More-than-half Japanese firms to maintain, expand investment in China: survey

More than half of Japanese companies plan to expand or maintain investment in China in 2024, according to a survey by the Japanese Chamber of Commerce and Industry in China that was released on Tuesday, underscoring their confidence in the China market, driven by improved business conditions and policy support.

The survey showed that Japanese firms recognize the pivotal role of the China market in their global strategy and are keen to capitalize on the opportunities presented by China's high-quality development, despite external uncertainties stemming from intensified US actions targeting China, analysts said.

The survey received 1,741 responses, primarily from the manufacturing sector. The survey was conducted from March 18 to April 12 to grasp the situation of Japanese companies in China and understand the changing market environment.
Among the surveyed companies, 56 percent said that they would increase or maintain their investment in China this year.

At Tuesday's press conference, Tetsuro Homma, chairman of the chamber, said that two or three decades after entering the China market, many Japanese companies in China still recognize the importance of the market.

While striving to secure their respective market positions and profit areas, they are adopting new measures including more investments for the future, the chamber head said.

The main reasons that Japanese firms plan to invest more include the need to launch new projects, establish factories and production lines, increase orders, and strengthen their research and development (R&D) capabilities, according to the survey.

Even for companies that plan to reduce overall investment, there is a consensus to ramp up investment in R&D and talent development, the chamber said.
China's continued improvement in the business environment has spurred enthusiasm for investment among Japanese companies, as reflected in this report.

The survey found that 57 percent of the companies said that they were very satisfied or satisfied with the business environment in the first quarter of this year, a three-percentage-point increase from the previous quarter, marking an improvement for three consecutive quarters.

The surveyed companies also said that some of the Japanese firms had excellent communication and a good relationship with Chinese local governments. Cities receiving high praise included North China's Tianjin, Shanghai, and Foshan, South China's Guangdong Province.

Additionally, 75 percent of surveyed enterprises reported receiving treatment in terms of policy perspectives that was equal to that of domestic enterprises, marking a two-percentage-point increase from the previous quarter.

Moreover, 52 percent of the surveyed enterprises indicated that China is their most important market or one of the most important markets, marking a one-percentage-point increase from the previous quarter.

Many Japanese enterprises expressed a desire to resume visa-free arrangements to facilitate personnel exchanges and expand business opportunities, according to the chamber.

"Japanese companies are voting with their feet when it comes to the future. China remains their most important market and Japanese companies are actively adjusting their strategies to minimize external risks while maximizing development opportunities in the China market and capitalizing on China's high-quality development," Xiang Haoyu, a research fellow at the China Institute of International Studies, told the Global Times on Tuesday.

The Chinese government's continuous enhancement of the business climate for foreign investment and its further opening-up has drawn investment from foreign companies, including those from Japan.

These companies are being rational in assessing and valuing their cooperation needs and interests with China, their major market, the Chinese expert said.

In a recent interview with the Global Times, Homma said that China's GDP is four times that of Japan's, with a population of 1.4 billion. "Japanese companies cannot and should not ignore the importance of the Chinese market in their global strategy," he said.