A consumer backlash in South Korea promoted by an increasing trade spat with Japan saw sale of Japanese cars drop significantly last month in Tokyo’s neighboring country.

According to data from the auto industry, there was a 32 per cent decline in sale of Japanese cars in South Korea last month compared to the same month a year ago. The drop in sale of Honda’s cars was still greater at 34 per cent.

The consumer sentiments in South Korea turned against Japan resulting in a boycott of Japanese products following the imposition of export curbs of three materials to South Korea in July this year. And following the announcement of Japan last week that it would delist South Korea from a list of trusted trade partner list, the trade tensions between the two trading partners escalated further. There was anger and threats from Seoul to Tokyo’s move to strike South Korea from the so-called “white list”.

Earlier, the export curb of three critical materials from Japan to South Korea by Tokyo had sparked concerns that it would impact the supply chain of the global electronic sector because eth three materials are crucial in manufacturing of memory chips and display. Some of the largest chip and display makers are situated in South Korea such as Samsung.

In an effort to cushion the impact of the export curb by Japan of the three materials, the South Korean government announced plans on Monday of investing about $6.5bn.

“We want to turn the crisis into an opportunity for the materials, parts and equipment industry,” South Korea’s industry minister Sung Yun-mo told reporters.

While Japan has claimed that its decisions to curb trade with South Korea was because of national security concerns, the tensions have prompted consumers in South Korea to boycott Japanese products and services which includes cars beer and tourist trips.

“Showroom visits are declining while consumers are holding off on signing contracts,” a Honda Korea official told the media following the announcement of the July sales data by the Korea Automobile Importers & Distributors Association.

Diplomatic tension over compensation for wartime labour is the root cause of the trade tensions between the two countries. There was South Korean court rulings last year against a number of Japanese firms that were allegedly involved in forced labour in the country during the Second World War ordering the companies to pay compensation.

The ruling of the court was not accepted well by Japan because is argues that the settlement for the disputed had been made in 1965 following which the neighboring countries had been able to establish normal diplomatic ties.

(Adapted from BBC.com)

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