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Rattling the supply chains

How do anti-Japan riots in China affect the supply chains of U.S. companies? Plenty, according to this article from The Economist. While the worst of Chinese-Japanese dispute has passed as of last week, the effect can still be remarkable on the supply chains that exist between the two powers. While Japan feels as though China will be the one that suffers the most if business breaks between the two, Japan's business lobby finds otherwise: According to Keidanren, Japan's business lobby, there are almost 30,000 Japanese firms in China, the result of 40 years of mostly thriving trade. Japan has invested $85 billion in China in the past 15 years, including over $6 billion last year alone. With Japan's economy stagnant, its population shrinking, and energy costs and the currency rising, its firms in China have little choice but to lower their heads and hope that the row blows over. The toll is heavy, nonetheless. Car exports to China, for instance, may drop by 70% in the fourth quarter compared with the third, says J.P. Morgan, a bank. Japan's GDP may dip as a result. Some Japanese companies have attempted to strengthen their relationships in china, including Mitsubishi, while others plan direct expansion in China such as Fast Retailing (Japan's biggest clothes retailer). However, slowing growth, boycotting of Japanese products, and slowing economies are driving others away. Both Japan and China find themselves taking a hard look at their multinational supply chains.

About Matthew Kabik

Matthew Kabik is the former Editor of Computer Aid's Accelerating IT Success. He worked at Computer Aid, Inc. from 2008 to 2014 in the Harrisburg offices, where he was a copywriter, swordsman, social media consultant, and trainer before moving into editorial.

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