'Unwelcome and unsafe': Why Japanese companies are retreating from China at a historic rate
Japanese companies are leaving China at record pace, as a diplomatic freeze and a slowing economy force businesses to reassess their presence.
TL;DR
- The number of Japanese companies operating in China has fallen to a historic low of 10,118, a 22% decrease from the previous year.
- Strained China-Japan relations, including Japan's stance on Taiwan and China's retaliatory measures, are accelerating the withdrawal.
- Factors like U.S. tariffs, resistance to Chinese goods, and the growing Indian market also incentivize Japanese businesses to diversify away from China.
- In the past two years, 4,137 Japanese companies fully withdrew from China, with only 1,221 entering.
- Japanese firms are increasingly relying on the U.S. market, with profits from China dwindling while those from the U.S. have risen.
- Concerns about the safety of Japanese nationals in China, including detentions, further add to business anxieties.
- Automakers and parts suppliers are most likely to scale back, while medical and precision equipment makers that have localized are more likely to stay.