indo17787
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A record number of Japanese companies have closed their China businesses under the triple pressure of slowing momentum in the Chinese economy, US tariffs and a diplomatic freeze between Tokyo and Beijing.
As of June 2026, a total of 10,118 Japanese companies had an established presence in mainland China, according to Teikoku Databank, Japan’s largest corporate credit research firm.
That figure, published on Wednesday, was the lowest number since the group began compiling the statistic in 2010. It represented a 22 per cent fall from 2024 and a 30 per cent drop from a 2012 peak for Japanese corporate presence in China.
Teikoku Databank researchers said the drop “clearly indicates a shift in Japanese companies’ business in China from an expansion phase to a restructuring phase”.
They added that the “China withdrawal” was likely to continue as Japanese companies of all sizes reassess decades-long understandings about the risks of investing in Chinese manufacturing capacity and the strength of domestic competition for its consumer markets.
A major part of those restructuring efforts, companies told researchers, was aimed at diversifying supply chains to lower Japanese companies’ reliance on China while not completely decoupling from the country, according to the report.
Japanese businesses were looking to pivot to India, as well as destinations such as Vietnam, Thailand and other parts of south-east Asia, after years of intensive investment in China.
“We fed the dragon and it breathed fire,” he said of the increasingly competitive environment in China.
Corporate Japan has also been caught in the middle of a now year-long diplomatic spat that was triggered by Prime Minister Sanae Takaichi’s remarks in parliament regarding Japan’s hypothetical military involvement in a conflict over Taiwan.
Those comments sparked a furious response from China, which has restricted exports of critical minerals to Japanese companies.
Travel has also dried up, with the exception of a few small-scale business delegations. The most recent figures from the Japan National Tourist Organisation showed a 59 per cent year-on-year drop in mainland Chinese tourists visiting Japan in August.
In Guangzhou, a huge annual travel expo held ahead of China’s October 1 National Day featured no exhibits from Japanese companies.
Rising labour costs and worsening economic conditions in China, following the collapse of real estate prices and huge industrial overcapacity, were also driving the trend, Teikoku researchers said.
New Japanese investment into China has dwindled. Between 2024 and 2026, 1,221 Japanese companies entered China, either through local subsidiaries, factories or representative offices, according to the Teikoku report, the lowest number on record apart from during the Covid-19 pandemic.
They were offset by a record 4,137 Japanese companies that completely withdrew from China during that period.
US President Donald Trump’s on-again, off-again tariff war with China has also cast a heavy shadow, companies told the researchers. Teikoku found that around 60 per cent of Japanese manufacturers with production bases in China reported an impact on revenues from the US tariffs.
@Nimble @Vikramaditya1
@Sam6536
If I were you, industrial supply chains would be the last thing I'd get cocky about. There was a time Lotte's plant in Pakistan was basically saying, “please just let our Reliance shipment through.” They'd signed up for 140,000 tonnes of paraxylene from India and already received 82,500 tonnes when the trade ban came down. A Pakistani trying to mock India's industrial imports is a bit rich 
