Food exporters, especially from north-eastern Japan, are at high risk of having their export orders cancelled in the coming month.

Peril: Contract Risk
Sectors, Assets or Individuals Affected: All Sectors

Analysis: In the past week, a number of countries have imposed screening of imports, primarily of food products, from Japan. These include China (including Hong Kong), Indonesia, South Korea and Thailand, while the European Union has recommended that member states start scanning imports as well. These measures come after reports of the contamination of food products in parts of north-eastern Japan from radiation from nuclear reactors that were affected by the tsunami and earthquake on 11 March.

A large number of companies have suspended or heavily restricted their purchase of Japanese products. These include Mandarin Oriental, Lotte Shopping Company (South Korea’s largest retailer), Cathay Pacific, Hilton, JW Marriott and Shangri-La hotels.

Risk Implications: The primary products that will be affected include beef, diary products and vegetables, primarily spinach, and seafood, including seaweed. Products that are sourced from north-eastern Japan, including Ibaraki prefecture, are at particular risk given that contamination fears in these areas have been heavily publicised.

Non-food imports, such as automobiles and electronics, are also at a low risk of being rejected by foreign importers. Reports indicate that consumers are raising concerns about levels of radiation in Toyota and Nissan cars that were manufactured in plants or stored in ports near the affected areas.

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