Record Number of Japanese Companies Leaving China Amid Diplomatic Tensions
The number of Japanese companies operating in China has dropped to a record low, according to Teikoku Databank. As of June 2025, only 10,118 firms were active in the country — down by nearly one-third from its peak and over 22% since last year's survey. Analysts attribute this decline to worsening diplomatic relations between China and Japan, rising operational costs, tariff risks, fierce local competition, and a slowing Chinese economy. The exodus has been accelerated after Japanese Prime Minister Sanae Takaichi suggested military support for Taiwan in case of an invasion by Beijing. In response, China restricted exports of critical minerals to Japanese firms and discouraged travel between the two countries. Over 4,137 companies have fully exited China since early 2023 — a record number — while only 1,221 new entries were recorded. Japanese businesses are increasingly shifting their focus toward markets like India and the U.S., with Topix-listed firms deriving more profits from American operations than ever before. Analysts warn that this trend is part of an ongoing 'perfect storm' for investment in China.
Topics: China Diplomatic Relations Global Business Strategy Investment Trends Japan