Market calms down, but Chinese business people are actively assessing its medium-term risks

According to the latest online survey of the "CEConlines Website" under Global Sources (NASDAQ: GSOL), the senior managers of Chinese companies that have trade with Japan It is expected that the tension in Sino-Japanese relations (hereinafter referred to as the "Event") will continue beyond October.

Nearly half of respondents expect the situation to have a negative impact on their business this year; however, 68% of them believe the impact will be limited - the event will cause their company's annual sales to decline by 10% in 2012 or below.

Nevertheless, in the current environment where China's economic growth has slowed down, the impact of events on individual industries cannot be ignored. According to Chinese customs data, the total bilateral trade volume between China and Japan in 2011 reached US$342.8 billion.

“The current tension between China and Japan has an obvious negative impact on your company’s recent business?”

Nearly half of respondents believe current anti-Japanese sentiment negatively impacted their operating results.

Nearly 30% of Chinese exporters who participated in this survey There is some financial loss—annual sales decline of 5% to 10%. If the total amount of China's exports to Japan in 2011 is calculated, it is expected that this Sino-Japanese tension will bring economic losses of up to 7.4 billion to 14.8 billion US dollars to China's entire export industry.

"If you select 'Yes', how long do you think your company's business decline will last? "

Majority believes: the current negative impact will continue after October.

Two-thirds of respondents importing from Japan expect their losses to be 5% or less , but the estimated loss to the overall industry across the country will be as high as $9.8 billion.

“How much do you estimate your company’s 2012 revenue will be lost due to the tense Sino-Japanese relations?”

Although in several cities nationwide There are anti-Japan demonstrations, but the five categories of companies with business ties in Japan that participated in the survey expect the incident to have a rather limited impact on their 2012 results. Currently, the majority of respondents plan to keep a low profile on the incident, and if possible "Normal Business Operations". Respondents' main concern, however, was maintaining their business as anti-Japanese sentiment continued to rise, as reflected by respondents as follows:

Manufacturers using Japanese components: 73% of respondents will Seek new suppliers. Among the respondents who actively sought out new suppliers, one of the reasons was that their employees wanted to boycott Japanese products completely (49%, multiple choice);

"If anti-Japanese sentiment in China continues to expand, will your company's management proactively seek new non-Japanese suppliers for these components/materials?"

Manufacturers whose products contain a high proportion of Nissan's raw materials and components will Do not hesitate to seek new resources. This will be a real opportunity for domestic second-tier suppliers, especially in the electronics industry.

Exporters: Respondents will turn to contacts in mainland China and the EU if tensions between China and Japan continue to escalate Buyers (59% and 40%, respectively, multiple choice); In order to replace the Japanese market, your company Which of the following markets would you turn to to make up for? (multiple choice)"

For respondents who export to Japan, if the Japanese market is not the best choice, where can they be replaced? The most common solution is to turn to China and the EU, but the demand in both, especially the latter, is not very strong.

• Importers: Abide by established contracts, but stop signing new contracts until Sino-Japanese relations improve (37%) ;
• Retailers: Temporarily stop displaying/selling Japanese goods (24%) and terminate contracts with Japanese goods suppliers in the future (11%)

“If anti-Japanese sentiment in China continues to grow, which of the following actions is your company’s management most likely to take?”

Nearly 11% of retailers will consider suspending new contracts, and only a few companies will completely stop displaying and selling Japanese goods.

One third of the managers of Japanese-owned/Japanese-joint companies in China interviewed admitted that recent events have Their impact was "significant, though temporary," but more than half of those surveyed declared that their employees "tend to remain committed to the company and focused on their work." When asked if there will be major changes to the company in the next year, such as the cessation of Japanese brands, the closure of the company, or the divestment of Japanese investors, the survey results were more fragmented, with 45% of respondents saying "extremely unlikely" and choosing "Very likely" and "more likely" respondents each accounted for 11%.

"Possibility of major changes in your company within a year: (e.g. stop operating Japanese brands, Japanese investors Divestment, company closure or withdrawal from China, etc.)”

As for the company's changes in the next year, managers of Japanese-invested companies are divided, but there is a meaningful number: 45% of the respondents are sure that there will be no major changes in the future.

"How much risk does the current 'anti-Japanese sentiment' pose to your business?" topic survey by Global Sources Its "CEConline Website" was conducted from September 20 to 24, 2012, and attracted a total of 1,113 respondents, of which 482 said they belonged to the following categories and then completed the entire questionnaire:

• Companies operating exports to Japan (31%)
• Manufacturing companies that contain a large amount of Japanese parts/materials in their finished products (24%)
• Companies engaged in the distribution/retailing of Japanese branded goods (24%)
• Companies operating import business from Japan (12%)
• Companies with sole proprietorship/shareholding by Japanese companies (9%)

Business managers are the "main force" participating in this survey,83 % of respondents were managers or above, with nearly a third being senior managers (CEOs, general managers) and one-fifth being sales/marketing directors. Most of the companies surveyed are located in South China (43%) and East China (39%). In terms of company annual sales, two-thirds of the respondents have annual sales of more than US$10 million, of which 27% Respondents said their annual sales exceeded US$150 million.

Since its launch in 1999, the CEConline website has become China's largest online management resource center with more than 2 million registered users.