As Japanese companies increasingly pull back from China, the weak earnings performance of TOTO and Kawai Musical Instruments is said to reflect cooling private-sector demand. A recent report by Teikoku Databank points out that the number of companies expanding into China has fallen sharply from its peak.
In the discussion to date surrounding the Chinese market, a report published by Teikoku Databank states that the number of companies expanding into China fell 29.7%, from a peak of 14,394 in 2012 to 10,118 in 2026. Following a period of relative stability, the pace of decline is said to have accelerated in recent years.
The report is said to analyze how companies in labor-intensive industries with annual sales of ¥1 billion or less are withdrawing from China, particularly in response to rising costs and heightened country risk. This is reported to reflect a shift in the way companies view China as a production base.
The discussion has also addressed two motivations from domestic and overseas perspectives: pulling back from China and expanding into China to target its market. The reality that the former trend is coming to an end is said to be emerging clearly. Meanwhile, the weak performance of TOTO and Kawai Musical Instruments is cited as an example of how cooling private-sector demand in China is affecting corporate earnings.