Japanese companies exit China at record speeds

Japanese companies are withdrawing from China at record speeds due to a combination of economic slowdowns, rising manufacturing costs, and heightened geopolitical tensions. According to data from Teikoku Databank, the number of Japanese firms operating in China fell to 10,118 in June, a 22% decrease from the previous year and a 30% drop from the 2012 peak.

Over the past two years, 4,137 Japanese companies have completely exited the Chinese market, while only 1,221 have entered. This trend is driven by intense competition from local Chinese brands, tariff risks, and diplomatic friction following statements regarding potential military intervention in Taiwan. Concerns regarding the safety of personnel have also increased following the detention of Japanese citizens and executives in China.

As a result, Japanese firms are shifting their focus toward the United States. Analysts note that profits from China for Tokyo Stock Exchange-listed companies have dropped from 23% in 2020 to less than 15% this year, while profits from the U.S. market have risen from 25% to 35%. Major players such as Mitsubishi Motors and Suzuki have already exited Chinese production, while others like Nippon Steel and Mitsubishi Corporation have significantly reduced their operations.