Trade between China and Japan is worth about $345bn (£212bn). That alone, stands as a significant portion of trade, investment, and revenue. Short-term revenue, for example would be a one-time exchange of trade whereas long-term revenue would be long-term trade obligations between two business or parties. The full terms of the obligation are usually carried out over more than one year.
Some industries are heavily dependent upon long-term revenue for sustained profits and to pay for basic operating costs. Long-term revenue, however, is not simple to define because it can mean different things in different industries.
[http://smallbusiness.chron.com/definition-longterm-revenue-38225.html]
Let's take a look at how Japan's economy and trade as well as long-term revenue has been hit as a result of the conflict over the Diaoyu Islands. Japan has the world’s third largest economy, and is the second largest holder of US treasury bonds. It has a large impact on global commodities and energy: it is the largest importer of liquid natural gas (LNG) and third largest importer of crude oil. Despite its financial troubles, it still carries considerable weight in financial global institutions like the IMF, the World Bank, and the World Trade Organization. However, Japan's economy contracted in the latest quarter, signaling that like Europe it may already be in recession, further weighing down world growth. Japan's outlook remains bleak, with most economists forecasting a further decline in economic activity for the October-December quarter, which would officially put it in a recession. Incidents in China are likely to cause lasting damage to Japan’s extensive manufacturing operations. The Japanese car industry was hardest hit as mobs targeted Japanese brand vehicles, in some cases smashing them or setting them on fire. Japanese carmakers temporarily closed dealerships as a precaution and reduced output. Toyota reports that its car sales in China fell by 48.9% from a month earlier to 44,100 units in September. Honda’s sales, meanwhile, dropped by 40.5% from a month earlier to 33,091 units. Overall, according to the China Association of Automobile Manufacturers, sales of Japanese brand vehicles sank 29% in September from a year earlier. The slowdown in trade with China, Japan’s biggest trading partner, clearly is taking its toll. In 2011, two-way trade between China and Japan totaled more than US$340 billion. China is both Japan’s biggest export destination, buying about 18% of the goods it ships overseas, and also the biggest source of its imports. But Japan is only China’s fourth-largest trading partner, after the E.U., U.S. and ASEAN. In comparison, Japan has much more to lose than China does if they both halt trade and investment with each other; Japan's long-term revenue will take a massive hit.
[http://www.knowledgeatwharton.com.cn/index.cfm?fa=article&articleid=2684&languageid=1]
One example would be Toyota. It has been hit hard by the Sino-Japanese island dispute and the company estimates the loss in sales to be around 200,000 cars. The sales of the company, and of its two joint ventures with China, have almost halved in September and October due to the protests. TM expects the impact of sales losses on its full-year net profits to be almost 30 billion Yen ($373 million). Other examples include Nissan Motors shares dropped 5% in Tokyo, Uniqlo-owner Fast Retailing fell 7% and Honda Motors was down by 2.5%.
[http://seekingalpha.com/article/1003181-why-is-toyota-motor-the-best-auto-stock-to-buy-now]
[http://www.bbc.co.uk/news/business-19632047]
However, it does not go one way. China needs Japan and Japanese investment badly. More than 20,000 Japanese companies ranging from apparel, electronics, and the auto industry have operations in China, with an annual turnover of $345 billion. Now, that could be at risk. According to a Reuters poll taken in Tokyo in September, more than 37 percent of Japanese companies have expressed caution about future operations on the mainland, and suggested redirecting investment to Southeast or South Asia. This would not be good. The global economy needs Chinese reforms, just as the Chinese economy needs Japanese investment. This conflict has proposed a lose-lose situation as both economies need each other.
[http://thediplomat.com/the-editor/2012/11/12/why-china-needs-to-change-its-japan-policy/]
In conclusion, China is extremely integral to Japan's economy. Being Japan’s largest trading partner, and by a lot. China accounted for 21% of Japan’s exports and imports in 2011. The next closest was the U.S. at 12%, then South Korea at 6%. As for travel and tourism, at its peak in 2009, China sent 1.4 million visitors to Japan, including tourists and business travelers. The number fell to 1 million in 2011, something analysts attributed to the March 2011 earthquake and nuclear disaster, strained relations between the two nations and a strong Japanese yen, and will probably continue to fall due to this conflict over the DIaoyu islands. The two countries are very economically interdependent, but however Japan must value the relationship more highly than China because Japan really has no good alternatives. Not so China, which can get much or all of what it wants from Japan from many willing European and North American suppliers. Apart from that, the costs (including opportunity costs) of estrangement for China will be relatively small, easily bearable, and likely to decline over time. For Japan they will be huge, painfully onerous, and likely to rise over time. In short, Japan and China need each other, but Japan needs China more than China needs Japan [http://blogs.wsj.com/chinarealtime/2012/09/17/whats-at-stake-in-china-japan-spat-345-billion-to-start/]
[http://www.forbes.com/sites/stephenharner/2012/09/11/japans-future-depends-on-china-this-is-the-real-danger-in-the-territorial-dispute/]