Of Japanese Cars Hurts Chinese Companies The Most...”

  • avatar

    And this is a surprise how?

    Like I said earlier, once this starts hitting the wallets of the officials you’ll see a drastic change in stance.

    Most of this though about the islands will probably blow over once there is a change in leadership. It might not, but I seriously think a lot of this is just to keep people from looking at the changeover too closely. Too many power struggles going on at the moment.

  • avatar

    A new icon for our age…. a raised camera/phone instead of a raised fist. I’m sure some hipster T-shirt peddler has already latched on.

  • avatar

    I am no fan of Japanese automakers expect maybe Mazda and Nissan to a certain extend but it is a shame to see private companies bear the burnt for the decisions and choices made by their governments. If it is any solace to the Japanese automakers, it seems the sales losses have only been deferred temporarily and not lost to the competition.

  • avatar

    I wonder why these JV partners don’t just remove the Honda/Toyota badges and replace them with Dongfeng/Guangzhou badges? Why continue to hang the albatross around their necks?

  • avatar

    The WSJ has an excellent article on this subject, how the China-Japan dispute is hurting Chinese workers and businesses:

    The impact is much more complicated than looking at earnings. Chinese working for Japanese companies, which is 1.6 million people to 5 million depending on who you ask, are legitimately worried for their jobs. While they are still getting paid, and given paid time off or put in training, they are not getting overtime, and that additional income they expect.

    And those workers aren’t using money in local businesses, they eat out less, they spend less money. Meaning businesses such restaurant are also being effected.

    Worse, modern production relies on JIT (just-in-time), meaning that these factories use a network of fast-moving, usually local, suppliers. Cutting production by half will have a ripple effect throughout the economy.

    • 0 avatar
      Pastor Glenn

      L’avv,you are right.

      Sometimes wishing evil upon one’s enemies (as the Chinese are doing) ends up having worse evil visit oneself (as the Chinese are finding out).

      Some people call that karma, or kizmet. As a Pastor, I prefer to think of it in Biblical terms.

      Treat others as you would wish to be treated. Be kind to your enemies.

      Else, kizmet……

  • avatar
    Felix Hoenikker

    Warning: Conspiracy theory ahead
    Did high ranking Chinese officals short the domestic car compaines and then start to stir the pot with the Japanese? The officials could make a very nice, quick profit from the temporary fall in Chinese car manufacturer stock prices.

    • 0 avatar
      Pastor Glenn

      Why would you consider that a conspiracy? It makes so much logical sense for a group of people without any conscience or care for what is considered unethical behavior by most, that is is very probably true. It’s not like the Chinese leadership can’t control every aspect of Chinese life – the media, the crowds, etc.

      I could be really cynical and say that the Chinese elite have learned really well from the American and European elite…. but I won’t otherwise I might offend some.

    • 0 avatar

      This is not a conspiracy theory but rather common practice in China. Why do you think the leaders of the Communist Party are so filthy rich? They know before hand what policies are going to implemented, and they profit from it.

      The most recent, and relevant, example is China’s next leader, Xi Jinping. Bloomberg published an article on his finances (which is the reason that Bloomberg is now banned in China). One thing they uncovered is that Xi Jinping’s family profited on the last anti-Japanese riot.

      Basically, Xi Jinping’s family purchased a 30% stake in a state-owned rare-earth company before the island-spat with Japan saw the Chinese rare-earths blocked, and rare-earth prices quadrupling.

      Xi Jinping’s family have a value of $376 million in assets.

      There is a reason why Shanghai’s A-share stockmarket is generally considered a complete bust. For an economy that grows so quickly, Chinese stocks perform horribly. The reason is that its stock market is rife with insider trading and moves based on government-connected businessmen that know Communist parties next move. The only way to make money off of stocks in China is if you know important people.

      Which is why the Chinese don’t invest in stocks. Being that they are restricted from moving large sums of yuan overseas, the only place they can invest their money is real estate. Which is why Chinese real estate prices are so incredibly high right now.

  • avatar
    schmitt trigger

    Like the old proverb says (which may be of Chinese origin):

    Be careful on what you wish upon your enemy

  • avatar

    perhaps the chinese partner wanting to vait till the japs cannot handle the blood letting then sell the plants at a fire sale price.

    these kind of large scale investments do need so much cash flow daily inorder to keep the lights on too.

    when its sputtering or not firing in all cylinders is going to hurt greatly.
    not sure what is the jap culture nowadays will they adhere to this, usually when a lower rank discovered a higher rank’s mistake they still follow thru, kind of blind follow’s the blind as our western culture put to it.

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