Japan's year to recover from crisis? Think again

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TOKYO -- Make it two for two. Japan's beleaguered auto industry is on track for another year of external shock and awe.

After being knocked flat by last year's earthquake-tsunami double punch (and the massive flooding in Thailand), the country's carmakers had been hoping for a quiet 2012 to rebuild.

They were only three months away from a peaceful year, when disaster struck again in the form of violent anti-Japanese rage spreading across China. A top target of the rage: Japanese cars.

To be sure, this crisis is far from the broadside Mother Nature delivered last year. But there is plenty of reason to worry.

And it should concern both foreign and Japanese brands.

Media images of burning Hondas and trashed Toyota dealerships show the depth of Chinese outrage. Honda, Toyota, Nissan and Mazda were among those shuttering factories or offices as Japan's expatriate business community ducked for cover.

On Tuesday, as the anti-Japan protests and marches reached a crescendo, Nissan's stock tumbled 5 percent in Tokyo trading.

Even after the unrest settles, there is good reason to think this round of protest is more potent than previous outbursts against China's neighbor and erstwhile wartime occupier.

Photos that have gone viral on the Web show why.

They depict Japanese cars slathered with mea culpa stickers slapped on by their Chinese owners pleading some variant of "I bought this car before Japan messed things up. From now on, I'm boycotting Japanese goods." Even if Chinese customers want Japanese cars -- after all, they are still good products -- they are afraid to buy them for fear of patriotic retribution.

Japan's carmakers are rightly worried about long-term damage to their brand value in the world's largest auto market.

China is the battleground for future sales growth among international brands. And the Japanese -- who enjoy a leg up against U.S. and European rivals in many markets worldwide -- now risk falling behind in the most important one.

But the unrest, triggered by a territorial dispute between Beijing and Tokyo over a spray of unpopulated rocky islets in the East China Sea, also should worry all overseas makes.

The protests are an all-too-painful reminder of how the Chinese government holds business hostage to its political agenda.

Beijing infamously keeps public opinion on a short leash, until the rabble rousing suits its interests.

Japan and China have a troubled past and complex present. But is there any reason to think China wouldn't unleash a similar economic backlash when it butts heads with another nation?

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter

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