Why Japanese companies are retreating from China at a record pace
Japanese companies are exiting China at a record pace due to economic slowdowns, geopolitical tensions, and diplomatic friction between Tokyo and Beijing. The number of Japanese firms in China has dropped to its lowest level since 2010.
Why it matters
This trend signals a significant shift in global supply chains and the 'de-risking' strategy of major economies away from China.
Japanese companies are leaving China in record numbers, as a slowing Chinese economy and a diplomatic freeze force businesses to reassess their presence in the world's second-largest economy.
The number of Japanese companies operating in China fell to a historic low, standing at 10,118 as of June, according to Teikoku Databank , a corporate credit research firm in Japan. That's down 22% from the previous survey held in June 2024 and about 30% below the 2012 peak, and the lowest since Teikoku began tracking the data in 2010.
Japanese firms, which were already planning to reduce their footprint in China, are considering withdrawing from the market with greater urgency since China-Japan ties went into a tailspin, said Jeremy Chan, an analyst at political consultancy firm Eurasia Group.
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