WSJ: “Explosive anti-Japanese sentiment in China forced Toyota, Honda and Nissan to idle factories across the country this month. Media reports suggest that fresh shutdowns may be coming again in October.
Halting production is never good news. But who’s got the bigger headache – the Japanese or the Chinese?
There is no question that Toyota, Nissan and Honda will lose sales and market share to competitors. It’s already happening. And lost sales matter because China accounts for 15% of global profits at Toyota and Honda and as much as 25% at Nissan.
And yet, the pain could become even greater for China.
All Japanese cars made in China are produced at joint-venture factories owned on a 50-50 basis with Chinese partners. When the plant doors close, Chinese executives who run those joint ventures will immediately confront two frightening realities: a dramatic drop in revenue and tens of thousands of idle workers.
Take Hong Kong-listed Guangzhou Automobile Co for example. GAC, a subsidiary of the powerful Guangzhou municipality, runs world-class car assembly joint ventures with Honda and Toyota that employs just under 13,000 people.
Guangzhou Honda and Guangzhou Toyota also buy car parts from hundred of suppliers based in Guangdong province that employ tens of thousands of more people. Honda and Toyota products are sold through more than 900 dealers owned by Chinese business people. Count several more thousands of jobs there.
As China steps its way through a delicate political transition expected to formally begin in October, the last thing the leadership in Guangzhou wants to deal with is a crush of workers with too much time on their hands. If an argument between workers at a Foxconn 2038.HK +0.78% plant in Taiyuan can trigger rioting by thousands, imagine what might happen should Guangzhou workers start wondering about future job security.
Guangzhou Automobile isn’t an isolated case.”
via Japanese Car Plants in China: Who’s Feeling the Heat? – China Real Time Report – WSJ.
CHINDIA ALERT: You'll be living in their world, very soon 