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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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"The impact caused by natural disasters can be fixed quickly, while it takes a longer time and more effort to make hostile sentiment against Japanese cars go away," Luo said in a September 17 interview, according to Businessweek.

Given the persona non grata status of Japanese brands in the mainland, China's Passenger Car Association estimates that Japanese automakers will relinquish their lead to German automakers for the first time in seven years.

Other car companies that Chinese consumers might turn to include General Motors (NYSE:GM) and Volkswagen (PINK:VLKAY), which both already enjoy strong sales in China.

John Foley from Reuters notes that often times, calls for boycotts do not work because of the "free rider" effect, where customers agree with a boycott but do not practice it themselves with their favorite products. However, he does point out that "cars may be an exception, since they're highly visible and easy to vandalize."

For now, Japanese auto manufacturers appear confident that they will be able to ride out the storm.

"Our business in China is firmly rooted. We won't change that long-term strategy even if we experience near-term difficulties," Honda executive Masaya Nagai told the Wall Street Journal.

Twitter: @sterlingwong
No positions in stocks mentioned.
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