59.1 percent growth! Why are Japanese chemical companies re-betting on the Chinese market?

From January to June 2025, Japanese investment in China increased by 59.1. According to this growth rate, Japanese investment in China in 2025 is expected to exceed that of last year, reversing the trend of continuous decline since 2021. According to a survey of 8268 Japanese companies by the Japan Chamber of Commerce in China, 16% expressed their intention to increase investment, and 42.4 percent were the same as the previous year, and their willingness to invest in China hit a new high.

In the chemical industry, Japan's investment in China's chemical industry has also shown a rapid growth trend. According to incomplete statistics, in the past year, there have been more than 8 investments in China's chemical industry, with a total investment of more than 3 billion yuan. Japan's investment in China's chemical industry is mainly concentrated in the fields of high-end materials, new energy supporting facilities and green technology, with investment amounts ranging from tens of millions of dollars to one billion dollars.

What are the main reasons for the rapid growth of Japanese investment in China's chemical industry? What will be the impact on China's chemical industry?

Japan's rapid investment in China's chemical industry is the superposition effect of the adjustment of the industrial structure of the two countries, the long-term development dividend of the Chinese market, and multiple strategic considerations and market opportunities.

First, the rapid development of China's chemical industry, the coordination of national strategy and local strategy, driving the rapid growth of the chemical industry, attracting Japanese enterprises to invest in the chemical sector. Guangdong Foshan, Jiangsu Taixing and other chemical industry clusters, there are targeted to attract Japanese enterprises to invest in preferential policies. In addition, China's dual carbon goals and the development of green technology are the advantages of Japan's chemical industry and can complement the Chinese market.

Second, the structural outbreak of demand for chemical industry in China, including the iterative demand for new materials brought about by the new energy revolution, the demand for functional new materials brought about by consumption upgrading and high-end manufacturing, as well as the long-term development dividends brought about by the acceleration of China's infrastructure construction and equipment renewal, have provided the basis for attracting Japanese industries to invest in chemical industry in China. Japanese catalysts, Toyota, Mitsubishi and other companies have a large number of new energy related investments in China. Mitsubishi Chemical, Japan's light and other enterprises, China's high-performance plastics, flame retardant materials also have a large investment.

Third, the necessary strategic transformation of Japanese chemical companies at this stage. According to Pingtou, Japanese chemical enterprises are facing the pressure of domestic market saturation and technology surplus. Japan's domestic consumption of chemical products is slow, environmental protection is more stringent, these to the Japanese chemical industry has brought obvious imbalance between supply and demand, Japan's chemical exports have been relatively large. In addition, Japan is exporting more and more technology overseas, and China is one of the testing grounds for the commercialization of its high-end technology. For example, Asahi Huacheng will give priority to hydrogen energy and energy storage technology in GG10 strategy to China. Dongli Foshan Base is Dongli's first full series of resin overseas base in the world, etc.

Finally, China has the advantage of scale, and Japan has some core technological advantages. To a certain extent, the cooperation between the two can realize the deep nesting of industrial chain integration. For example, Asahi's carbon fiber technology cooperates with Chinese wind power blade enterprises to raise the product strength to the international leading level, which helps the development of China's new energy field and also drives Asahi's technology to the ground. Mitsubishi Chemical's flame retardant resin formula and China's new energy vehicle enterprises jointly develop flame retardant materials with high standards, which drives the flame retardant level of China's new energy vehicles.

Japan's large investment in China's chemical industry, there is a phenomenon of investment economic data prosperity, but behind this, from the two dimensions of industrial optimization and security risks to rational assessment. From the point of view of industrial optimization:

first, Japan's investment in China's chemical industry is conducive to driving China's industrial upgrading and ecological optimization. Japanese companies have a deep accumulation in the fields of electronic chemicals, high-performance resin materials and new energy materials. Joint ventures with Chinese companies are to participate in the Chinese market through "technology spillover. Among them, the investment of Japanese enterprises is mostly concentrated in the key technical links of the industrial chain, which is also the part of the technology accumulation that Chinese enterprises lack. It forms a complementary industrial chain with Chinese enterprises, which significantly improves the integrity and efficiency of China's chemical industry chain.

Second, the investment of Japanese chemical enterprises is conducive to forcing the innovation and management upgrading of Chinese local chemical enterprises. After Sumitomo Chemical expanded its PTA production capacity, Hengli Petrochemical improved PTA purity and reduced production costs through independent research and development of "continuous hydrofining" technology. Wanhua Chemical learns from Mitsubishi Chemical's "integrated park" management experience to optimize the upstream and downstream material circulation and reduce comprehensive energy consumption. On the whole, the catfish effect brought about by Japanese companies' participation in Chinese market competition is also one of the ways to increase vitality in the development of China's chemical industry.

Third, Japanese chemical companies invest in the Chinese market, mainly in Changsanhe and the Pearl River Delta. Individual companies have settled in cities such as the southwest. While creating a large number of employment opportunities, they have also stimulated the development of the local economy.

At the same time, Japan's investment in China's chemical industry will certainly have a negative impact.

First, the risk of using core technologies may increase. Japanese enterprises generally adopt the strategy of "technology blockade + low-end transfer" in their investment, and core technologies are still strictly controlled by Japan. Representative technologies include photoresist formulation, solid-state battery electrolyte interface modification technology, etc. These technologies will not be fully disclosed by Japanese enterprises, but will adopt the mode of purchasing core raw materials in Japan and using high technology licensing fees for Chinese enterprises. Chinese enterprises do not involve core technologies in the whole process. Although this cooperation mode ensures the stable production of the project, there are serious technical risks for our long-term development.

Second, the "invisible monopoly" of Japanese companies in some areas of the market is gradually strengthening, and Chinese companies are increasingly lacking in competition. For example, in some high-end chemical new materials, the representative products are OLED display materials, semiconductor packaging epoxy resin materials, etc. Japanese companies have a high market share in these products in China, including Japanese imports and Japanese companies' production in Chinese factories. To a certain extent, it will compress the development space of related Chinese companies.

Third, the development of some Japanese industries in China may accelerate the consumption of China's resources. For example, the demand for high-end chemical materials will accelerate the mining of fluorite, and the demand for new energy materials will accelerate the mining of phosphate resources, etc., or will increase China. Consumption of important mineral resources.

Fourth, the investment of Japanese enterprises in China's chemical industry may affect the independent controllability of China's chemical industry. For example, in the field of lithium battery electrolyte, Japan's central nitrate monopolizes high-end lithium hexafluorophosphate purification technology, and the capacity allocation of its factories in China directly affects the stability of the raw material supply of Chinese electrolyte enterprises. In the field of carbon fiber, Toray has set up a research and development center in China to lock in the high-end carbon fiber procurement channels of Chinese wind power blade enterprises, limiting the speed of market substitution of Chinese enterprises. "Key link control" may pose a threat to the security of China's industrial chain in the event of geopolitical conflicts or trade frictions.

The investment of Japanese enterprises in China's chemical industry is mainly concentrated in high-end new materials, new energy products and other fields, and the investment is gradually accelerating.

Chinese enterprises can crack Japan's technological dependence through the mode of "precise absorption + independent breakthrough", such as focusing on the high-end production lines of Japanese enterprises in China, and learning their tacit knowledge through supporting cooperation and joint debugging. In view of the high-end materials monopolized by Japanese enterprises, we have formed an "innovation consortium" with universities and research institutes, and made a breakthrough through "reverse engineering + principle innovation. In emerging fields such as new energy materials and bio-based chemicals, patents are laid out in advance to form a "cross-licensing" bargaining chip for Japanese companies to avoid falling into a passive situation of patent litigation in future competition.

In addition, Chinese chemical companies can avoid the main core advantages of Japanese chemical industry and seek differentiated development. For example, in areas where Japanese companies have a late layout, such as bio-based chemicals and low-carbon technologies, Chinese companies are rapidly expanding production capacity and establishing standards. In response to the personalized needs of domestic small and medium-sized manufacturing industries for chemical materials, Chinese companies provide "small batch, fast response" services to make up for the lack of flexibility in the standardized production of Japanese companies.

Chinese enterprises can, as far as possible, highlight the added value of "technology joint research and development" and "local talent training" when applying for the "foreign high-end chemical project" of the Ministry of industry and information technology, obtain the "policy leverage" of land and tax preferential treatment, unite with industry associations, lead the formulation of national standards in the fields of new energy materials and green chemical industry, and bring the technological advantages of local enterprises into the specification, Compress the space of "technology premium" of Japanese enterprises.