The number of Japanese companies with a presence in mainland China fell to 10,118 as of June 2026, down 22% from 2024, according to data from Japanese credit research firm Teikoku Databank.
The statistics cover China excluding Hong Kong, Macau and Taiwan. The current figure is the lowest since data collection began in 2010 and is also about 30% below the peak recorded in 2012.
Operational restructuring
Researchers at Teikoku Databank said the decline points to Japanese companies in China shifting from expansion to restructuring, predicting that activity will continue to be scaled back as businesses reassess the risks of investing in Chinese manufacturing capacity and contend with intensifying competition in the domestic market.
Rising labor costs and deteriorating economic conditions in China, following a decline in property prices and growing excess industrial capacity, have prompted Japanese companies to reconsider their operations in the world’s second-largest economy.
Supply-chain diversification
Restructuring plans are focused on diversifying supply chains and reducing reliance on China without fully disengaging from it, after years of heavy Japanese investment in the Chinese market.
Japanese companies are seeking to expand their presence in India, Vietnam, Thailand and other Southeast Asian countries, as their operations in China face pressure from the economic slowdown and US tariffs.
Political tensions extend to travel
The scaling back of activity coincided with rising political tensions between Tokyo and Beijing. The report said China had imposed restrictions on exports of certain rare metals to Japanese companies.
The impact also extended to the travel sector, with the latest data from the Japan National Tourism Organization showing that the number of visitors arriving in Japan from China fell 59% in August compared with the same month in 2025.
