Friday, September 21, 2012

Blog #4 Japan Air

A land dispute between China and Japan over an uninhabited island in the East China Sea, known as Diaoyu in Chinese and Senkaku in Japanese, promoted the restriction of of Japan Air flights into China. More than 12,000 flights, between October 10 until the 27th, and possibly more have been cancelled. This flight restriction has caused a Chinese retaliation. For the first time since public opening, Japan Air fell below initial public offering.

Japanese response to the dispute over the sovereignty of the island has led to Japanese corporations temporarily closing manufacturing facilities located in China.

Both China and Japan are seeing economic repercussions over this territory disagreement. Japan relies heavily on Chinese manufacturers to meet the high volume of electronics that the country consumes. If this "embargo" on Chinese manufacturing persists major Japanese electronics companies could see major stock drops due limited supplies. China on the other hand, relies on large Japanese corporations to purchase large quantities of Chinese labor.

Astonishingly, this entire economic ripple could be started by a single pebble (Japan Air), over an island that no one lives on.

No comments: