A Teikoku Databank survey found that the number of Japanese companies operating in China fell to its lowest level since the survey began in 2010, reaching 10,118 as of June 2026. The deterioration in Japan-China relations, stagnation in the Chinese economy and rising country risks, including restrictions on rare-earth exports, have been cited as contributing factors.
According to a Teikoku Databank survey, the number of Japanese companies operating in China stood at 10,118 as of June this year, the lowest level since the survey began in 2010. This was approximately 30% lower than the peak of 14,394 companies recorded in 2012. Approximately 86% of the companies operating in China belong to the manufacturing, wholesale or services sectors, and the number in each sector declined between 2024 and 2026.
Shanghai, the largest concentration of companies operating in China, is home to 3,961 of them, a decrease of approximately 30% from 2022. Liaoning also saw a decline of more than 30%, while Beijing recorded a decrease of approximately 50%.
Teikoku Databank identifies the deterioration in Japan-China relations, stagnation in the Chinese economy, economic coercion such as restrictions on rare-earth exports, and rising country risks including the amended anti-espionage law as contributing factors. It says that moves to restructure supply chains by diversifying operating bases across Southeast Asian countries and Japan are becoming increasingly prominent.
Looking ahead, the survey says that while businesses will continue operating in China with the risks associated with the country in mind, moves to “withdraw from China” may also intensify over the medium to long term in an effort to reduce dependence on the Chinese market.