Japanese exports fall as firms reopen in China

Chinese demonstrators carry anti-Japan banners and shout slogans on September 16.

Story highlights

  • Dozens of Japanese factories and stores reopened in China after violent protests
  • Exports to China, Tokyo's largest trading partner, dropped nearly 10% year-on-year in August
  • Japanese automakers Nissan, Mitsubishi, Mazda and Suzuki, have reopened in China
  • Panasonic has yet to reopen in Qingdao where part of its facility was set ablaze by protesters

Dozens of Japanese factories and stores reopened Thursday in China after violent protests forced their closure amid fury over Japan's plans to buy disputed islands in the East China Sea.

Chinese plants for electronics makers Canon and Sony, along with Japanese automakers Nissan, Mitsubishi, Mazda and Suzuki, have reopened in China, company officials told CNN. Nearly 200 7-11 stores in Beijing and Chengdu operated by Seven & I Holdings and convenience stores operated by Lawson Inc. also reopened. Toyota Motor Company wouldn't reveal whether its China operations had reopened, telling CNN that the decision is up to individual plants.

Honda has yet to reopen two plants in Guangzhou province, while Panasonic has yet to reopen operations in Zhuhai, site of an employee strike, and in Qingdao, where part of its facility was set ablaze last weekend by protesters.

Meanwhile, trade data released Thursday shows that Japanese exports dropped 5.8% year-on-year in August, with trade to China dropping nearly 10%. Analysts attributed the fall to a general global slowdown in demand for Japanese goods.

The decline underlines the economic significance of China, Japan's largest trading partner, and highlights the risk a prolonged dispute poses for Tokyo. The figures were compiled before the widespread calls in China for a boycott of Japanese goods.

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Earlier this week, ratings agency Fitch warned that the credit ratings of Japanese auto and technology manufacturers could come under pressure "if the clash between China and Japan over the Senkaku/Diaoyu islands escalates and is prolonged."

The dispute with China comes as Japan Inc. has been battling to recover from the twin disasters last year of the Tohoku earthquake and tsunami, as well as floods in Thailand which hurt Japanese electronics and automobile manufacturers that operate in the area. Export-driven companies are also struggling against a stubbornly high yen, which hurts the competitiveness of Japanese companies abroad.

Tensions in the dispute, a perennial source of nationalistic anger on both sides of the East China Sea, rose on September 10 after Japanese government agreed to buy the uninhabited islands from its private Japanese owners. China claims historical ownership of the island chain, while Tokyo maintains it has been in Japanese hands since 1895. The islands — known as the Senkakus in Japan and Diaoyu in China -- were administered by the U.S. occupation force after World War II. But in 1972, Washington returned them to Japan as part of its withdrawal from Okinawa.

The islands sit among popular fishing waters and are also believed to be rich in oil resources. Ownership of the chain would allow exclusive commercial rights in the seas surrounding the islands.

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