On-the-ground reporting has confirmed a sharp improvement in the performance of Japanese companies in the Chinese market. The backdrop includes a new surge in manufacturing orders and demand for highly reliable power supplies for AI data centers.
During a business trip in July, the author heard multiple accounts of improving performance among Japanese companies operating in China. Interviews conducted locally suggest that investment sentiment toward China bottomed out in 2025 and began showing signs of becoming more active in 2026. Similar trends can be seen among US and European companies as well as Japanese companies.
The American Chamber of Commerce in China's China Business Climate Survey, published in January 2026, and the European Union Chamber of Commerce in China's Business Confidence Survey, published in May 2026, also include findings pointing to improved outlooks among Japanese companies. During this trip, the author heard multiple accounts of Japanese companies doing business with Chinese high-tech companies seeing their earnings expand sharply. The names of the individual companies cannot be disclosed.
Specifically, one capacitor manufacturer has seen orders from Chinese companies surge to the point that production cannot keep pace, with its performance recovering partly because of higher selling prices. At another power-supply manufacturer, orders for its products from global companies have risen sharply as it responds to stringent reliability requirements related to AI data centers. Japanese companies in fields related to long-distance power transmission and optical communications are also seeing their performance expand significantly.
These companies are stepping up investment to increase production capacity, including production-line expansions and the construction of new plants. At the same time, it is difficult to assess developments in the Chinese market, where conditions change more quickly than at Japanese companies. As a result, an increasing number of companies are strengthening visits to local operations by executives from their Japanese headquarters when making final decisions.