Japan’s woes could benefit SA auto industry

There is little doubt that Japanese investment in the African continent will be unavoidably iced, according to Simon Freemantle and Jeremy Stevens, economic research strategists at Standard Bank. “Japan has consistently been an important investor in Africa,” they told FTW. “However, even prior to this crisis, the global economic downturn had exerted substantial pressure on foreign direct investment (FDI) flows from Japan to the world. For instance, Japan’s FDI flows to Africa totalled US$2.1 billion in 2008 and then slumped to US$158 million in 2009. Estimates suggest they recovered somewhat last year, but will be under intense pressure in 2011.” But it has to be noted that this possible freezing of investment is only likely to apply to the short-term, or possibly extend into the medium-term. But Japan has always been strategically long-thinking, and its motivation for African investment is unlikely to change, rather to hesitate for a short time. And the quake disaster could even have some good news for Africa, and especially SA, according to our economic duo. “Japanese automotive companies are perhaps the most integrated in African markets,” said Freemantle/ Stevens. “Firms such as Toyota, Nissan, Honda and Komatsu have established operations on the continent. It is plausible that some of these firms’ production that has been stalled in Japan, could relocate to Africa.”