(Yicai) Feb. 12 -- Japanese companies are increasingly confident about their prospects in the Chinese market amid recovering demand, according to a new survey.

The survey, released yesterday by the Japanese Chamber of Commerce and Industry in China, found that 58 percent of Japanese companies operating in China said they would "significantly increase," "increase," or "maintain" their investment scale, up 3 percentage points compared to the previous year.

According to feedback from Japanese companies, the main factors are increased demand for their products and growth in order volumes. Some companies plan to establish new factories, production lines, and research and development centers to meet this resurgent demand in the Chinese market. Others indicated plans to invest in areas related to electric vehicles, smart technologies, and green energy.

Among the surveyed companies, 53 percent of Japanese enterprises consider China to be their most important or one of their top three most important markets, up 4 percentage points compared to the previous quarter.

Tetsuro Homma, chairman of the Japanese Chamber of Commerce and Industry in China and global vice president of Panasonic Holdings, told Yicai that the survey was conducted from Jan. 9 to Jan. 24. The feedback indicated that Japanese enterprises feel they have benefited from the economic stimulus measures implemented by the Chinese government since September last year.

The revenue, profits, and overall business performance of Japanese enterprises in China have all improved, the survey found, with 34 percent of firms reporting that their revenue had "increased" or "slightly increased," up 7 percentage points compared to both the previous quarter and the same period last year. Meanwhile, the proportion of companies reporting a decline in revenue dropped to 36 percent, down 8 percentage points from the previous quarter and 11 percentage points from the same period last year.

In terms of profits, 33 percent of Japanese enterprises in China reported profit growth, up 16 percentage points compared to the same period last year.

Homma pointed out that multinational companies from various countries have

realized that China's labor cost advantage is gradually diminishing. But on the other hand, China's comprehensive industrial supply chain system, continuously improving innovation capabilities, large pool of highly skilled technical talent, and vast market potential continue to attract foreign enterprises, he said.

Among the surveyed companies, the proportion of those optimistic about China's domestic economic outlook increased by 5 percentage points compared to the previous quarter, while the proportion of companies holding a pessimistic view decreased by 13 percentage points.

In addition, 15 percent of the surveyed companies expressed an optimistic or somewhat optimistic attitude toward China's economic prospects in 2025, up 4 percentage points compared to the previous quarter. Meanwhile, the proportion of companies adopting a cautious outlook was 44 percent, a significant decrease of 20 percentage points compared to the previous year.

Editor: Tom Litting