Foreign Investment Reverses Course Amid China’s Economic Headwinds

According to The Vision Times, China’s economy is encountering mounting challenges in sustaining stable growth, prompting a growing number of foreign enterprises to accelerate their exit from the country, including many Japanese firms with decades-long operating histories in China. One widely noted example is Sony Precision Devices (Huizhou) Co., Ltd., the first wholly foreign-owned enterprise established by Sony in southern China, whose closure has drawn considerable public attention.

Chinese analyst Mei Ling described the withdrawal as deeply striking, noting that the Huizhou facility had operated in the Zhongkai area for 29 years and played a central role in supporting surrounding restaurants, small businesses, and logistics providers that depended heavily on its presence. Founded in 1995 in Huizhou’s Zhongkai High-Tech Zone, the factory marked Sony Group’s first fully foreign-owned investment in South China and specialized in the production of precision electronic components used in mobile phones, digital cameras, quartz optics, and LCD displays. At its height, the plant employed as many as 30,000 workers before ownership was later transferred to Japan’s RS Technologies.

Upon closure, Sony implemented an N+3 severance compensation scheme, under which many long-serving employees reportedly received payouts ranging from 100,000 to more than 200,000 yuan. For example, a skilled worker earning 10,000 yuan per month with two decades of service would receive close to 230,000 yuan in total compensation. Mei Ling remarked that Sony’s core manufacturing capacity has largely shifted to Thailand, with domestic Chinese facilities expected to serve primarily local demand, while the vast majority of global orders are fulfilled through Southeast Asian operations. She added that the closure has generated a sense of nostalgia, as employment at Japanese companies was once widely regarded as a desirable career path, yet many of these firms have ultimately departed.

Sony’s retreat from China has unfolded gradually rather than abruptly. Mei Ling observed that Canon and Nikon have also shut down Chinese factories in recent years, making Sony part of a broader trend rather than an exception. Sony has publicly stated that diversifying production locations is intended to reduce the risks associated with reliance on a single manufacturing base. At the same time, Sony’s smartphone business has quietly withdrawn from the Chinese market, as reflected by the shutdown of its WeChat account, the removal of phone listings from its official website, prolonged inactivity on its Weibo account, and the absence of updates on national carrier platforms for nearly two years. These developments suggest that Sony’s 11-year presence in China’s smartphone market is nearing its conclusion.

Sony’s case is emblematic of a wider pattern of foreign capital retreating from China. Mei Ling characterized recent developments as striking, citing numerous examples, including Toyota’s closure of factories in Guangzhou and Wuhan, Mitsubishi Motors’ halt of vehicle production and planned full exit, Volkswagen’s shutdown of its Changsha plant, Samsung’s closure of its Huizhou factory, and Canon’s successive closures in Zhuhai and Zhongshan. Additional departures include IBM’s withdrawal of its investment division and closure of its research and development center, Microsoft’s cessation of operations and dissolution of its Shanghai artificial intelligence laboratory, Starbucks’ sale of a majority stake in its China business to a private equity firm, SAS’s complete withdrawal, and Victoria’s Secret’s announced liquidation and planned exit by early 2026.

These exits have occurred despite the registration of nearly 60,000 new foreign-invested enterprises in 2024 and a near 10% year-on-year increase in foreign investment inflows. However, the actual utilization of foreign investment declined by more than 25%, highlighting a disconnect between headline figures and underlying economic realities.