Mon, Sep 24, 2012 - Page 14 News List

Toyota supplier considers scaling back China plans

Bloomberg

A Toyota Motor Corp supplier said it may scale back expansion plans in China in the face of escalating anti-Japan sentiment as the fallout from the political dispute over an islands group spreads to businesses.

“The protests may affect our decision on making further investment in China,” Toyo Tire & Rubber Co chief executive officer Kenji Nakakura said in an interview in Osaka last week.

“China remains an important market from which we can’t retreat, but when it comes to increasing investment we may be more inclined to do it in other countries such as Malaysia,” he added.

Nakakura’s comments make Toyo Tire one of the first Japanese companies to openly say they are reconsidering investment plans in light of China-wide protests, some of which have turned violent. In the past week, demonstrators protesting Japan’s purchase of islands claimed by both countries torched auto showrooms and smashed Japanese-branded vehicles, forcing some companies to suspend their factories in the country.

Toyo Tire, based in Osaka, suspended a factory that produces tires for buses and trucks in the eastern Chinese city of Qingdao on Sept. 18, according to Nakakura. Production resumed the next day.

Toyo Tire’s dealers have been subjected to protests from demonstrators opposing the sale of Japanese goods, though the company did not suffer damages to its facilities and offices in China, said Nakakura. Toyo Tire has asked its employees to refrain from going on business trips to China for the time being, he said.

Compared with other auto parts, tires have a bigger exposure to the general public as they are mostly sold in stores and their brands are easily visible, according to Nakakura.

“We’re concerned that the calls for blocking Japanese products will affect sales” he said.

Nakakura said the company is still gathering information and measuring the financial toll, though the company has no plans to scale back production in China for now.

Toyo Tire, the fourth-biggest tiremaker in Japan, has ramped up production overseas to counter the strengthening yen. China is the company’s largest Asian manufacturing base after Malaysia, with targeted output of 2.5 million units by 2015, or 20 percent of total Asian production. Toyo Tire has a long-term plan of making 8 million tires annually in China, Nakakura said.

The company may increase production in Malaysia because of the country’s free-trade agreement with China, Nakakura said. The company is also considering production in “many other countries,” he said.

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