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Earthquake And Tsunami Spell Disaster For Japanese Car Industry

Global dealerships are beginning to fret that new Japanese automobiles won't make it to the market.

Toyota IQ
Toyota IQ
Nathalie Brafman

The Japanese car industry is at a standstill. Some five days after the earthquake and tsunami hit Japan, all the factories of the country's biggest car manufacturers Toyota, Nissan and Honda were still closed, including those which were not directly affected. Toyota, the world's top automobile manufacturer, estimates a production decline of 40 000 vehicles. Honda has announced that it does not plan to restart production before Sunday, and puts its production loss at some 16,000 vehicles.

According to a study by investment bank Goldman Sachs, cited by Bloomberg, financial losses could top two billion yen ($24.6 million) for every day of lost production at Nissan and Honda. For Toyota, the bill could be three times higher.

The factories could start-up again in the coming days, but probably not for long. Even if some of the factories have not been damaged, their supply has been disrupted. Nissan CEO Carlos Ghosn said earlier this week that even if operations resumed soon, "it would not be for very long because the supplier network "is really devastated".

The problem has been exacerbated by the unique Japanese system of Kanban (literally meaning "label") employed by the nation's car industry. A supply concept invented by Toyota at the end of the 1950s, the system uses the rate of demand to control the rate of production. The method allows manufacturers to limit their stock volumes and thus reduce costs. "Japanese automakers are faced with a three-fold challenge", says Yann Lacroix, an industry expert for top French insurance company Euler Hermès. "They have to resume production is spite of rolling power blackouts; obtain the necessary components from their suppliers in spite of devastated roads; and somehow export their cars abroad at time when the ports on the eastern coast are closed."

These problems will soon have repercussions abroad. Japan is the world's second-largest car exporter (after Germany). More than one in every ten cars produced in the world comes from Japan. In 2010, the export market (including cars and parts) was worth 130 billion dollars.. More than eight million vehicles were built on the archipelago, half of which were sent to the United States.

"Toyota produces 47 percent of its cars in Japan, about four million units, and out of that we export close to half of them (1.8 million)", says Philippe Boursereau, Toyota spokesperson in Europe. Supply of Toyota's hybrid Prius, of its four-wheeled Rav 4 or the small IQ – all made exclusively in Japan - is likely to be seriously affected by the disruption in the company's parts supply chain.

"We haven't been able to contact all our suppliers yet, so we do not know what shape they are in", Boursereau says. According to the carmaker, 60 percent of the cars sold in Europe are manufactured in Japan, but "it takes about six weeks for Toyota vehicles to travel from Japan to Europe." This means that over the next five weeks, European dealers will still be receiving cars (or car parts) manufactured before the earthquake and the tsunami. Any disruptions in European or American plants would only begin to occur by the middle of April.

Read original article in French

Photo - kosabe

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How A Xi Jinping Dinner In San Francisco May Have Sealed Mastercard's Arrival In China

The credit giant becomes only the second player after American Express to be allowed to set up a bank card-clearing RMB operation in mainland China.

Photo of a hand holding a phone displaying an Union Pay logo, with a Mastercard VISA logo in the background of the photo.

Mastercard has just been granted a bank card clearing license in China.

Liu Qianshan


It appears that one of the biggest beneficiaries from Chinese President Xi Jinping's visit to San Francisco was Mastercard.

The U.S. credit card giant has since secured eagerly anticipated approval to expand in China's massive financial sector, having finally obtained long sought approval from China's central bank and financial regulatory authorities to initiate a bank card business in China through its joint venture with its new Chinese partner.

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Through a joint venture in China between Mastercard and China's NetsUnion Clearing Corporation, dubbed Mastercard NUCC, it has officially entered mainland China as an RMB currency clearing organization. It's only the second foreign business of its kind to do so following American Express in 2020.

The Wall Street Journal has reported that the development is linked to Chinese President Xi Jinping's meeting on Nov. 15 with U.S. President Joe Biden in San Francisco, part of a two-day visit that also included dinner that Xi had with U.S. business executives.

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