The risks are enormous right now. Unbelievable. Losing foreign direct investment flows into China would bring the whole Red pyramid down within months.
There is more at stake this week than back when they rammed and held our EP-3 and crew.
Posted on 04/17/2005 11:48:09 PM PDT by TigerLikesRooster
Shanghai violence exposes 'China risk'
Kazumasa Higashi / Yomiuri Shimbun Correspondent
The violent demonstration against Japanese and Japanese establishments that took place Saturday in Shanghai came as a great shock to the 4,500 Japanese companies in the city.
As many of the firms are expected to take protective measures to deal with the situation, it is likely that new projects will be stalled.
Workers of a Japanese company reportedly staged a strike in Dongguan, Guangdong Province. The spread of anti-Japanese movements is expected to cause Japanese companies to suspend projects to set up affiliates in China and review their business strategies for the Chinese market.
"After breaking the windows of a Japanese restaurant, the crowds entered the restaurant and broke the tables and chairs. A group of police officers sprinted toward the restaurant, but they passed in front of it and headed toward the Japanese Consulate," said an employee of a Japanese company, who said he witnessed the violent demonstrations. "It was scary."
A restaurant run by Japanese beef bowl franchise operator Yoshinoya D&C Co. was closed at 10 a.m. at the request of the police. The restaurant is located near People's Square, where the demonstrators planned to meet.
According to the Shanghai municipal government, since 1978, when the Chinese government started its open-door policy, Japan has been the second-largest investor in the city after Hong Kong. As of the end of 2003, total Japanese investment in the city was 670 billion yen.
The direct damage inflicted by the demonstrators is not large compared to the amount of Japanese investment. But the psychological impact on Japanese companies that witnessed the violence, and the Chinese authorities' lenient reaction to it, is massive.
"Our company's headquarters won't send anybody from Japan to Shanghai for a while," an employee of a Japanese food company said.
According to the Japanese Consulate in Shanghai, 34,000 Japanese are living in the city.
About 30,000 more Japanese stay regularly in Shanghai on business trips.
If many of these businesspeople stop visiting Shanghai, it is possible the situation may be similar to that during the SARS epidemic in Guangdong and Beijing in 2003, when many factory construction projects there were delayed.
Auto Shanghai, China's largest automobile exhibition and a symbol of the country's economic development, will be held from Friday.
Toyota Motor Corp., Honda Motor Co. and other Japanese automakers said they would participate in the exhibition as scheduled, but also said they would keep an eye on the situation.
Some Japanese businesspeople have started to think the anti-Japan movement in China could be a long-term problem for Japanese companies.
"I think the anti-Japan movement has made Japanese companies recognize that they should set up export and manufacturing headquarters in countries other than China," a Japanese working in the financial industry said.
That the anti-Japan demonstration took place at the heart of the Chinese economy has made Japanese companies keenly aware of the "China risk."
Though currently it is said an average of two Japanese companies establish operations in Shanghai every day, the number might become much smaller in the near future.
Shanghai is becoming one of the centers of the Asian economy, along with Tokyo, with about 24,000 affiliates of foreign firms there as of the end of 2003.
The violent movement in the "international" city must have made U.S. and European companies also aware of the "China risk."
http://www.yomiuri.co.jp/newse/20050418wo13.htm
It remains to be seen whether China's attempt to use anti-Japanese protests to divert people's anger is successful, or ends up opening-wide the flood-gate of discontent against the regime.
Ping!
Which country is the largest investor in China? Is it Japan? What would happen if Japanese investments dried up? Are Japanese investments welcome in India?
India does not have anything major against Japan. Japanese investment would be welcomed there.
As for the largest investor, it would be either U.S. or Japan. If anti-Japanese feeling also trigger anti-American hostility, China would have a big problem economically.
If I were a Japanese businessman, I would be dusting off the old India investment plans right about now.
That's the thing. China lives on investments. If the investments are cut, the whole thing could crash immediately.
I *think* the largest direct investor in China is actually Taiwan.
India is a more difficult place to invest in manufacturing and infrastructure projects vis-a-vis China. There are reasons why there is a lot more foreign investment in China than India - while that may be changing (an article in the Times of India just last week was bemoaning why Mumbai can't be modeled like Shanghai ...), it is what it is today.
I think it is Taiwan, which also makes China's belligerence toward Taiwan highly questionable. As to India, they are still evolving rapidly, but want to have the say as to what foreign money does [what country doesn't?] and are shy of letting foreigners gain that kind of control.
The risks are enormous right now. Unbelievable. Losing foreign direct investment flows into China would bring the whole Red pyramid down within months.
There is more at stake this week than back when they rammed and held our EP-3 and crew.
This is a very dangerous time. Amazing how rapidly it happens out of thin air these days.
Probably the biggest bloc of investors is ethnic-Chinese from overseas, which includes Taiwan and Singapore. However, since these Chinese live in different countries, their businesses would come in with different national labels.
It's not out of thin air. The Chicoms have a lot of balls in the air: Whipping up nationalistic fervor that deflects numerous internal stressors.
The North Korean nuke problem and the six party talks that include Japan.
They want to prevent Japan from getting a seat on the Security Council if the UN gets reorganized.
China and Japan both claim islands in the East China Sea that are supposed to lie above significant hydrocarbon deposits.
A Chicom submarine was reported to have violated Japan's territorial waters.
Japan never apologized for its horredous conduct in World War II, and approves new textbooks that ignore what it did, including biological warfare.
Japan's recent declaration that it would support efforts of the U.S. if Taiwan was threatened by China.
I probably forgot some.
I was about to say pretty much the same thing. Things have been in place, and are now triggering visible movements.
It would take almost nothing for these demonstrations and attacks to turn against American businesses and interests. We have seen it before on a smaller scale in the cases of the bombing of the Belgrade embassy and the EP-3 recon plane. The protests against Japan are ultimately aimed at the U.S. as Japan is America's primary ally in the region and the center from which America projects its power in the Asian-Pacific and thus keeps in check China's aspriration to become the regional hegemon; this is really what's it about.
horredous = horrendous
so sorry
As I said in the earlier comment, the question is whether Chinese regime would take that step now. If they push too hard, Japan and U.S. investments may fly out, only to set off economic downturn which would only create more civil unrests.
Taiwan is definately up there if it is not number one. Singapore is also heavily invested.
It definately was not pretty for U.S. citizens in China when the embassy was bombed. But, there was no tension with U.S. citizens living in China and Chinese over the recon plane incident. It was a much bigger issue here in the states I think.
The way the Chinese looked at it, your face does not hit my fist. In other words, the recon plane did not hit the Chinese fighter. They event definately did not register on the tensions meter in China.
The funniest part of the event was the Chinese pilot's name - Wong Wei (pronounced Wong Way). The Chinglish translation of that was Wrong Way. But I digress.
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