Beijing, - Mamoru Shimada, President Fuserashi Company - manufacturer of precision components - canceled his visit to China this month due to the ongoing protests. He then turned his visit to Malaysia and Indonesia, looking for a better business opportunity to build a new production facility.
"We plan to increase production capacity in China. However, the risk is obvious from the protesters, I think it is better to add production capacity in Thailand because it had a factory there," said Shimada.
Anti Japanese products by Chinese citizens to acts of vandalism and arson as well as car dealers last September, is now reaping the rewards bad. Japanese automotive component manufacturers jointly agreed to stop running the investment into the world's most populous country because market conditions are not clear.
Component company Koito Manufacturing Company (KMC) - supplier of headlights for the Toyota Group - said it suspended plans third plant expansion. In fact, the development is already half way.
"Demand from the car manufacturer is currently not clear, so we do not know how to stop this project," said Shinji Karasawa, KMC spokesman told Bloomberg (13/11/2012). Another component company, Sumitomo Electric Industries Limited and tire manufacturer Toyo Tire & Rubber Company also again think back to business expansion in China.
Toyota sales fell 44 percent last month, following the 49 per cent decline in September. Honda and Nissan also reported the worst sales decline in October.
Southeast Asia
The Japanese component manufacturer plans swerved and expand its business in developing countries such as Southeast Asia in Thailand, Vietnam, Myanmar, Indonesia and Cambodia. This situation would be a sign of a decline in investment flows to China next year, hurt bilateral trade (Japan-China) which tripled reach 340 billion U.S. dollars in the last 10 years.
"Our board members have asked whether the best way to move production out of the future of China. Protesters urged us to accelerate the move to the outside," said Masayoshi Matsumoto, President of Sumitomo Electric.
Signs of decline in investment flows to China are seen in September, dropped 6.8 percent, a decline that continues lasts for 11 months. Direct investment by Japanese firms to China last year shot 74 percent to 12.6 billion dollars. Making Japan as the country with the greatest investment to China, after Hong Kong and Taiwan, according to the Japan External Trade Organization.
Various companies that supply components for Nissan, Honda and Toyota in China now face uncertainty, and businesses are more vulnerable than car manufacturers because they are smaller-scale businesses and global.
