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Japanese Companies Are Planning a Massive Boycott of Chinese Supplies

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By Augustine Mbam - - 5 Mins Read

Because of the growing tensions around China, Japanese companies such as Honda are planning to reduce their dependence on China.

The bad side to this news is that investors and companies expect the high cost of products once the zero-China policy is implemented. 

Since this summer, Honda, a car manufacturing company, has been carrying out a secret project to manufacture their cars without depending on China's parts. 

China is facing problems with the United States because of its stance on the Taiwan issues. Companies are beginning to make their products with as few China parts as possible to prepare in case of any emergency.

Business Isn't Stopping anytime soon 

Despite the US issues with the Chinese government and the new moves Japanese companies are making. It looks like business is not stopping anytime soon. 

Even the top managers of Japanese companies know that China is one of their largest markets, and cutting them off abruptly will lead to massive losses. 

For a company like Honda Motors, China makes up about 30% of its sales, and the company, despite its ongoing zero-China policy, is not planning an abrupt cut. Rather than cutting China off, it would be a gradual process to help prepare for any emergency. 

In addition to the zero-China policy, Japanese companies are looking at other parts procurement options apart from China. 

According to a reliable source Nikkei Asia, companies such as Honda are already making inquiries from other regions, such as South Asia. From what a Honda spokesperson told the news outlet, the company is already making moves to ensure its supply chain is not at risk.

Japan Heavily Depends on China for Imports 

Apart from companies trying to reduce their dependence on Chinese produce, an analysis shows that Japan heavily depends on Chinese imports. 

About 80% of Japanese imports from China are worth around $9.4 billion, and if the government should stop importation, the price of products will increase. 

According to estimates made by professor Yasuyuki Todo of Wesda University, about $360 billion of production will disappear if the Japanese government should stop importation from China for two months. 

Analysts only expect the Japanese government to handle the impact of cutting supply chains from China by gradually reducing dependency and looking for alternatives.

Cutting China from the Japanese economy will cost Japan 10% of its GDP 

According to Asian Times, if the China supply chain is cut off from the Japanese economy, it could lead to a loss of more than 10% of their GDP. 

Without the parts and other materials imported from China, it would be incredibly hard for Japan to meet its production needs. 

From the calculations done by a consulting firm based in Tokyo, if China is cut off from the Japanese economy, it can result in a 50% increase in the price of personal computers. 

The reaction and response from China are expected if Japan goes on with its zero-China policy. Assuming China cut off the Japanese from their own economy, it could lead to a more than $206.2 billion loss for Japan.