‘Unwelcome and unsafe’: Why Japanese companies are retreating from China at a historic rate

Mazda Motor's flag and Japanese national flag are hoisted at the company headquarters in Fuchu-cho, Hiroshima Prefecture, Japan July 15, 2025. Issei Kato | ReutersJapanese companies are leaving China in record numbers, as a slowing Chinese economy and a diplomatic freeze force businesses to reassess their presence in the world's second-largest economy. The number of Japanese companies operating in China fell to a historic low, standing at 10,118 as of June, according to Teikoku Databank, a corporate credit research firm in Japan. That's down 22% from the previous survey held in June 2024 and about 30% below the 2012 peak, and the lowest since Teikoku began tracking the data in 2010. Japanese firms, which were already planning to reduce their footprint in China, are considering withdrawing from the market with greater urgency since China-Japan ties went into a tailspin, said Jeremy Chan, an analyst at political consultancy firm Eurasia Group. The exodus is likely to intensify as the diplomatic feud between Asia's top two economies forces Japanese companies — already grappling with shrinking profitability strained by tariff risks, growing labor and manufacturing costs, cutthroat loca...