China-Japan Island Dispute May Have Impact on Overall Auto Supply

After its impact on the Japanese CBU businesses’ production and sales in China, the island dispute between China and Japan is gaining steam. “If the crisis cannot be settled, in addition to the Japanese auto industry, the overall China auto industry supply chain will suffer from the damages,” said Zhao Ying, professor of the Institute of Industrial Economics of Chinese Academy of Social Science. 

“So far the island crisis has not had its impact on the self-owned brands, like us Great Wall Motors. However, it is a fact that many power transmission systems of Great Wall’s automobiles have used parts from Japan,” said Shang Yugui, deputy general manager of Great Wall Motors Co.

Thus, if the island dispute between China and Japan gets more serious, the impact on the auto parts trade between China and Japan will become more enormously and even spread to the self-owned brands sector. Furthermore, since the Japanese auto industry has highly localized their businesses in China, “their upstream auto parts businesses and downstream service-oriented businesses will be further trapped in the crisis,” predicted by industry insiders.