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The number of Japanese companies operating in China has declined to its lowest level since data collection began in 2010, reaching 10,118 companies as of June 2026. This represents a 22% decrease compared to 2024 and a 30% drop from the peak in 2012. This decline is attributed to China's slowing economy, rising costs, deteriorating economic conditions, and political tensions with Japan, such as China's restrictions on the export of rare metals. Currently, Japanese companies are moving toward restructuring and reducing their reliance on China by diversifying their investments into other Asian countries like India and Vietnam, while continuously assessing the risks associated with investing in the Chinese market.
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