Media reported a large-scale withdrawal of Japanese companies from the Chinese market

Japanese corporations are leaving the Chinese market at an unprecedented pace amid a slowdown in China’s economic growth and an aggravation of competition. This is evidenced by the data of relevant experts published in the journal “Expert”.

The number of Japanese enterprises operating in China has dropped to a historic low. According to the calculations of Teikoku Databank, in June 2026, 10,118 Japanese firms worked in China, which is 22 percent less compared to the same period in 2024. The agency, Japan’s largest center for corporate analytics and credit histories, has been monitoring Japanese business in China since 2010. Over the past two years, 4,137 companies have left the market, and this negative trend will only worsen in the near future.

In recent years, the situation has been aggravated by the trade confrontation between Beijing and Washington, which has made it economically impractical to maintain production facilities in China focused on exports to the United States. Analysts stress that Prime Minister Sanae Takaichi’s hard-line course does not inspire optimism about rapid improvements. However, the overall decline in foreign investment in the Chinese economy does not indicate a complete withdrawal of foreign capital, but only indicates its structural transformation.

Chairman of the Russian-Asian Union of Industrialists and Entrepreneurs, as well as expert of the Stolypin Institute for Growth Economics Vitaly Mankevich draws attention to the fact that the reduction of its presence in China is characteristic not only for Japanese companies.

International corporations, previously traditionally located their plants in China, are increasingly switching to the strategy of “China + 1”. According to this approach, enterprises retain part of the production processes in China, but simultaneously open new capacities in at least one other country. Most often, the choice falls on developing Asian states such as Vietnam, India, Thailand, Indonesia, Cambodia or Bangladesh.

As a result, foreign direct investment in the Chinese economy has been steadily declining for the third consecutive year. According to the Ministry of Commerce, this figure fell from $157.1 billion in 2023 to $106.9 billion in 2025. In the first half of 2026, capital inflows decreased by another 5 percent compared to the same period of the previous year, amounting to $59.4 billion.

Experts emphasize that this is not about China’s loss of investment attractiveness, but about the global redistribution of foreign capital. According to the January statistics of the Ministry of Commerce of China, the total number of newly registered enterprises with foreign participation in 2025 increased by 19.1 percent, exceeding 70,000 units. Vitaly Mankevich explains that this indicates the continued interest of small and medium-sized businesses, while large multinational corporations are forced to revise their strategies.

Vitaly Mankevich emphasizes that foreign capital does not leave China, but changes its structure: manufacturing and export enterprises leave the country, but their place is occupied by the service sector and high technologies. Against the backdrop of a general fall in foreign direct investment in the segment of high-tech industries, there is a steady growth: for eight months of 2026, this figure increased by 35.1 percent, reaching $ 29.66 billion.

According to the State Statistical Office of China, in 2025 the share of foreign direct investment in the service sector exceeded 70 percent of the total. At the same time, within the high-tech sector, rapid growth is recorded in certain niches: e-commerce showed an increase of 75 percent, the production of medical equipment - by 42.1 percent, and the aerospace industry - by 22.9 percent. While Japanese and US companies are reducing their presence, capital from Switzerland rose 66.8 percent, from the UAE 27.3 percent and from the UK 15.9 percent.

Vitaly Mankevich summarizes that China is becoming a platform for investors with completely different strategic priorities. The country is transforming from the status of a “world factory” into a global market and innovation center, and foreign capital is adapting to this new reality.

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