Government officials scrambling to keep damage in economic realm as low as possible

Japanese companies become protest targets in China

by Jun Hongo

Staff Writer

As anti-Japan protests in China rage with no end in sight, Japanese businesses there are seeing their operations disrupted, while government officials seek to limit the damage to economic ties.

“The share that Japan and China hold in the global economy is overwhelming,” Finance Minister Jun Azumi said at a news conference Friday. “We must take a rational approach on the issue,” he added, expressing the wish to preserve business relationships.

What began as a territorial row over the sovereignty of the Senkaku Islands, known as Diaoyu in China, threatens to fray economic ties between Tokyo and Beijing.

By Tuesday morning, automakers Toyota Motor Corp., Nissan Motor Co. and Honda Motor Co. had seen dealerships looted and dozens of cars set on fire by protesters.

Panasonic Corp. has reported that its factories in Qingdao, Shandong Province, and Suzhou, Jiangsu Province, have been ransacked.

Other electronics makers including Canon Inc. shut down operations, fearing a spike in violence on Tuesday, the anniversary of the Mukden Incident, also known as the Manchurian Incident. On Sept. 18, 1931, members of the Imperial Japanese Army bombed a Japanese-owned railroad in the northern part of China as a pretext for invading the region.

“We haven’t been able to calculate the cost of the damage because the situation is still tense near our stores due to the memorial day,” a spokesman for Shiga Prefecture-based Heiwado & Co., which operates three grocery stores in Hunan Province, told The Japan Times.

All three stores have been broken into and looted, he said.

“Local Japanese staff are being told to act with caution,” the spokesman said. Such safeguards include avoiding speaking Japanese in public or driving Japanese cars.

A spokesman for Matsuya Foods Co. said the company shut its four beef bowl restaurants in Shanghai. It’s unclear when they can reopen, he said.

“Our restaurants haven’t been damaged by the riots, but we are following the developments closely,” the spokesman said.

Mitsumi Electric Co., which manufactures parts for Nintendo Co.’s game consoles, said its factory in Shangdong Province was set on fire during the rallies. Two of the four factories it operates in China were closed Tuesday, a spokesman said.

“We have instructed local Japanese employees to stay home,” he added.

Some companies have report-edly covered their signboards to deter attacks and removed Japanese products from store shelves. Others went as far as plastering their storefronts with Chinese flags.

Clothing retailer Uniqlo, a subsidiary of Fast Retailing Co. and operator of 42 outlets across China, released a statement responding to a report that one of its shops near Shanghai had posted a sign claiming that the Senkakus belong to China.

This “was not at the instruction of the company,” the retailer said in a statement, adding that it does not take sides on political issues. Uniqlo said it had closed its stores in China and that more than 200 of its Japanese employees were told to stay home.

In recent years, economic ties between Japan and China have strengthened. There are now more than 22,000 Japanese companies operating in China, according to the Japan External Trade Organization, accounting for approximately 5 percent of all international companies in the country.

A Finance Ministry report says that Japanese companies directly or indirectly had created about 9.2 million jobs for Chinese by 2005, and pay more than $5.9 billion annually in corporate taxes.

According to July trade statistics, China was responsible for approximately ¥1 trillion of the ¥5.3 trillion Japan earned in exports during the month. Similarly, of the ¥5.8 trillion in imports in July, ¥1.3 trillion came from China, making it Japan’s largest trade partner.

But there is a flip side to robust economic intercourse. A recent article in the People’s Daily, a newspaper run by the Communist Party of China, suggested that Beijing could turn to economic sanctions if Japan continues to control the Senkaku Islands, without giving specific details.

When a Chinese trawler collided with a Japan Coast Guard vessel near the Senkakus in 2010, China retaliated by cutting exports of rare earth metals. Though criticized by the international community for the aggressive tactic, pundits warn Beijing could do something similar again.