A dispute over East China Sea islets in October quickly escalated into a widespread Chinese boycott of many Japanese automotive brands, resulting in fewer sales and reduced profits for Nissan, Honda, Toyota and Mazda.
Mazda announced yesterday that it expects its China car sales to fall by more than a third from a year earlier, with both Nissan and Honda revising their forecasts by up to 20 percent, a move both blamed on the situation in China.
However, Hong Kong-based researcher at US consultant McKinsey & Co, Paul Goa has predicted that the damage suffered by Japanese brands should prove to be a “temporary phenomenon”, and stated:
“Over the medium to long-term, the Japanese (market) share in China will recover because for customers, especially those buying cars with their own money...the nationality of the brand is not a major consideration, whether it’s Japanese, Korean, whatever. In the end, they think about performance, styling, fuel economy and safety.”
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Goa added that he thought it would be a mistake for the Japanese automotive industry to move its focus away from China; instead it should be “doubling their efforts” to win back China market share previously lost to Volkswagen, General Motors and Hyundai Motors.
“For their first car, as they had no ownership experience, they gravitated towards flashy cars and were impressed by advertising and sales campaigns. Now they are looking for something more rational – quality, safety, durability – areas where Japanese brands like Toyota excel.”
Following Tokyo’s nationalisation of the two islets and the ensuing dispute, many of Japan’s most recognised automotive brands are expected to change the way they advertise within China in an effort to win back the nation’s hearts and wallets.
In future, it is expected they will move away from the traditional mass media advertising much used in the past to focus on “a more direct and personal touch”, as Noriaki Yamada, Mazda’s China Chief explained at the Guangzhou autoshow, the first major industry event in China since the protest.
“Japanese firms may not produce the most eye-catching products or brand marketing campaigns, but they invest in the long-term relationship with suppliers to improve the cost structure and improve the quality. This is what Americans and Germans don’t do that well.”