October 9th, 2012
07:28 AM GMT
Hong Kong (CNN) – Figures last month out of China for Japanese auto companies paint a pretty stark picture of the impact on sales of anti-Japanese sentiment over a group of disputed islands.
Sales for Toyota vehicles in the world’s largest car market fell 40% year-on-year in September, mimicking similar declines for Mazda and Nissan. Meanwhile, General Motors had record car sales in China last month, as did South Korean carmaker Hyundai.
All of which suggest calls by Chinese nationalists to stop buying Japanese products are taking a bite out of Tokyo profits. But do economic boycotts really work?
Product boycotts are as old as the 1773 Boston Tea Party, but Northwestern University researcher Brayden King notes that the number of company boycotts exploded since the 1990s, as movements shifted away from governments to protesting the behavior of global companies. Protests against underage labor on Nike production lines in Pakistan and Cambodia resulted in the company publishing its first corporate responsibility report in 2001. Studies suggest about one in four targeted boycotts against companies end with some sort of concession.
But a 2011 study by King found that the higher the perceived status of the company, the more likely a boycott is effective – and the main driver is the duration of media attention received. Boycotts against firms that rank high on the Fortune Magazine’s annual ranking of “Most Admired Companies” generated 4.4 times more coverage than boycotts against unranked companies, King found.
The nationalistic fervor surrounding the Japanese product boycott in China, inflamed by the government’s purchase of an island chain that both Tokyo and Beijing claim, will increase the likelihood the boycotts will stick. During the Iraq War, the France’s vocal criticism of the U.S. resulted in boycotts against French products, most famously the U.S. House of Representatives rebranding French fries as “Freedom Fries” in the Capitol cafeterias in 2003.
A study by a pair of researchers from StanfordUniversity found that the boycotts cost French wine makers an estimated $112 million in potential sales in the U.S.
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