Majority of Japan Firms See Recovery in China Business

The vast majority of Japanese firms doing business in China are seeing a recovery of sales since the anti-Japanese riots and boycotts that began last September.

Over 60% of Japanese companies that had been hurt by the resurgence of anti-Japanese sentiments as a result of the territorial dispute over the Senkakus (Diaoyudao) report recovery of August sales to last year’s levels, according to a Mainichi Shimbun survey of 116 major firms.

The most surprising aspect of the survey is that 39 of the firms suffered no ill effects from the eruption of anti-Japanese demonstrations.

Of the 73 firms that were affected, 61.6% report being “on a recovery trend despite having gone through such adverse effects as a drop in revenue.” However, most firms have not seen business return to the levels they enjoyed prior to last September. They also report being wary of a resurgence of anti-Japanese feelings in China.

Among the firms that have fared best are Nissan which reports its China sales as having recovered to last year’s levels and the fast-fashion retailer Uniqlo which has seen earnings fully recover despite a 20% slump during the crisis.

But the sales of Toyota and Honda, the two Japanese automakers with the biggest sales in China, haven’t yet recovered to pre-crisis levels.

Overall only four firms say their businesses experience a continuing drop in revenues though 11 feel it’s too early to make an assessment.

Despite the risks, China remains a key production base and the biggest growth market for Japanese firms, bigger in many cases than their domestic market. Three-quarters of responding firms (74.2%) say they will maintain their current levels while 15.2% will actually increase their investments. Only two firms (1.9%) plan to trim their investments in China.

Despite the events of the past year, the risk cited most often by Japanese firms in China is a slowdown in the economy (77 firms), followed by rising personnel costs (59 firms) more than the 51 firms citing anti-Japanese sentiment. To address these perceived risks 22 firms plan to relocate or expand their business bases to other Asian or emerging nations.