A record number of Japanese companies have closed their China businesses under the triple pressure of slowing momentum in the Chinese economy, US tariffs and a diplomatic freeze between Tokyo and Beijing. As of June 2026, a total of 10,118 Japanese companies had an established presence in mainland China, according to Teikoku Databank, Japan's largest corporate credit research firm. That figure was the lowest number since the group began compiling the statistic in 2010, representing a 22 per cent fall from 2024 and a 30 per cent drop from a 2012 peak.
Teikoku Databank researchers said the drop clearly indicates a shift in Japanese companies' business in China from an expansion phase to a restructuring phase. The China withdrawal is likely to continue as companies reassess decades-long understandings about the risks of investing in Chinese manufacturing capacity. A major part of restructuring efforts is aimed at diversifying supply chains to lower reliance on China while not completely decoupling.
Satoru Nagao, fellow at the Hudson Institute, said Japanese businesses were looking to pivot to India, Vietnam, Thailand and other parts of southeast Asia. Corporate Japan has also been caught in a year-long diplomatic spat triggered by Prime Minister Sanae Takaichi's remarks regarding Japan's hypothetical military involvement in a conflict over Taiwan. Rising labor costs and worsening economic conditions in China, following the collapse of real estate prices and huge industrial overcapacity, were also driving the trend.
Source: Financial Times Companies · Summarized by HeadlinesBriefing