In 2012 a wave of anti-Japanese nationalism gripped China. Angry crowds burned down Japanese-owned factories, smashed Japanese-made cars and pelted Tokyo’s embassy in Beijing with eggs. It was an experience that jolted Japanese business leaders and they decided to make sure they never again relied on one country for essential widgets, and especially the finished article.
In the months before the Brexit vote, Japan’s government warned that a victory for the leave campaign could have a negative impact on investments in Britain. The Japan Business Federation, noting that more than 1,000 Japanese firms have a presence in Britain, joined the Japanese prime minister, Shinzo Abe, in pleading with Britain to remain in the EU.
Since the referendum vote, Japanese companies have stayed largely silent. Like all major employers, they have broken cover in recent weeks to talk about the huge cost of a no-deal Brexit. But there have been precious few stories of companies, and especially those that sell directly to consumers, blaming factory closures or office relocations on the UK’s decision to leave the European Union.
The exception is Nissan, which is not really a Japanese company in Europe. It is a French business run by Renault executives in Paris, and as such has an active political agenda. Nissan abandoned plans to build a new model at its Sunderland plant with a clear warning that uncertainty over Brexit was affecting its business. That said, the French Groupe PSA is not expected to blame Brexit should it – as expected – close the Astra-making plant in Ellesmere Port. The struggling carmaker needs to consolidate production and it would probably seem gratuitous to blame Brexit. Unlike Nissan, which has a highly productive factory near Sunderland, Ellesmere Port has struggled against low investment and poor management for years.
Honda was one of the businesses most affected by the riots in China. It also watched as anti-Chinese sentiment gripped Vietnam in 2014, giving rise to the same behaviour towards Chinese businesses meted out to Japanese firms a couple of years earlier.
So why would it blame Brexit for the decision to close its factory in Swindon from 2021? Amid growing concerns that the UK, like many other countries, is in the grip of nationalist fervour, there is only the prospect of souring consumer sentiment.
Of course, when Honda overturned its previous pledge to remain in the UK, there was much more to consider than just Brexit. As many commentators have stressed, the industry is under colossal pressure to switch from diesel to electric and hybrid vehicles, and faces slowing demand in China and western markets.
The matrix of reasons for closing factories is one reason Britons are unlikely to react with violence, or even a consumer boycott. They know that cars are pieced together from a global supply chain and while they might be assembled with a degree of fanfare in a particular country, they are a composite of efforts.
Yet to a business considering quitting the UK, or winding down operations, and for which Brexit is a major factor, mentioning the B word is still not worth the risk.
Panasonic said in a statement last year that it was moving its European HQ from the UK to Amsterdam for “improved efficiency and cost competitiveness”, when it was clearly driven almost exclusively by Brexit. But in an interview with Tokyo’s main business newspaper, the firm’s European boss spoke more openly. He moaned at length about Brexit and the potential loss of access to the free flow of goods and people. He said the company also feared that the Japanese government might start considering the UK a tax haven should it go ahead with plans for cuts to corporate tax rates to attract business. If Panasonic ends up paying less tax in the UK, that could make it liable for a bigger tax bill in Japan.
If the next big domino – Toyota’s factory near Derby – falls, Brexit will largely be to blame. But don’t be surprised if it doesn’t get a mention.
• Phillip Inman is economics editor of the Observer
