Now that Beijing has announced it will allow the yuan to move more flexibly, some Japanese businesses are concerned it could lead to increased manufacturing costs in China while others anticipate greater spending in Japan by Chinese tourists.
Yamaha Corp., which makes electric pianos in China for export to Europe and the United States, is concerned that an appreciation of the yuan would reduce its earnings.
For Yamaha, a 10 percent appreciation of the yuan against the dollar would cut its operating profit by around ¥800 million a year.
Fast Retailing Co., operator of the Uniqlo casual clothing chain, has commission manufacturers in China that make around 85 percent of its products, which are shipped to Japan and other markets.
The company is anticipating a limited risk to its earnings from a rise in the Chinese currency but said it needs to immediately transfer around 30 percent of its production in China to other nations.
Meanwhile, Komatsu Ltd. is expected to benefit from the yuan's appreciation because the construction machinery it manufactures in China relies on parts imported from Japan. Its sales in China account for around 20 percent of its total sales.
For Komatsu, a 1 percent appreciation of the yuan against the yen would lower its manufacturing costs in China and boost its operating profit by around ¥1.1 billion a year.
The yuan's appreciation is also expected to encourage more Chinese to visit Japan and spend more.
"It is expected to raise Chinese tourists' motivation to buy expensive goods. This is a big chance for department stores," Seichi Iioka, executive director of the Japan Department Stores Association, said Monday.
Major steelmakers are expecting a higher yuan to hit the exports of their Chinese rivals.