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Japanese Automakers Face Off With China

 

China and Cars

China and Cars

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If you know your world history, you know that China and Japan have a long history of not getting along well with one another. While relations between the two have generally been cordial as of late, a recent dispute over the uninhabited Senkaku Islands has stirred-up strong anti-Japanese sentiment in China.

How strong? As The Detroit News reports, Chinese demonstrators have destroyed or vandalized several dealerships selling Japanese automobiles, while Chinese authorities have generally looked the other way. One Audi dealer posted a banner reading, “Even if China was covered in graves, Japanese must all be killed.”

Now it’s Japan’s turn to fire back by suspending automobile production in China and temporarily closing dealerships until the latest storm passes. The decision also affects Chinese automakers, many of which have partnerships with Japanese automakers.

Financially, the impact for Chinese automakers has already been noticed. Dongfeng Motor, a partner of both Nissan and Honda, has lost 12-percent of its stock value in the past week. Even state-owned companies like Guangzhou Auto have lost stock value, indicating exactly how linked the two economies really are.

While it’s likely that this, too, will pass, it does raise a big question of “what if?” It’s no secret that China wants more control over its automotive industry, and incidents like this could be the catalyst the government has been looking for. Could this be the beginning of the end for foreign automakers in China?

For the sake of the global economy, we certainly hope not.

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