Dokdo blow-up has Korean, Japanese firms lying low

Toyota draped its Korean headquarters with a placard wishing for a Korean victory in the recent Korea-Japan football match over a bronze medal at the London Olympics. However, the placard was taken down about 14 hours prior to the match, or two hours after the local media first reported on Lee’s visit to Dokdo. (Photo : The Korea Times)

President Lee Myung-bak’s surprise visit to Dokdo, a tiny Korean island which Japan argues it has historical claim to, has driven a wedge between the two regional neighbors both in diplomatic relations and public opinion. This has Korean and Japanese companies operating cross-borders trying hard to be invisible.

Responding the most sensitively are Japanese carmakers, which in recent years have been enjoying a strong growth in Korea that had previously been dominated by Hyundai.

Toyota, the leading Japanese carmaker, has been a company that goes the full length in marketing efforts to please Korean consumers, even draping its headquarters with a placard wishing for a Korean victory in the recent Korea-Japan football match for bronze at the London Olympics.

However, the placard was taken down about 14 hours prior to the match, or two hours after the local media first reported on Lee’s planned visit to Dokdo.

Perhaps, Toyota has learned from experience that, when tempers flare between Korea and its former colonial ruler over anything related to history and territorial sovereignty, it’s best not to be seen or heard.

The company’s biggest Dokdo-related nightmare came in 2005 when Japan’s Shimane prefecture announced a “Takeshima Day, after the Japanese name for the islets. This sparked a diplomatic row and furious demonstrations and protests in Korea. It eventually led to a boycott of Japanese products in Korea, forcing Toyota to delay the release of a new passenger car and led to a slew of customers canceling orders.

Toyota is planning the Korean release of the luxury sedan Lexus ES next month.

Nissan, another Japanese carmaker, seems apprehensive as well. The company has been preparing full-blown marketing efforts for a renewed version of its Altima sedan, with plans to release it on the Korean market next month and can only hope it can avoid a Dokdo-related setback.

“That is certainly a concern,’’ said a local Nissan representative.

Korean firms are uneasy as well. Retailers like Lotte Department Store have been enjoying a sharp growth in sales in recent years due to the huge influx of Japanese travelers. Now the companies fear that the increased tensions between the two countries will dissuade many Japanese tourists from coming to Korea. Travel agencies share the stress, fearing a decline in the number of Koreans visiting Japan.

Korean food and beverages companies like CJ, Nongshim, LG Household & Healthcare and Hite Jinro have been enjoying increasing sales in Japan in recent years. While an official from Hite Jinro said that the company hasn’t seen any influence from the Dokdo dispute yet, he expressed concern about the possibility of emotions getting further heated and Japanese consumers rejecting Korean products.

Cosmetics firms like Etude, which have been aggressively pushing marketing efforts and benefiting from the popularity of Korean entertainers in Japan, are also closely monitoring the situation.

“The worst-case scenario for Japanese firms in Korea is that the Dokdo flare-up hits another gear and leads to a consumer distaste for Japanese products. Right-wing Japanese protests are also a concern for the firms as they could fuel the bad mood. Korean firms in Japan are on alert for similar reasons,’’ said an official from the Korea Trade Investment Promotion Agency (KOTRA).

Korea has stationed a small maritime police detachment on Dokdo since 1954. Lee is the first Korean president to visit the island. Prime Minister Han Seung-soo visited in 2008 and this also sparked a row with Japan. <The Korea Times/Kim Tong-hyung>

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