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JETRO published its FY2025 survey of Japanese-affiliated companies in Asia and Oceania on November 26. The share of Japanese firms in China expecting an operating profit in 2025 rose to 63.2%, the first increase in four years, while the share planning to expand business over the next one to two years fell to a record low of 21.3%.
Overview
On November 26, 2025, the Japan External Trade Organization (JETRO) published the results of its FY2025 Survey on Business Conditions of Japanese-Affiliated Companies Overseas (Asia and Oceania). The report was subtitled "China's performance improves, India remains strong, impact of U.S. tariffs on the region limited."
The survey covered Japanese-affiliated companies in 20 countries and regions in Asia and Oceania and was conducted from August 19 to September 17, 2025. Of 12,900 companies contacted, 5,109 gave valid responses (a valid response rate of 39.6%). In China, 791 of the 1,479 companies contacted responded (406 manufacturers and 385 non-manufacturers).
Background
The survey began in 1987, and this was its 39th edition. It is widely used by companies and researchers to understand, country by country, Japanese firms' earnings outlooks, business plans and management challenges. In recent years, Japanese companies in China had reported weakening earnings and declining appetite for expansion amid slow demand growth and intensifying competition.
Key Points
| Item | All respondents | China |
|---|---|---|
| Expect operating profit in 2025 | 66.5% (prior year 65.8%) | 63.2% (up 4.8 points) |
| Plan to expand in next 1-2 years | 45.0% (prior year 43.8%) | 21.3% (prior year 21.7%) |
- Improved earnings: The share of profitable firms in China rose for the first time in four years. The share expecting operating profit to improve from the previous year rose by 7.5 points in China. The most common reason was higher local demand, followed by higher demand in export markets, better production and sales efficiency or utilization, and lower labor costs.
- Business plans: The share of firms in China planning to expand has fallen every year since 2022 and hit 21.3%, the lowest since non-manufacturers were added to the survey in FY2007, although the decline narrowed from the previous year. In India, the figure rose for the fifth straight year to 81.5%.
- U.S. tariffs: Among firms that export to the United States, 53.4% of those in China reported a negative impact on operating profit, the highest level in the region.
- Staffing: Only 18.6% of firms in China said hiring had become more difficult over the past two years, a relatively low level.
- Competition: In China, 50.4% of firms named local companies as competitors with whom competition has intensified.
Across all respondents, 16.7% expected an operating loss in 2025, unchanged from the previous year, while 36.6% expected improvement, down 0.8 points. India's share of profitable firms remained high at 75.5%, indicating widening differences in earnings and expansion appetite across the region.
Significance for Japan-Shenzhen Exchange
The results suggest that while the earnings environment for Japanese companies in China has improved somewhat, they remain cautious about new investment and expansion. Many firms appear to be securing profits through efficiency gains and cost cuts while holding off on decisions to expand.
In South China, including Shenzhen with its concentration of electronics and new energy industries, competition with local companies is intense, but opportunities for trade and cooperation with them are also plentiful. Attention is focusing on how companies adjust their operations to changes in the local market and on what forms partnerships with Shenzhen companies might take.
Outlook
For the 2026 operating profit outlook, the share of all respondents expecting improvement rose 5.1 points compared with the 2025 estimate, and the share expecting deterioration fell 12.6 points. Whether the decline in expansion appetite in China will bottom out, and how the trade environment including U.S. tariff measures will evolve, remain uncertain.
From the Association
Survey results that show the on-the-ground situation of Japanese companies are an important reference for thinking about economic exchange between Japan and Shenzhen. The Association will continue to follow such surveys and developments and to provide opportunities for dialogue and mutual understanding between Japanese and Shenzhen companies.
This article is based on publicly available information and is provided for reference only; accuracy and completeness are not guaranteed.