Japanese Companies Accelerate Their Withdrawal from Communist China

It is reported that Japanese companies operating in China were the lowest in the past decade. According to Teikoku Databank, the number of Japanese companies operating in mainland China was 12,706 as of June 2022. Since the CCP (COVID) virus spread in 2020, 2292 companies have withdrawn from China.

The region with the largest decrease in Japanese companies entering China was Shanghai, where the CCP implemented a lockdown for two months. It is said that many companies moved their bases to Japan or Southeast Asia due to rising labor costs and soaring prices.

Teikoku Databank analyzed that “there is a move away from China in response to China risks, such as the negative impact of the CCP’s Zero-COVID policy on corporate activities.”

As early as 2020, the Japanese government already reminded Japanese companies to evacuate from Communist China, and at that time provided hundreds of billions of yen in return subsidies to the companies leaving Communist China, and more than 1,700 Japanese companies left that year. The Japanese companies moved their production base back to Japan or Southeast Asia, like Vietnam, Thailand, India, etc.

With the recent assassination of former Prime Minister Shinzo Abe and the release of the Defense White Paper 2022, Japan has made it clear that Communist China is a severe threat to the security of Northeast Asia, Southeast Asia, and the Indo-Pacific region. Japan is decoupling from Communist China. The policy of encouraging Japanese companies in Communist China to move back to Japan was implemented during the administration of former Prime Minister Abe. His proactive approach accelerated Japan’s efforts to rid itself of the supply chain threat from Communist China.