A diplomatic dispute between China and Japan is threatening to put a sizeable dent in sales of Japanese brand cars in China as anti-Japanese sentiment in the country rises.
Reports from China say that protests and rallies over the weekend saw dealerships selling Japanese brands attacked and set on fire, as well as Japanese brand cars overturned and damaged in streets where demonstrations occurred. One report says that a driver of a Toyota was dragged from his car and severely beaten.
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The widespread protests across China follow a rise in tensions between Japan and China over disputed islands in the East China Sea. Chinese street demonstrations against Japan intensified over the weekend after the Japanese government appeared to put in place steps to purchase the islands.
A number of Japanese companies are apparently reviewing operations during the unrest and reported to be temporarily halting operations, including electronics firm Panasonic.
Mazda Motor Corp will halt production at its Nanjing factory, which it jointly operates with Chongqing Changan Automobile Co Ltd and Ford, for four days.
Nissan is suspending production at two of its factories for two days. Honda will suspend production for two days from September 18.
However, Reuters reported today that Toyota said its offices and factories were operating as usual in China. The report added that the company was checking with dealerships to see which ones were affected over the weekend.
A major concern for Japanese companies is that besides the direct impact of boycotts of Japanese brand goods, potential customers in China will be put off by rising concerns over safety while such hostile sentiment persists.
Much now depends on whether the increasingly violent demonstrations will be allowed by the authorities to continue, as well as developments in the diplomatic dispute between the Chinese and Japanese governments.
Japanese companies are sure to be closely monitoring the situation on the ground this week.
Toyota car sales in China were down 15% in August.
