Just over a week since revelations of a cheating scandal that plunged Kobe Steel in to crisis and ensnared hundreds of firms, the embattled steelmaker's shares skid to five-year lows as investors worried about the financial and legal fallout. Sonia Legg reports
BROADCAST AND DIGITAL RESTRICTIONS~**Broadcasters: NO ACCESS JAPAN / WHEN VIDEO IS SHOWN ON CABLE, COMMUNICATIONS SATELLITE IN JAPAN BY CNN, CNNI, BBC WORLD, NBC & CNBC ALL MUST ON-SCREEN COURTESY "TV TOKYO". Digital: NO ACCESS JAPANESE WEBSITES.) If Kobe Steel was hoping for a better week there's no sign of it yet. The steel maker's shares hit a five year low on Monday - before recovering slightly. Investors are worried about the financial and legal fall out from the scandal. (SOUNDBITE) (English) PEPPERSTONE, MARKET ANALYST, DARREN SINDEN, SAYING: "Kobe Steel is interwoven into the very fabric of Japanese business life. Large numbers of small to medium sized Japanese businesses rely on Kobe steel products as do a number of large businesses abroad so that in itself is a cause for concern." Last week Kobe Steel's CEO's said around 500 firms had received falsely certified products, confirming widespread wrong doing at Japan's third largest steel maker. And the problems could go back 10 years. (SOUNDBITE) (English) PEPPERSTONE, MARKET ANALYST, DARREN SINDEN, SAYING: "In Japan it often comes down to a lack of face with somebody taking a short cut and they didn't admit they were wrong. What's unusual here though of course is that it's product related rather than a financial in the past. Scale it's typically been around covering up losses etc. here. People do seem to have cut corners in the same way perhaps that the German auto manufacturers have done with the diesel emissions tests." No safety issues have surfaced yet. But the company's finances could come under pressure - the CEO promised compensation to customers for any costs arising from replacements As for the root cause - some point to a decade of slow growth, and competition from China. Meaning manufacturers have failed to adopt modern compliance standards. There've been scandals at Nissan, Suzuki and Mitsubishi along with Takata and Toshiba, among others. Made in Japan is perhaps no longer the byword for industrial quality and reliability that it once was.