A Teikoku Databank survey found that the number of Japanese companies exiting mainland China had reached a record high, with local operations reported to be shrinking and withdrawing. Exits and companies whose whereabouts could not be confirmed reached a record high, while the net decline over 2 years stood at approximately 2,916 companies.
The number of Japanese companies operating in mainland China was found to be 10,118 as of June 2026, down 2,916 companies, or 22.4%, from 13,034 in the previous survey conducted in 2024. The figure was the lowest since 2010, indicating that business in China is shifting from expansion to restructuring. There were 1,221 new entrants, the smallest increase from the previous survey, while exits and companies whose whereabouts could not be confirmed reached a record 4,137, bringing the net decline over 2 years to 2,916 companies.
Yahoo News points to the deterioration in Japan-China relations as a factor prolonging the trend. Retaliatory measures were taken by China after remarks by Prime Minister Takaichi Sanae (高市 早苗), resulting in a sharp decline in the number of tourists and a situation in which Japanese representatives no longer participated in exhibitions.
Problems in the Chinese economy are also cited as contributing factors. The collapse of the property market, weak domestic demand, the loss of relatively low labor costs, and dependence on government subsidies were said to be creating excess production capacity and a reliance on low-priced exports.
The US tariff war is also putting pressure on companies’ procurement and production schedules. In a Teikoku Databank survey, approximately 60% of Japanese manufacturers with production facilities in China said that US tariffs were affecting their earnings.