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Anti-Japanese Hatred in China Reshaping the Market

German cars sell like hotcakes in China, partly because of the added prestige of the Communist Party’s fondness for luxury Audis. Still, we believe Audi’s parent company, Volkswagen, when it says that a violent anti-Japanese sign at a Chinese Audi dealership doesn’t represent the company’s views:

In the undated photo, dealership employees smiled at the camera with their fists up in the air as two men dressed in dark suits hoisted a banner stretching across more than 20 feet (6 meters) that read: “Japanese must all be killed even if it means China is covered in graves. Diaoyu must be reclaimed even if China becomes barren land.” . . .

The photo illustrates the wave of anti-Japan sentiment spreading across China, with some angry mobs attacking dealerships selling Japanese brands and trashing Japanese cars in the streets. Nissan Motor Co. (7201), Toyota Motor Corp. (7203) and Honda Motor Co. (7267) temporarily suspended production in the country at some plants.

The results of spreading anti-Japanese feelings will be far reaching. For instance, for the first time since 2005, German car sales are predicted to overtake Japanese brands, and this isn’t just because Germans make such good cars; historical hatreds in China are running strong, reaching into every layer of society.

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