Amid the accelerated withdrawal of foreign capital from China’s manufacturing industry, another Japanese company has chosen to exit. Fujikura Group, headquartered in Tokyo, recently announced the closure of its wholly-owned subsidiary, Fujikura Electronics (Shanghai) Co., Ltd., and has initiated the employee compensation process.
Fujikura Electronics primarily produces electronic wiring systems, automotive connector components, and communication wiring frames, serving as a crucial component supplier for multiple automobile and communication equipment manufacturers. The company entered the Chinese market in 2001 with a registered capital of $10.5 million. After over twenty years of operation, it has now decided to withdraw.
The company recently informed its employees about the layoff plan. Many employees subsequently shared screenshots of their personal compensation on social media. One employee, surnamed Wu, who had worked for 7 years and 10 months, received compensation of 65,774 yuan, slightly higher than the “N+1” standard stipulated in the Chinese Labor Contract Law. Besides legal compensation, the company also provided additional allowances to its employees.
One of the employees commented, “I agreed to terminate the labor contract with the company, and the company compensated me with sixty-five thousand yuan after working for 7 years and 10 months.” Many netizens expressed their approval, with one comment stating, “Although foreign companies are leaving, at least it’s dignified. They don’t withhold wages or force people to leave naked, much better than many local companies.”
It is understood that in recent years, Japanese companies such as Panasonic, Hitachi, Mitsubishi Electric, and Toshiba have gradually reduced their production capacity in China, with some businesses relocating to Thailand, Vietnam, or India to avoid geopolitical risks and China’s increasingly complex policy environment. According to data from “Nikkei Shimbun” in December 2024, Japan’s direct investment in China dropped by 15% year-on-year in 2023 and has continued to decrease.
A businessperson surnamed Li, who has long been engaged in electronic component manufacturing in Zhejiang, mentioned in an interview with Epoch Times that foreign companies were once the “benchmark” for Chinese manufacturing. He stated, “Over the past thirty years, many Chinese companies have learned the technology and management practices of foreign enterprises but have not learned to treat workers well. There are still significant gaps in terms of labor protection and workplace environment.”
He noted that the difficulty of many private enterprises in maintaining stable operations is closely related to the current political environment. He said, “Before 2017, our company used to make ‘five-year plans,’ but later we dared not because we could be acquired, integrated, or asked to merge by the government at any time.”
Information on the Fujikura Group’s official website indicates that its other businesses in China, such as fiber optics, cables, and new energy vehicle components, are still operating normally. As early as 2022, Fujikura had integrated its flexible printed circuit (FPC) business into Fujikura Printed Circuit Co., Ltd., gradually shifting production focus to Thailand and Vietnam. At that time, Japanese media reported that the group was investing in strengthening its Southeast Asian base to address the uncertainties brought by “Made in China.”
Behind the foreign capital withdrawals lies the ongoing economic contraction in certain regions of China. Mr. Qiu, who previously worked in an electronics factory in Shenzhen and is now self-employed, mentioned upon returning from Shanghai that he clearly felt the market downturn.
He said, “I took a walk on Jinglin East Road, and many shops were closed with ‘for rent’ signs, but nobody came to inquire. I heard that Shanghai’s catering industry has declined by 60% year-on-year. Additionally, in coastal factory areas in Jiangsu and Guangdong, many factories have shut down production, some directly transferring production lines to Vietnam, Indonesia, or even Mexico. Next, the electric vehicle companies are facing a wave of closures.”
Yi Zhou, an independent labor researcher in Guangdong, pointed out that as foreign companies continue to withdraw, Chinese workers are facing a “new type of uncertainty.” She said, “Many foreign employees have long service years and solidified skills. Once factories close, it is very difficult for them to re-employ.”
She added that foreign enterprises typically provide more comprehensive social security, holidays, and employee communication mechanisms. For many frontline workers, this “sense of a structure” is challenging to replicate in local private enterprises. “Behind the withdrawal of foreign companies is not just a wage issue but the collapse of the entire career path.”
Industry observer Geng Hao pointed out that the trend of foreign capital withdrawal has been ongoing for many years but has recently accelerated significantly. He said, “On one hand, costs are rising; on the other hand, there is a lack of trust in the government’s regulatory methods. Some companies are concerned about excessive scrutiny of employees or data, and even the risk of data leaving the country.”
He believed that the Chinese Communist Party’s promotion of “domestic substitution” and “independent and controllable supply chains,” while encouraging local growth, has inadvertently squeezed the living space of foreign capital. “If some high-end manufacturing companies feel pressured by policies and tight control over employees, they will naturally evaluate whether to continue staying in China.”
Regarding industrial policies, Beijing has been implementing “industrial chain localization” and “independent production of key components.” While there are strategic considerations, the actual implementation has made some multinational companies feel “unwelcome.”
Commentator Zhang Yuan pointed out, “Many foreign executives privately express that it is increasingly challenging for them to make long-term plans in China because regulations change from one day to the next, cross-border remittance restrictions are tightening, and with legislation changes such as the anti-espionage law, they are walking on thin ice in compliance.”
As foreign enterprises withdraw and factories stop production, discussions on the “wave of unemployment” on Chinese social platforms are becoming more frequent. A user commented, “Even if domestic brands become stronger, they cannot immediately absorb so many unemployed people. In the end, it is ordinary laborers like us who suffer losses.”