Security fears, political risk, and supply-chain de-risking are reshaping how Japanese companies view China’s manufacturing future.
Over the past two years, a growing number of Japanese companies have been scaling back their operations in China, relocating production or shutting it down. Analysts and observers say that this trend reflects a strategic reassessment driven by political risk, security concerns, and rising geopolitical tensions.
Observers and industry insiders who spoke to The Epoch Times described the trend as a “Japanese corporate exit from China.” What stands out is not a single dramatic withdrawal but a pattern across industries—from automobiles and electronics to food, retail, and dining—indicating a broader erosion of confidence in China as a long-term manufacturing base.
The publication interviewed multiple China-based analysts and insiders, who requested that only their surnames be published due to fears of reprisal.
Political Risk and Security Concerns
The auto sector has provided some of the clearest signals. Mitsubishi Motors halted vehicle production in China in 2023 and exited its joint-venture operations altogether in 2025.
Liu, an auto sales manager in China’s Guangzhou city, recently told The Epoch Times that the shift is evident on the ground.
“Many family members of Japanese employees have already left China,” he said. “Japanese [staff] told me they’re deeply disappointed with the situation here.”
In his view, Japanese companies’ overall assessment of China’s operating environment has fundamentally changed.
Zhou, a Japan-based Chinese scholar, told The Epoch Times that persistent losses are only the surface issue. The deeper concern, he said, lies in China’s increasingly state-driven industrial policy, which places severe pressure on foreign companies.
For decades, China has used strict joint-venture quotas, patent court rulings, and industrial subsidies to transfer technology from foreign companies into Chinese hands, resulting in the loss of intellectual property for many Western companies.
In addition to the regime’s industrial policy favoring state-owned enterprises, Zhou noted that security concerns are another factor driving Japanese companies to reconsider their presence in China.
“After several incidents involving attacks on Japanese nationals in China, many Japanese employees’ families left over the past year due to personal safety concerns,” Zhou said. “Some companies have already begun moving production equipment to Southeast Asia.”
