The growing alarm after U.K. Prime Minister Theresa May’s Brexit deal suffered a defeat in Parliament isn’t just unsettling for British politics. Global businesses are on edge as well.
Asian companies, whose operations and investments stretch far into Britain and the European continent, have a lot at stake as they face higher tariffs and costs. Tuesday’s setback will do little to cure the anxiety. Chancellor of the Exchequer Philip Hammond has sought to assure business leaders that their no-deal nightmare scenario could still be avoided, but with only 10 weeks left before the U.K. is due to leave the European Union, companies are bracing for a potential hard exit.
“Japanese companies should have been making preparations for the possibility of a hard Brexit, but now the reality of carrying out those measures is getting closer,” Hiroaki Nakanishi, chairman of the country’s largest business lobby Keidanren, told reporters in Tokyo Wednesday.
Here’s what Asian companies are saying about Brexit:
Honda
The Japanese automaker said Wednesday that a hard Brexit would seriously impact its European operations, even though it is implementing countermeasures. New checks at the border could disrupt its logistics systems, while tariffs on goods moving between the EU and U.K. would hurt its competitiveness, it said. “We now look to the government to deliver a clear, legally certain path forward to avoiding no deal and to delivering the conditions that support the continued competitiveness and productivity of our sales and manufacturing operations,” it said.
About 4.5 percent of Honda Motor Co.’s sales come from Europe, and it has one factory in the U.K. with manufacturing capacity of about 150,000 units annually.
Toyota
Asia’s biggest carmaker has said it would temporarily halt its production in the U.K. if Britain storms out of the EU without a trade agreement, disrupting weekly revenue of 60 million pounds ($77 million) generated there, the company’s Europe President, Johan van Zyl, said in October. Japanese firm wants tariff-free trading after Brexit, he has said.
Toyota declined to comment on the vote Wednesday.