As Japanese companies continue to distance themselves from China, declines in the Chinese market are becoming increasingly apparent in the financial materials of TOTO and Kawai Musical Instruments Manufacturing Co.,Ltd. amid cooling private-sector demand. The latest observations from Teikoku Databank also highlight changes in the structure of local demand.
According to a report by Teikoku Databank, the number of companies operating in China fell from 14,394 in 2012 to fewer than 10,000 in 2026, a decrease of approximately 29.7%. The analysis indicates that China's traditional role as a low-cost production base is weakening and that more companies are withdrawing.
Private-sector demand in the Chinese market is stagnating under the government's drive for self-reliance, the deterioration of the property market and US-China tensions. The reality can also be discerned from Japanese companies' IR materials. In particular, sales in China of products targeting the middle class are reported to be sluggish.
Kawai Musical Instruments Manufacturing Co.,Ltd.'s regional piano sales in its financial results presentation materials for the fiscal year ending March 2026 show a pronounced decline in the Chinese market. Piano sales by Yamaha in China may also have fallen substantially.
TOTO's mainland China business has seen its operating loss widen, while sales have fallen by approximately 20% year on year. The downturn in China's housing market has had a strong impact, and cooling private-sector demand is also reflected in earnings. The second part is scheduled to cover FANUC and TDK's Chinese market trends.