Recently, china and Japan are having a large dispute about Diaoyu Island which does not only affect the political powers but also heavily affect the economy in both countries. Some of the main exports from Japanese such as automobile and electronic devices are facing a dangerous challenge. The majority of Chine people are refusing to purchase any Japanese products. Even more extreme case, there are people continuingly destroying their Japanese-made products. There are protests for Japanese product almost everywhere. These two countries are experiencing a cold war, and it affects the economy of both countries at the same time. This is because China is the largest export and Import County in the world, and China is one of Japan’s largest exporting countries. During this period, Japan’s export rate to China decreased by 14 percent.
As one of the news on Chicago and tribune business news mentioned: “Almost a quarter of Japanese manufacturers are rethinking their investment plans in China and some may shift future production elsewhere after the spike in tensions between Asia’s two largest economies.” The Japanese market in China seems to have downgrade timing, so they need to switch their market segmentation into another country. On the first and, Japan is able to solve their problem in a short term. On the other hand, they are losing a huge opportunity market which its economic system is growing in the fastest pace amongst the world.
Reference: http://articles.chicagotribune.com/2012-10-23/business/sns-rt-us-japan-china-firmsbre89m1gs-20121023_1_japanese-companies-china-and-japan-china-dispute