China and Japan have had a close-knit relationship with each other with respect to economics over the past few years. However, the political conflict over the ownership of Diaoyu Island (Senkaku Island in Japanese) brings to light the economical influences of both countries, especially Japan.

In China, people launched anti-Japanese demonstrations in terms of Diaoyu Island. Gradually, people began to boycott Japanese goods. Typically the Japanese automobile is the Chinese first choice due to low its low consumption of fuel and high safety standards. However, the sale volume of Japanese cars experienced a dramatic decline in the past several months in China, and has dropped by 15%. More specifically, Chinese consumers have less motivation for Japanese products due to their attachment to their own country and they also tend to choose brands of products from other countries because of the social atmosphere. Such consumer behavior brings a hit to Japan’s market and economics.

Japan has been trending downward since the Asian financial crisis. China’s market is relatively the biggest dependence of their economics growth. It will be a fatal blow to Japan’s economic recovery if they lose the Asian market that centers on China.

The point is to see what kinds of market strategies will Japan make in order to reply to Chinese consumers’ passive behavior.

link: http://www.economist.com/node/21563316