Japanese Firms Pull Back from China as Bilateral Ties Chill

A Drop of More than 20%

A Teikoku Databank survey found that there were 10,118 Japanese companies operating in China as of June 2026, which is the lowest number since the survey was first conducted in 2010, when there were 10,778 companies. It is more than 20% lower than at the time of the previous survey in 2024, and around 30% down on the 2012 peak.

The survey, which is the ninth to date, analyzed the activities of each company operating in China (excluding Hong Kong and Macao), based on Teikoku Databank’s corporate database. The results of the survey show a clear contraction of Japanese corporate activities in China against the backdrop of deteriorating Japan-China relations.

Over the two years since the previous survey, 1,221 companies newly entered the Chinese market by establishing local subsidiaries, factories, or representative offices. Meanwhile, 4,137 companies withdrew or became unlocatable, for reasons including site closures, resulting in a net decline of 2,916 companies.

The proportion of small and medium-sized enterprises in China with annual sales of either “up to ¥100 million” or “¥100 million to ¥1 billion” declined compared to the previous survey, while the share of mid-sized and large corporations with annual sales of ¥1 billion or more increased.

Shanghai remained the top destination, with 3,961 Japanese companies, accounting for roughly 40% of the total. Although the city remains the main hub for Japanese companies doing business in China, the number of companies fell by 1,085 (or 21.5%) compared to the previous survey.

By industry, manufacturing comprised the largest share at 4,206 companies, accounting for roughly 40% of the total. This was followed by wholesale (3,320 companies) and services (1,213 companies). Together, these three industries accounted for 86% of all companies. The financial and insurance sectors accounted for 343 companies, down from 414 in the previous survey. Nevertheless, this figure remains high compared with the first half of the 2010s, reflecting Shanghai’s continued prominence as a financial hub for China and the broader Asian region.

Data Sources

• Data on Japanese companies operating in China (Japanese) from Teikoku Databank

(Translated from Japanese. Banner photo: The Panasonic booth at the China International Import Expo in Shanghai on November 6, 2025. © Jiji.)