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For Japanese Automakers, China Dispute Might Be Worse Than Tsunami

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Calls for a boycott of Japanese brands will hurt the likes of Toyota and Honda.

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MINYANVILLE ORIGINAL A year after the devastating tsunami, Japanese automakers are bracing themselves for another crisis that will seriously impact their businesses.

This time, the crisis is political, not natural. Last weekend, the simmering tension between China and Japan over the sovereignty of islands in the East China Sea (known as Diaoyu in Chinese and Senkaku in Japanese) boiled over as protestors in scores of Chinese cities took to the streets in anti-Japan demonstrations. (See also: 5 Things You Should Know About the China-Japan Territory Dispute.)

According to Reuters, Japanese diplomatic missions, shops, restaurants, and car dealerships were the targets of protests, with Toyota (NYSE:TM), Honda (NYSE:HMC), and Nissan (PINK:NSANY) reporting that their stores in Qingdao were attacked by arsonists.

As a result of the protests, Honda shuttered its five assembly plants in China on Tuesday and Wednesday to recalibrate production outputs given that the anti-Japan sentiment will likely impact sales. Toyota, Mazda, and Nissan also suspended production in China for two days.

There are calls for Chinese citizens to boycott Japanese products, but patriotism is not the only thing that is motivating locals to avoid all things Japanese. There is also the issue of safety, what with Japanese cars overturned or set ablaze in the weekend protests.

"The repercussions for Japanese carmakers are very serious and will last for a long time," Cui Dongshu, deputy secretary general of the Passenger Car Association, told Bloomberg. "There are plenty of choices. Why bother with Japanese brands if there are concerns of safety due to anti-Japan sentiment?"

Luo Lei, deputy secretary general of the China Automobile Dealers Association, said that the dip in sales caused by Sino-Japanese tensions could hurt Japanese automakers more than the tsunami and earthquake of 2011 did.
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