In the past two years, there has been a significant shift in the landscape of China’s manufacturing industry: several Japanese companies are scaling back or shutting down their manufacturing operations in China. At the same time, Japanese enterprises are displaying a notably cautious attitude towards investments in critical materials and high-end manufacturing sectors. This phenomenon is being referred to as the “exodus of Japanese companies from China.” Based on public data and corporate trends, this is not merely market fluctuations but a strategic choice made by foreign enterprises in response to the risks associated with the Chinese communist system and escalating geopolitical tensions.
In the automotive sector, Mitsubishi Motors ceased complete vehicle production in China in 2023 and withdrew from related joint ventures. Its sales in China have been steadily declining since reaching a peak in 2020, dropping to around 7,000 vehicles by 2024. Mr. Liu, a salesperson at Guangzhou Automobile, told Epoch Times, “Many Japanese employees’ families have left China now. I heard Japanese people saying they are very disappointed with China.” He believes that some Japanese companies have undergone a shift in their overall assessment of the Chinese environment, leading to a trend of Japanese companies being disappointed in China and subsequently withdrawing.
Scholar Mr. Zhou, during an interview with reporters, mentioned that the prolonged losses are just the surface issue, with the deeper reasons lying in the continuous strengthening of China’s state-led industrial policies, resulting in institutional squeezing of foreign enterprises. He stated, “I know that since Japanese nationals were attacked in China, many Japanese corporate personnel and their families have been evacuating China over the past year, out of personal safety concerns. Some companies have shifted their production equipment to Southeast Asia.” He believes that security apprehensions and the opaque nature of the Chinese system are becoming significant variables influencing corporate decision-making processes.
A contraction has also been observed in the electronics manufacturing sector. Canon’s laser printer factory in Zhongshan, Guangdong, ceased production in November 2025 after operating for 24 years. The factory’s workforce once exceeded ten thousand employees but dwindled to approximately 1,400 at the time of shutdown. The market share of its printers in China had dropped to less than 4%, with related orders being redirected to Vietnam, Thailand, and other locations. The relocation of production lines signifies not only market outcomes but also demonstrates proactive risk aversion by companies towards a single political environment.
Changes in the food sector carry particular symbolic significance. Yakult’s factory in Shanghai closed at the end of 2024, with the company announcing the closure of its first factory in Guangzhou, Guangdong, on November 30, 2025. The Guangzhou factory was the first production base established by Yakult in China after entering the market in 2002. More than twenty years later, the withdrawal of this early deployment signals the end of the expansion cycle of Japanese consumer brands in China.
Signs of contraction are also evident in the retail and foodservice sectors. FamilyMart closed nearly a hundred stores in North China, consolidating resources in core areas, while Yoshinoya paused expansion in second and third-tier cities. Shifting from expansion to defense, the actions of these brands reflect a decrease in confidence among companies regarding the stability and predictability of the Chinese market.
Mr. Li, a scholar from Beijing, pointed out that Japanese and American enterprises are shifting production lines to Southeast Asia, indicating a reduction in their reliance on China’s manufacturing system. “Political risk and supply chain security have become core variables in corporate decision-making,” he stated, emphasizing that this isn’t merely short-term operational fluctuations but long-term risk mitigation measures aimed at the environment under the Chinese communist system.
Over the past five years, foreign enterprises, from automotive and electronics to food and retail, have held significant positions in the Chinese market by leveraging a “quality premium.” However, Japanese brands are currently exiting or scaling back to varying degrees. According to research by the Japanese media Yomiuri Shimbun, Japanese brands that previously held significant positions in Chinese household consumption lists are now noticeably less present in daily life.
Ms. Yao from Zhejiang Business Association stated, “Due to operational costs and political factors, the departure of Japanese companies is part of a long-term strategic plan.”
She noted that in the backdrop of China’s constantly changing policies, stringent regulations, and ongoing tense external relations, companies must reassess the safety margins of their investments in China.
Furthermore, Ms. Yao indicated that Western companies in China are systematically “de-risking” against the Chinese institutional environment. The shift of capital and production capacity is gradually revealing its impact on the Chinese economy: “Although Japanese capital has not completely withdrawn, the redistribution of industrial focus has already occurred. If this trend continues, China’s attractiveness to foreign capital in terminal manufacturing will further weaken, and the regional supply chain structure will accelerate its distance from China.”