Nissan Executive Says China Sales Hurt by Japan Tensions

Nissan Motor Co. (7201), the biggest Japanese automaker by sales in China, said deliveries in the country have been affected as it cut back on marketing events in the wake of violent anti-Japan demonstrations last month.

Nissan has reduced the number of promotional activities, on the advice of Chinese authorities, Nissan Chief Operating Officer Toshiyuki Shiga told reporters at an auto forum in Chengdu, southwest China today. The impact is difficult to quantify, he said.

Shiga’s comments may be among the first from a major Japanese company acknowledging the fallout from an island dispute that’s soured diplomatic ties between Asia’s two biggest economies and triggered protests. Tension is escalating as Japanese companies increasingly rely on China for growth to counter shrinking demand in Europe.

“Sales in China were already slowing, and this may accelerate the slowdown in sales,” Mitsushige Akino, executive director at Tokyo-based Ichiyoshi Asset Management Co. said by telephone. “I won’t be surprised if production becomes affected too, and if tension further heightens between the nations, it may have a bigger impact.”

Protests erupted in China and Hong Kong last month as Japanese activists landed on an island in the East China Sea, known as Diaoyu in Chinese and Senkaku in Japanese. Japan is mired in a similar row with South Korea, while China is embroiled in territorial disputes with Vietnam and the Philippines.

Tomoko Takemori, a spokeswoman at Honda Motor Co. (7267), said the company hasn’t heard of any impact on sales or production in China. Naoto Fuse, a spokesman at Toyota, said the carmaker is not seeing any impact now from the political tension with China.

Island Protests

Li Bing, an engineering business owner, helps illustrate why companies such as Nissan are expressing concern.

Germany and American brands are all acceptable but definitely not Japanese ones,” said Li, 34, who’s attending the Chengdu Motor Show this week in the capital of landlocked Sichuan province. “All my friends are boycotting Japanese brand stuff. No matter how good the quality and pricing are, we won’t buy.”

Demonstrations were held in more than 10 Chinese cities and featured calls for a boycott of Japanese goods, the state-run China Youth Daily reported last month. Japan asked the Chinese government to protect its citizens living in China, Chief Cabinet Secretary Osamu Fujimura said.

Staying ‘Rational’

China Daily said the protests of varying size in cities including Beijing, Qingdao, Guangzhou and Shenzhen were mostly peaceful and the newspaper urged people to be “rational.”

“When choosing between a Japanese or a German-branded car, both equal in terms of value, why would you buy a Japanese car when you see residents smashing them in such anti-Japan protests?” said Song Jian, president of Tsinghua Institute for Automotive Technology. “It would definitely weigh on your buying decision.”

Still, Kenichi Hirano, market analyst at Tachibana Securities Co., sees any impact on sales from tensions between the two countries as temporary and short-lived.

“These tensions are reoccurring and every time it happens, the Communist Party controls and quietens down the tension before it gets too heated,” he said.

Nissan’s Chinese partner joined Hirano in ruling out a prolonged fallout.

‘Some Impact’

There will definitely be “some sort of impact, but I believe Chinese consumers are a lot more rational now,” Zhu Fushou, general manager of Dongfeng Motor Corp., the Chinese joint venture for Nissan, said today in an interview at the forum.

Nissan’s Shiga said that growth in China will probably come from the less developed cities, such as Chengdu, where car ownership levels are lower and incomes are rising.

Asked whether anti-Japan sentiment has made it more difficult for Nissan and other Japanese automakers to sell in the inland areas, just as growth is expected to outpace the richer eastern coastal areas, he said: “I can imagine so.”

“Both countries are important to each other economically,” he said. “I hope this issue will be solved as soon as possible and not continue.”

To contact Bloomberg News staff for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Tian Ying in Beijing at ytian@bloomberg.net; Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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