Recently, the trend of “de-Chinafication” in the adjustment of Japanese companies’ presence in China has attracted attention, marking a significant shift in their strategies. Reports from Guangdong cities like Zhongshan and Huizhou have emerged indicating Canon and Sony are scaling back or terminating their operations in China. Industry experts point out that unlike previous direct factory closures, Japanese capital is gradually reducing its operational and systemic risks in China through divestments, terminating partnerships, and decreasing new investments.
Canon confirmed that its laser printer factory in Zhongshan, Guangdong, officially ceased production and operations on November 21st, leading to the dissolution of approximately 1,400 employees. The decision to halt production was attributed to changes in market demand and industry competition, with Canon emphasizing that its other production bases in China are still operational. The news of the factory closure in Zhongshan has sparked discussions within the local manufacturing industry, with many insiders interpreting it as a symbolic move reflecting further contraction of Japanese enterprises in the Pearl River Delta manufacturing sector.
On December 14th, Sony’s adjustments in Huizhou garnered attention. Multiple media outlets and social platforms reported signs of termination or withdrawal at Sony’s production base in Huizhou, affecting around tens of thousands of employees and necessitating arrangements for employee placement and project closures. Sony has yet to issue a unified public statement regarding these reports. A source familiar with the situation mentioned that the factory had been a crucial production hub for Sony in China, indicating a reassessment by Japanese enterprises of their manufacturing layout in China.
Cheng Kuang, a mechanical and electrical engineer with extensive experience in Japanese-funded enterprises in the Pearl River Delta, noted that the contraction of Japanese businesses in China is not a sudden occurrence but rather a gradual process of downsizing. He explained that some Japanese firms are no longer making additional investments, opting for share sales or terminating joint ventures, with core production gradually shifting to countries like India despite appearances of continued operation in some car factories.
Beijing-based scholar Zeng Qi, familiar with Sino-Japanese joint ventures, highlighted that recent adjustments by Japanese companies have shifted towards more discreet and dispersed methods compared to earlier factory closures and mass layoffs. Actions such as divestment, terminating partnerships, and ending technology licensing agreements are becoming more common. Zeng explained that these adjustments are often finalized through corporate changes, internal agreements, or contract expirations, making them less apparent to the public.
Since 2019, Dalian has been designated as a demonstration zone for Sino-Japanese regional cooperation by the Chinese government in hopes of attracting Japanese investment. However, recent observations from the area suggest that some Japanese companies are seeking to terminate their partnerships.
Mr. Jiang, a corporate consultant in Beijing involved in negotiations for numerous Sino-Japanese joint ventures, mentioned that Japanese headquarters have become notably cautious in their decisions concerning China in recent years. This shift is not solely due to short-term losses but a reassessment of long-term uncertainties. Consequently, Japanese entities are more inclined to first divest their equity and gradually reduce their business scale in China.
According to a report by Nikkei Asia on November 26th, Japanese enterprises are progressively reducing their reliance on the Chinese market. Among companies with overseas operations, only 16.2% currently view China as their most important market, a decrease from 23.8% in 2019. Similarly, the proportion of companies considering China as their most critical market has decreased from 25.9% to 12.3%.
Data from the Japan External Trade Organization (JETRO) shows that Japanese exports to China have declined for three consecutive years until 2024, with a roughly 24% decrease from 2021. This decline is especially notable in exports of mechanical products like automotive components and industrial robots, showing double-digit decreases over three years.
Both Canon and Sony have not made explicit statements regarding their alleged withdrawal from China at this point. Local governments have also not issued specific statements about these adjustments. Nevertheless, many interviewees believe that these changes reflect a structural shift in the strategies of Japanese enterprises in China.
A survey released in October 2025 by the Japan Economic Research Institute revealed a continuous decline in the percentage of Japanese companies with overseas operations considering China as their most important market. Compiled statistics from Japanese institutions and research units indicate a decrease in the number of Japanese-funded enterprises in China in recent years, from approximately 13,600 in 2020 to around 12,700 in 2022, illustrating a structural adjustment in the layout of Japanese businesses in China.
Some observers note that these adjustments are primarily being carried out through divestments and termination of partnerships, processes that are relatively discreet. The long-term implications, including effects on local manufacturing, employment structures, and foreign cooperation models, remain to be observed.