SHANGHAI/BEIJING -- Mazda Motor Corp. and Honda Motor Co. are among a number of major Japanese firms halting production in China as angry protests escalate over a territorial dispute between Asia's two biggest economies.
Honda says it will suspend production at two factories in the southern China city of Guangzhou and the central city of Wuhan starting Sept. 18 for two days.
"We have decided to suspend production for two days" in the wake of the heightened tensions between China and Japan, Honda's spokeswoman, Natsuno Asanuma said. "Our dealers are not in a position to receive car allocations currently," she added, referring to attacks on some of those stores by protesters over the weekend.
From tomorrow, Mazda will temporarily halt production for four days at its Nanjing factory, which it jointly operates with Chongqing Changan Automobile Co Ltd and Ford Motor Co., a company spokesman said on Monday.
A Nissan Motor Co. spokesperson in Beijing said the company is discussing whether to give employees in the capital a day off on Tuesday or allow them to work from home.
China's worst outbreak of anti-Japan sentiment in decades led to weekend demonstrations and violent attacks on well-known Japanese businesses including Honda and Toyota, forcing frightened Japanese into hiding and prompting Chinese state media to warn that trade relations could now be in jeopardy.
China and Japan, which generated two-way trade of $345 billion last year, are arguing over a group of uninhabited islands in the East China Sea, a long-standing dispute that erupted last week when the Japanese government decided to buy some of them from a private Japanese owner. The move, which infuriated Beijing, was intended by Japan's government to fend off what it feared would be seen as an even more provocative plan by the nationalist governor of Tokyo to buy and build facilities on the islands.
In response, China sent six surveillance ships to the area, which contains potentially large gas reserves. On Monday, a flotilla of around 1,000 Chinese fishing boats was sailing for the islands. The weekend protests mainly targeted Japanese diplomatic missions but also shops, restaurants and car dealerships in at least five cities.
Toyota and Honda said arsonists had badly damaged their stores in the eastern port city of Qingdao at the weekend. However, Toyota said its factories and offices were operating as normal on Monday and that it had not ordered home its Japanese employees in China.
Chinese Foreign Ministry spokesman Hong Lei said the government would protect Japanese firms and citizens and called for protesters to obey the law.
"The gravely destructive consequences of Japan's illegal purchase of the Diaoyu Islands are steadily emerging, and the responsibility for this should be borne by Japan," he told a daily news briefing.
The islands, called the Senkaku by Japan and Diaoyu by China, are also claimed by self-ruled Taiwan, which China considers a breakaway Chinese province. "The course of developments will depend on whether or not Japan faces up to China's solemn stance and whether or not it faces up to the calls for justice from the Chinese people and adopts a correct attitude and approach," Hong Lei added.
Protests may cause more damage than natural disasters in 2011
The anti-Japan protests may cause more damage to Japanese automakers in the world's largest vehicle market than natural disasters last year, according to the state-backed dealership group.
Many dealerships in China that sell Japanese cars have shut for now after some outlets were attacked and vandalized, according to Luo Lei, deputy secretary general of the China Automobile Dealers Association.
Besides those boycotting Japanese goods, most Chinese citizens won't dare to buy Japanese-brand cars due to concerns over safety, Luo said.
"The impact caused by natural disasters can be fixed quickly, while it takes a longer time and efforts to make hostile sentiment against Japanese cars go away," Luo said, declining to quantify the damage as losses are still being tallied.
"I have worked at the association for 10 years and this round of losses suffered by Japanese car dealers is the worst I've seen."
"The longer the conflict between China and Japan lasts, the more this anti-Japanese sentiment will spread among ordinary consumers," said Klaus Paur, Shanghai-based global head of automotive at researcher Ipsos. "In this politically sensitive situation, Japanese manufacturers have to reduce marketing as well as communication activities, which in turn, significantly weakens their brands and leaves the field for competitors."
Still, a solution to the bilateral tensions may be found soon as neither Japan nor China are really interested in a serious conflict, which means Japanese brands in China can avoid long-term damage, he added.
Over the weekend, television news footage showed Japanese cars being overturned and window shields smashed by demonstrators in some cities.
Photos posted on online forums showed Toyota cars with the brand badges covered with logos of Chinese carmakers such as BYD Co., while some Japanese car dealerships hung Chinese flags and banners proclaiming patriotism for China.
Sales of Japanese-branded passenger cars fell last month in China, compared with gains of more than 10 percent for German, American and South Korean vehicles, according to China Association of Automobile Manufacturers.
Nissan, the biggest Japanese automaker by sales in China, said on Sept. 6 that deliveries in the country have been affected as it cut back on marketing events in the wake of anti-Japan demonstrations that first started last month.
China is Japan's biggest trade partner and Japan is China's third largest. Any harm to business and investment ties would be bad for both economies at a time when China faces a slowdown.