MGT 372.9 (Fall 2012)
“Japanese exports to China fall amid territorial dispute”
Japan’s exports to China decreased sharply in September compared to the previous year due to increase in their territorial disputes over the ownership of the islands Senkaku in Japan and Diaoyu in China. Though Japan’s overall exports started declining from last year due to serious damages caused by earthquake and tsunami, this territorial dispute has aggravated the situation causing overseas shipments to fall 10.3%, compared to last year. Global slowdown, especially in Europe, was also a contributing factor.
Relations between China and Japan have soured in recent weeks resulting from the territorial disputes over the islands. Compared to the previous year, shipments to China fell 14.1% in September due to widespread protests in China against Japan. All Japanese brands highly visible to consumers — from lipstick to cars were the targets. In some cases, violent protesters targeted Japanese brands, such as automotive giants Honda and Toyota.
According to Naoki Iizuka, from Citigroup Global Markets in Tokyo, the worsening of exports was due to anti-Japan protests and boycotting of Japanese products in China, and global slowdown, especially in Europe. The most adversely affected sectors were cars, electronics and general machinery.
If the present situation continues and gets worse, exports would fall still further and the trade deficit would grow in the coming months. Since March 2011 Japan's export-reliant growth model has already been under considerable stress due to a major earthquake and tsunami that hit Japan's northeast region in that month. This sparked a nuclear-reactor crisis and made the country almost dependent on foreign energy imports, which resulted in the nation's first annual trade deficit in three decades....