Record 4,137 Japanese companies exited China in two years, Teikoku data shows

October 5, 2026 at 07:19 AM2 min

This digest was compiled by AI from multiple sources — links to the originals are below.

A record 4,137 Japanese companies fully exited China over the past two years, while only 1,221 new Japanese entities were established there. The exodus reflects rising U.S. tariffs, public resistance to Chinese goods, and growing safety concerns. Japanese firms are shifting profit reliance toward the U.S. market, with Topix companies' China profit share falling below 15% from 23% in 2020.

Key Facts

A record 4,137 Japanese companies fully left China in the past two years, while only 1,221 new Japanese entities were established there.
The share of profits earned in China by companies in the Topix index fell to less than 15% this year, down from 23% in 2020.
The share of profits from the United States for Topix companies rose to 35% from 25% over the same period.
Chinese Vice Premier He Lifeng said the country always welcomes Japanese enterprises seeking to develop business there.

Corporate Exodus

A record 4,137 Japanese companies completely left China over the past two years, according to Teikoku data cited by CNBC. Only 1,221 new Japanese entities—subsidiaries, plants, or representative offices—appeared in China during the same period. Martin Schulz, chief policy economist at Fujitsu Research Institute, linked the departure to U.S. tariffs, public resistance to Chinese goods, and development of the Indian market. Jesper Koll, expert director at Monex Group, noted Japanese companies are increasingly relying on the U.S. market while reducing dependence on China.

Profit Shift

The share of profits earned in China by companies in the Topix index fell to less than 15% this year, compared with 23% in 2020. The share of profits from the United States rose to 35% from 25% over the same period. Automakers, parts suppliers, and export-oriented manufacturers are the most likely to reduce their presence in China, said Kei Koga, professor at Nanyang Technological University. Localized companies capable of competing with Chinese manufacturers, including in medical and precision equipment, have a better chance of remaining.

Safety Concerns

Analysts link business sentiment to concerns over personnel safety in China after Beijing detained Japanese citizens this year. Several Japanese nationals, including executives of major Japanese companies, were detained in August on suspicion of violating restrictions on exports of dual-use goods. Jeremy Chan, analyst at Eurasia Group, said Japanese companies and their employees increasingly feel unwelcome and unsafe in China. An April report by the Japan External Trade Organization showed companies are increasingly reluctant to expand their business in China. The day after the Teikoku report was released, Chinese Vice Premier He Lifeng said the country always welcomes Japanese enterprises seeking to develop business there and benefit from the opportunities of the Chinese market.