Three words inside the Nanjing Massacre Museum echoed what has been the modern global response to the uncomfortable topic of genocide: “Forgivable, but unforgettable.”  This comment was made by a German named John Rabe, who saved citizens of Nanjing during the infamous Japanese massacre (Rabe is considered to be the ‘Schindler of the East’).  The reason I bring up this quote is because its implications are deeper than simply the remembrance, forgiveness, and prevention of genocide and human evil.  Genocide, even when forgiven, can deeply affect cultures and race consciousness, causing divisions that can affect socioeconomic relationships (i.e. geographic settlement, political interaction, trade, etc.).

The idea for this blog was conceived after two complementary experiences.

In the first, I was leaving the Nanjing Massacre Museum and in the middle of a conversation with one of our Chinese classmates.  I asked our classmate how his generation’s relationship with the Japanese differs from that of his parents’ generation.  He told me that it is much better, and even voiced the quote that I mentioned at the beginning of this blog.  However, he told me that there are numerous people of his generation who still will not buy certain Japanese products.

The second incident happened during one of our many bus rides.  As I watched cars pass alongside us, I began to take notice of brands.  I began thinking about the auto market back in the United States, and the nationalism that has affected the American car market in creating deterrents to the success of Japanese automakers.

My obvious question then became: have national anti-sentiments for Japanese affected the auto market in China?

The idea sparked me as highly probable.  A great deal of time has passed since the Nanjing massacre, however that wasn’t an isolated incident of Japanese imperialism and aggression against the Chinese.  Chinese defense against Japanese imperialism can be traced back to the 19th century Qing Dynasty.

And, the Chinese wouldn’t be alone as national participants in an economic embargo, rooted in an unforgettable tragedy that has destroyed families and shaken the makeup of generations.  There are still Jewish people who will not buy a Mercedes or an IBM because of the involvement these two companies (subsidiaries included) had in the Holocaust (and the absence of reparations made by the companies).

A blog doesn’t present the ideal landscape for the extensive empirical research that would be required to answer such a question.  However, I was able to get my hands on “some” facts that should slightly elucidate the modern relationship between Chinese people and Japanese automakers.

Japanese automakers are doing well.  Not necessarily in the past, but as of very recently, they are.

In 2005, Japanese automakers had a 15% share of the Chinese auto market.  By 2006, that number had jumped to 25.7%.  European automakers, who formerly dominated the auto market with a market share at above 50% around 2002-2003 ended 2006 with a 24.4% market share.

Japanese market share in the U.S. auto industry was around 30% in 2005, and has improved since then (although I don’t have the most recent figures).  With the Chinese auto market growing substantially each year, it’s likely that Japanese market share will continue to increase.

Japanese automakers are gaining ground in China the same way they’ve been doing so in the United States: product reliability and energy efficiency.  Everyone wants to get a return on their investment, and if Japanese automakers appear to be the best source of a return on the hefty purchase price of an automobile, it’s not surprising that they’ll dominate the auto market.  Even if it’s in the home of its former wartime enemies: the United States and China.

P.S.  By the way, a quick lesson in Econ 101.  Many people, from your mailman to your favorite presidential candidate will talk about how we need to bring back manufacturing jobs to the United States.  The auto market is often mentioned, and we’re told how many jobs are being lost because of the continually increasing sales of Japanese automakers.

This is completely fallacious.

There are three sectors of any economy: agriculture, manufacturing, and services.  Services encompasses anything from the guy at McDonald’s who asks if you want fries with that, to your highest-priced Philly attorney.  The wealthiest countries sustain themselves on services-based economies.  Manufacturing actually represents a nominal percentage of sector of advanced capitalist countries like the United States, England, Japan, etc.

This is how it’s supposed to be.  Theoretical capitalism should imply the relative smallness (or near absence—e.g. Dubai, Singapore) of a manufacturing sector.  Manufacturing jobs are not as sustainable and are more frictional.  Technological change can wipe out entire manufacturing industries.  We’re far from creating robots to represent us in the courtroom and to perform heart surgeries, but we’ve been using robots to replace manufacturing jobs for many years now.

Also, empirical research has proven that the declining market share of United States automakers hasn’t put a dent in our GDP.  Other factors are at hand for our recent economic woes, not Japanese automakers.

So, now you have some ammo for the next guy who tells you that the United States is in recession because those Japanese are outselling American automakers.

- Anthony

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