Japanese Automakers Caught in the Crossfire Between Tokyo and Beijing

Police have taken an unidentified individual into custody and are continuing their investigation into the burning of a Honda Civic at a Shanghai dealership on Thursday.  The torching of the vehicle occurred as tensions between China and Japan intensify. In a telephone interview, Honda Motor Company’s China unit general manager Natsuno Asanuma said pictures of the burning Civic have appeared on a Chinese microblogging service, but added that she does not expect the incident to affect the company’s China sales.

The decades-old territorial tensions between Japan and China began escalating last April after Tokyo Governor Shintaro Ishihara said he was considering purchasing the Daioyu island group, or Senkaku islands, as they are known in Japan. In August, protesters took to the streets of Beijing, Shenzhen, Guangzhou and Qingdao and numerous other Chinese cities as well as Hong Kong after a group of Japanese activists arrived on Daioyu.

The state-run China Youth Daily newspaper, with a reported daily circulation of 800,000, reported that protesters were calling for boycotts of Japanese good. The protests were mostly peaceful.

Last month sales of American, South Korean and German autos increased by double digits, Japanese automakers saw their sales decline by 2 percent. German automakers reportedly saw a 27 percent increase in China sales in August.

CSC International Holdings Ltd. analyst Han Weiqi said, “Japanese automakers will find their lives in China harder and harder if the tensions don’t ease off. Many consumers are becoming hostile toward Japanese brands and even if they aren’t, they would be reluctant to buy a Japanese car on concerns that other people may target and trash their cars.”

Ninety-four percent of the 3,348 respondents to a recent online poll by the Beijing Times said escalating tension between the two Asian nations is affecting their auto buying decisions.

Nissan Motor Company COO Toshiyuki Shiga said Japanese automakers have been advised to curtail their advertising and marketing activities in China.

An article in Friday’s China Daily reported that six Chinese surveillance ships have been deployed to the waters around Daioyu Island. Beijing has warned that it will take additional actions unless the Japanese government withdraws its offer to purchase the islands.

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