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Honda profits whacked by China's boycott

October 29, 2012: 4:20 AM ET

China's unofficial boycott of Japanese products found another victim Monday, after Honda said it expects to report lower income for the fiscal year.

The automaker lowered its net income forecast for the year ended March 20 to $4.7 billion from the previous estimate of $5.9 billion, saying it expects less income from affiliates in China.

Honda shares trading in Tokyo dropped almost 5% on the news. The company also lowered its forecast for operating income.

Honda is not the only automaker to see China sales plummet. Sales of Japanese cars in China fell by between 35% and 50% in September -- with Toyota, Nissan, Mazda and Mitsubishi all feeling the pain.

Japanese cars are among the country's most visible exports, and have served as a target for protesters in China upset over Tokyo's efforts to assert control over the Senkaku islands -- or Diaoyu as they're known in China.

Protesters in China have overturned Japanese cars; and in Xi'an, an industrial city of eight million, a Chinese man was left paralyzed after being dragged from his Japanese car and beaten.

Mass protests have since abated, but sales of Japanese cars remain slow in China. Analysts attribute some of the sales decline to nationalistic feelings, but fears over the destruction of property are also thought to play a role. 

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Charles Riley
Charles Riley
Reporter, CNNMoney

Charles Riley lives and works in Hong Kong, where he covers markets, economics and other high-impact stories across Asia. He previously worked for CNNMoney in New York and CNN in Washington. He tweets @CRrileyCNN

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