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Japanese companies concerned about China’s economic slowdown

  • 2015-03-13 15:00:00
  • , Mainichi
  • Translation

(Mainichi: March 12, 2015 – p.6)

 

 China’s economic statistics announced on March 11 indicate its economy is slowing, with the growth rate of industrial production marking the lowest level in six years. Although Beijing raised the target for this year’s growth rate to 7%, there is already a forecast by markets that annual growth will fall below the target, which will drive the Chinese government to continue precarious business practices. There is concern that the economic slowdown of China, the Japan second largest trading partner after the U.S., may affect the performance of Japanese companies.

 

 China’s economic slowdown is a source of concern to Japanese companies. Japan’s total volume of exports to China in 2014 was 13.3840 trillion yen, which amounts to 18.3% of the country’s total exports. New car sales in China for the period from January to February increased by 4.3% compared with the same period in the previous year, which is a slowdown from the average of 6.9% marked in the last 14 years. At the end of January, the Honda Motor Co., Ltd., revised downward its forecast for sales of vehicles in Asia in the fourth quarter of

 FY2015 to 1.43 million units, 60,000 units below the original forecast. Vice president Tetsuo Iwamura said, “China accounts for most of our sales.” New car sales for the period January to February were 96,000 units, down by 7.6%.

 

 “China risk, as seen in the dark clouds gathering over real estate investment, is becoming evident,” said an executive of the Hitachi, Ltd. “I am concerned (about the slowdown) as China is such a big market.” The company is developing a wide range of businesses in China such as water treatment facilities and IT service. The company aims at achieving 1.22 trillion yen in consolidated sales for FY 2015, up by 14% compared with FY 2013; however, the slowdown in the growth rate may affect the company’s plans.

 

 The sales figures for the period FY 2014 April to December of construction machinery manufacturer Komatsu Ltd. was 86.8 billion yen, down by 23%. “Demand has remained low since the beginning of the new year,” complained an executive of the company. A continuing slowdown of China’s economy could place a damper on Japanese companies’ business performance. (Abridged)

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