The number of Japanese companies operating in China was approximately 13,000 as of 2024, down about 10% from the peak. The number of local entities stood at 6,589. Only 21.3% of companies said they planned to expand their business over the next 1 to 2 years, the lowest level since the survey began.
The number of Japanese companies operating in China fell to approximately 13,000 as of 2024, down about 10% from the peak. The number of local entities stood at 6,589, a decline of 396 over the past 5 years.
Although the number of companies has increased in some industries, only 21.3% said they planned to expand their business over the next 1 to 2 years, the lowest level on record. Factors cited as the backdrop include urban lockdowns during the COVID-19 pandemic, US-China tensions and deteriorating Japan-China relations.
The 3 factors cited as the background are changes in domestic conditions, including the concentration of Japanese companies in coastal areas, rising labor costs and the emergence of local companies; cooling Japan-China relations; and the impact of the international situation, including US-China tensions and the Taiwan issue. These factors are seen as potentially accelerating the trend of Japanese companies pulling back from China.
Supplementary comments from experts noted that although increases and decreases vary by industry, the overall contraction is continuing, particularly in labor-intensive industries such as textiles and apparel.