In snow country along the northwest coast of Honshu, a small manufacturer of precision molds is feeling the pain of China’s economic slowdown.

Orders have slowed to a trickle at Nagumo Seisakusho Co., a supplier to big auto-parts makers such as Denso Corp. and Aisin Seiki Co. And the company might keep salaries flat or even reduce them in fiscal 2019.

Manufacturers across the country depend heavily on customers in China, the world’s second-biggest economy, to buy their products, especially the parts and equipment that reach its factory floors and fuel its domestic and export growth.

Automotive chipmaker Renesas Electronics Corp. last week said it would suspend production at some plants for up to two months as it braces for Chinese growth to slow even further. In recent months, other big companies such as Mitsubishi Electric Corp., trading house Mitsui & Co., robot-makers Yaskawa Electric Corp. and Fanuc Corp.; and toilet giant Toto Ltd. have all blamed China as they cut their profit forecasts.

But the impact of China’s wobble is worse for manufacturers like tiny Nagumo that are closer to the start of the supply chain. Nagumo employs 100 people to create precision press molds that other domestic manufacturers use to make car parts and other products for the Chinese market.

On the nondescript 4,000-sq.-meter (43,000-sq.-foot) factory floor in Nagumo’s main Sanwa plant, workers clad in gray uniforms, some wearing blue surgical masks, busied themselves one recent day with the task of designing molds by computer and then milling, stamping and assembling the dies.

But the normalcy belies tough times for Nagumo, which makes all of its products on demand.

“Orders have stalled suddenly since January. Many of our clients are car-parts makers, and they have slammed on the brakes for orders recently,” at least through March, said President Hiroshi Komemasu.

“It is said that when China sneezes, Japan catches a cold,” Komemasu said on the factory floor. “I strongly feel that the trade war is affecting even small firms like us.”

The emptiest section of the facility was the busiest. Nagumo’s five sales staffers were often out of the office hunting new customers to make up for the drop-off in orders.

The company, founded as a fiber-processing company in the immediate aftermath of World War II, is based in Joetsu, a quiet city of about 200,000 people in Niigata Prefecture along the coast of the Sea of Japan.

Far from the bustle of Japan’s biggest cities, Joetsu is known for a festival, a museum and a mascot celebrating an Austro-Hungarian general who taught cross-country skiing to the now-defunct Imperial Japanese Army in the early 1900s.

Sharp slowdowns for upstream manufacturers like Nagumo bode ill for Japan as a whole, because smaller companies employ seven in 10 of its workers, and weak demand points to smaller shipments by bigger firms down the road.

Komemasu would not discuss specific Nagumo customers, but said one had slashed orders by half.

Unlisted, Nagumo managed to stay in the black for the 2018 calendar year but probably lost money in fiscal 2018 ending this month, Komemasu said. Declining orders are threatening its sales forecast, which predicts a 6 percent rise this year to ¥1.9 billion ($17 million).

Nagumo’s executives, worried about sales, have become reluctant to raise wages. After increasing base pay for three years, the company hopes to keep overall pay flat in the coming fiscal year, Komemasu said.

Such a constriction in wages could ripple through Japanese industry to affect other domestic manufacturers, which are now in the middle of their annual wage negotiations. This has reinforced concerns that trade friction will hurt salaries and consumer spending nationwide.

Giants such as Toyota Motor Corp. and Panasonic Corp. offered smaller pay increases at their annual wage talks Wednesday, tempering hopes that domestic consumption will offset external risks to growth.

Despite signs that U.S. President Donald Trump and Chinese President Xi Jinping may be nearing a truce in the the bilateral trade war, the collateral damage for Japan may linger.

“The U.S.-China trade war won’t be resolved entirely. Both sides may reach a vague compromise, but that doesn’t mean everything will be rosy for China’s external demand,” said Toru Nishihama, emerging-market economist at Dai-ichi Life Research Institute.

“Downward pressure will mount on Japanese exporters and manufacturers as the global economy slows further,” Nishihama said, adding that as Beijing focuses on supporting the domestic economy, the authorities will tolerate slower demand.

Atsushi Takeda, chief economist at Itochu Research Institute, sees the China slowdown’s impact on Japanese companies lasting for months, countering a rebound in car demand that was expected to be seen later this year from Beijing’s economic stimulus measures.

“But we need to bear in mind that the effects of trade friction will play out fully in Japanese exports and output in January-March and the following quarter, after the rush in shipments of Chinese goods to the United States seen late last year,” Takeda said.

“Semiconductors and cars will take a hit in the first half of this year, and other goods related to trade friction will follow suit in the second and third quarters, so the worst will come around April-June for Japanese exporters and manufacturers,” he said.

Last year, about 38 percent of Japan’s exports were electronic parts, semiconductor-manufacturing equipment and heavy machinery used to make other goods, while the auto industry accounted for 23 percent, Finance Ministry data show.

Japan’s manufacturing supply chain, linking small firms like Nagumo to Japan’s industrial giants and consumers worldwide, constitutes the China-reliant core of Prime Minister Shinzo Abe’s plan to lift Japan out of decades of deflation and fitful growth.

A much cheaper yen, sustained by unprecedented money-printing by the Bank of Japan, has made Japanese exports more competitive globally, spurring a long export boom and record corporate profits. This, in conjunction with Japan’ demographic woes, has promoted hiring, creating the tightest labor market since the 1970s and delivering modest pay raises.

But domestic consumption has remained tepid and export demand — especially from China — has slumped, threatening to derail what could be Japan’s longest postwar expansion.

This year has seen the biggest monthly export drop in two years, with a plunge in China-bound shipments, a big drop in machinery orders signaling weaker capital spending ahead, a weak wage outlook and dampening business sentiment in the Reuters tankan survey.

The government last month cut its assessment of factory output and profits, and indicators this month suggest the highly touted expansion may have halted.

In Joetsu, Kenichi Watabe, head of Nagumo’s general-affairs division, says the company has “managed to make ends meet as our sales staff dashed here and there trying to attract new customers and secure new orders.”

Nagumo’s workforce is now half of its peak due to past layoffs, Watabe said.

But company president Komemasu said squeezing too hard would cause lasting damage.

“We, like everyone else, tell employees to turn off the lights and refrain from purchasing unnecessary things in a downturn,” he said. “But we won’t curb investment in human capital and R&D.”

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