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Nikkei Chinese: Japanese Companies in China Plan to Reduce Investment

Nikkei Chinese Edition recently reported that Japan’s Chamber of Commerce in China announced the results of a survey targeting its member companies, which are Japanese companies stationed in China. Due to China’s slow economic recovery and the intensified confrontation between China and the United States, nearly half of the Japanese companies planned to reduce their investment in China in 2023.

Around 25 percent of the companies surveyed said they planned “no investment,” and 22 percent of them said they would “reduce” investment. Reasons for reduced investment included:

  • “the Tokyo headquarters is worried about investment risks in China,”
  • “demand in China and overseas markets is expected to be sluggish, and it will be difficult to expand sales,” and
  • “cross-border data supervision leads to increased market uncertainty.”

Meanwhile, 14 percent of the surveyed companies said they would increase investment, and two percent said they would increase investment significantly. About 37 percent of the companies stated that this year’s investment amount is “the same as last year.”

Some 66 percent of Japanese manufacturing companies surveyed said that “rising labor costs” were the most significant factor impacting their investment in China. Outside of the manufacturing industry, some 72 percent of surveyed companies said that the most crucial factor is “the impact of the international situation.”

China’s post-COVID economic recovery has been slow. Especially in southern Chinese regions such as Guangdong Province and central Chinese regions such as Hubei Province, where the manufacturing industry is concentrated, none of the surveyed companies felt that the economic situation had “improved.”

Source: Nikkei Chinese, October 13, 2023