A record number of Japanese companies are shutting down their operations in China, as a slowing Chinese economy, US tariff pressure and a diplomatic freeze between Tokyo and Beijing force a historic rethink of decades of investment.
According to Teikoku Databank, Japan's largest corporate credit research firm, 10,118 Japanese companies had an established presence in mainland China as of June 2026 — the lowest number since the group began compiling the statistic in 2010. The figure represents a 22 per cent fall from 2024 and a 30 per cent drop from the 2012 peak.
From expansion to restructuring
Teikoku Databank researchers said the figures "clearly indicate a shift in Japanese companies' business in China from an expansion phase to a restructuring phase", and warned that the "China withdrawal" was likely to continue as firms of all sizes reassess the risks of investing in Chinese manufacturing and the strength of domestic competition for consumer markets.
Between 2024 and 2026, only 1,221 Japanese companies entered China — the lowest number on record apart from the Covid-19 pandemic — while a record 4,137 completely withdrew. Around 60 per cent of Japanese manufacturers with production bases in China reported an impact on revenues from US tariffs, the researchers found.
Pivoting to India and Southeast Asia
Much of the restructuring, companies told the researchers, is aimed at diversifying supply chains to reduce reliance on China — without cutting ties completely. Satoru Nagao, a fellow at the US-based Hudson Institute think tank, said Japanese businesses were looking to pivot to India as well as Vietnam, Thailand and other parts of Southeast Asia after years of intensive investment in China.
Corporate Japan has also been caught in a year-long diplomatic spat triggered by Prime Minister Sanae Takaichi's remarks in parliament on Japan's hypothetical military involvement in a conflict over Taiwan. China has restricted critical mineral exports to Japanese companies, travel has dried up, and mainland Chinese tourist arrivals in Japan fell 59 per cent year-on-year in August.
Sources:
Japanese firms exit China in record numbers — Qatar Tribune
According to Teikoku Databank, Japan's largest corporate credit research firm, 10,118 Japanese companies had an established presence in mainland China as of June 2026 — the lowest number since the group began compiling the statistic in 2010. The figure represents a 22 per cent fall from 2024 and a 30 per cent drop from the 2012 peak.
From expansion to restructuring
Teikoku Databank researchers said the figures "clearly indicate a shift in Japanese companies' business in China from an expansion phase to a restructuring phase", and warned that the "China withdrawal" was likely to continue as firms of all sizes reassess the risks of investing in Chinese manufacturing and the strength of domestic competition for consumer markets.
Between 2024 and 2026, only 1,221 Japanese companies entered China — the lowest number on record apart from the Covid-19 pandemic — while a record 4,137 completely withdrew. Around 60 per cent of Japanese manufacturers with production bases in China reported an impact on revenues from US tariffs, the researchers found.
Pivoting to India and Southeast Asia
Much of the restructuring, companies told the researchers, is aimed at diversifying supply chains to reduce reliance on China — without cutting ties completely. Satoru Nagao, a fellow at the US-based Hudson Institute think tank, said Japanese businesses were looking to pivot to India as well as Vietnam, Thailand and other parts of Southeast Asia after years of intensive investment in China.
Corporate Japan has also been caught in a year-long diplomatic spat triggered by Prime Minister Sanae Takaichi's remarks in parliament on Japan's hypothetical military involvement in a conflict over Taiwan. China has restricted critical mineral exports to Japanese companies, travel has dried up, and mainland Chinese tourist arrivals in Japan fell 59 per cent year-on-year in August.
Sources:
Japanese firms exit China in record numbers — Qatar Tribune
