Quite possibly the most senseless foreign policy position China has taken over the years has been its stance towards Japan. With diplomacy concentrating on World War II issues that most of the world has now moved on from, sovereignty disputes over close to worthless islands, and a rise of Chinese nationalism fueled by state propaganda, China has succeeded in alienating what remains one of the world’s largest economic powers, as well as a major historic foreign investor in China and a close regional neighbor. While Japanese investment will remain in China, the fallout from the Chinese government-fueled drop off in Japanese sales to China has made the Japanese business community now feel unwelcome in the country. Consequently, future Japanese investment is looking for more sustainable, and friendly, investment relations across the rest of Asia.
A look at the emerging markets across Asia sees Japanese motorbikes and cars on the streets of Hanoi, Ho Chi Minh City, Rangoon, Jakarta, Delhi and Sri Lanka. Successful joint ventures across the region have made Japanese auto companies a dominant force throughout Asia and beyond. Even in the United States and Europe, some of the most popular brands include Toyota, Honda, Nissan, Suzuki and Mazda. China, meanwhile, is now stuck trying to foist unwanted Volvo sedans on a domestic population that does not want to buy them, and is not seeing much overseas demand for its domestic auto brands. No one wants an FAW truck except for a handful of nations in Africa and Latin America. Losing the support of the Japanese investment community was the wrong diplomatic step to take, and China will pay in terms of lost opportunities to partner with Japanese manufacturers globally for this misguided approach for years to come. In short, the lesson is this: you cannot continually beat up on one of your largest trading partners and one of the world’s largest economies without something giving way at some point. It has, and Japan, at least within the business investment community, now regards China as “unfriendly.”
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