Japan’s Carmakers Brace for China Backlash From Shrine Visit

Dec 26, 2013 4:16 am ET

(Updates with comment from investor in fifth paragraph.)

Dec. 26 (Bloomberg) -- Japanese automakers are bracing for a potential consumer backlash should tensions with China escalate after Prime Minister Shinzo Abe visited a shrine memorializing war-dead on Chairman Mao Zedong’s birthday.

Nissan Motor Co. said it was “closely monitoring” developments in Japan-China ties after Abe’s visit. The appearance at Tokyo’s Yasukuni Shrine, which honors the war-dead including 14 World War II leaders convicted as Class-A war criminals, drew a condemnation from China. Shares of Japan’s three biggest automakers rose today in Tokyo trading.

“As a company we have no means to intervene in politics,” Huo Jing, a Beijing-based spokeswoman for Nissan, said by phone. “All we can do is to be better at our job.”

Toyota Motor Corp. and Honda Motor Co. reported their first annual sales declines in China last year after the Japanese government purchased a group of disputed islands from their private owner, sparking nationwide protests and a consumer backlash. Today’s visit by Abe coincides with the 120th birthday of Mao, with Chinese leaders including President Xi Jinping honoring the founder of the communist state.

“We’re still at a stage where we need to carefully monitor the impact, but it’s obvious that this only has a negative impact on Japan,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co. in Tokyo. “The visit poses great geopolitical risks.”

Dangerous Signal

Toyota, Japan’s largest automaker, climbed 2.9 percent to 6,340 yen in Tokyo trading today, the biggest gain since Oct. 9, after the yen weakened to a five-year low against the dollar. Honda, the country’s No. 3 carmaker, added 0.9 percent while Nissan rose 0.8 percent. Guangzhou Automobile Group Co., which has joint ventures in China with Honda and Toyota, fell 1.3 percent in Shanghai trading.

“They chose today to visit the shrine, which makes it even harder for Chinese people to accept,” said Cui Dongshu, deputy secretary-general of the Shanghai-based Passenger Car Association. “The signal they are sending is very dangerous. It will deter some buyers as they may worry about the safety issue of their car and even themselves if the political environment worsens.”

Japanese automakers are regaining ground in China, though the recovery has come at a cost as they sacrifice profit for volume, said Cui. Today’s visit may spark a repeat of last year when consumers boycotted Japanese cars, he said.

Honda’s Beijing-based spokesman, Zhu Linjie, declined to comment, citing the company’s policy against commenting on politics. Toyota’s Beijing-based spokesman Liu Peng didn’t answer two calls to his mobile phone.

Many Choices

Zhang Yulan, a retired factory worker in Beijing, said she won’t let her son buy a Japanese car.

“The Japanese government is always making trouble,” said Zhang, 58, whose family is looking at buying a car. “There are so many other choices, so why them? I know most of them are made in China now, but why help them make money?”

In Shanghai, the Japanese consulate urged its nationals to be cautious as there’s a risk of worsening sentiment given the “strong anti-Japanese” tone in Chinese media reports, according to an e-mailed statement. The consulate was unaware of protests or demonstrations as of noon, it said in the statement.

At the height of last year’s demonstrations, hundreds of riot police watched over groups of protesters as they gathered outside the Japanese consulate chanting, “down with Japan devils, boycott Japanese goods, give back Diaoyu,” using the Chinese name for the group of islands in the East China Sea.

China Protests

Thousands of Japanese cars were vandalized and businesses attacked by mobs in last year’s demonstrations. Fast Retailing Co., owner of the Uniqlo clothing brand, closed shops in Beijing at the height of the protests in the city.

Two dealerships selling Toyota and Honda vehicles in Qingdao in eastern China were set on fire by anti-Japanese protesters last year, while many owners of Japanese-brand cars pasted Chinese flags or patriotic slogans on their vehicles in the hope of avoiding being attacked.

FamilyMart Co., the Tokyo-based convenience-store operator, said the Abe visit is unlikely to affect its business in China.

“Our local partner has the majority stake in our China, so I don’t think there will be any impact on our business,” said Tomoaki Ikeda, the company’s spokesman.

Japanese Businesses

Fast Retailing’s spokesman, Keiji Furukawa, declined to comment on the impact on their business in China from Abe’s shrine visit. Shotaro Nagai, a spokesman for Tokyo-based cosmetics maker Shiseido Co., said the company isn’t in a position to comment on government issues.

Sony Corp., which has seven plants in China producing consumer electronics including televisions, mobile phones and security cameras, declined to comment, said spokeswoman Yo Kikuchi. Toshiba Corp., which had about 23,000 employees and 35 manufacturing bases in China, declined to comment.

For Honda Accord owner Jack Ding, 35, news of Abe’s shrine visit came as an unwelcome surprise.

“What? Not again!” Ding said while sitting in his car waiting for a friend in Beijing’s financial district. “Well, what can we ordinary people do about it? I hope the whole thing won’t escalate. There’re so many Japanese cars on the roads. I think my car will be fine.”

--Tian Ying and Anna Mukai, with assistance from Gregory Turk and Liza Lin in Shanghai and Yuki Yamaguchi, Mariko Yasu and Takashi Amano in Tokyo. Editors: Chua Kong Ho, Allen Wan