German Industry Turns to Japan as a Manufacturing Base
- Japan is gaining strategic importance as a production location for German companies
- German manufacturers are increasingly using Japan as an export hub for Asia
- Manufacturing costs in Japan are significantly lower than in Germany
September 18, 2025 | Tokyo － A growing number of German companies see Japan not only as a sales market but also as a strategic manufacturing hub. This is the key finding of a recent survey conducted by the German Chamber of Commerce and Industry in Japan (AHK Japan) among German manufacturers with production or assembly facilities in the country.
Currently, 84 German companies based in Japan operate their own manufacturing or assembly plants at 132 locations nationwide. This represents more than 10% of the approximately 730 German firms active in Japan – a frequently underestimated aspect of bilateral economic relations. Of the 69 relevant corporate groups, 34 (49%) participated in the survey. Key industries include chemicals and pharmaceuticals (29%), mechanical engineering (23%), medical supplies and health care (21%), as well as automotive suppliers (12%).
“The weak yen, proximity to key customers in Asia, and stable regulatory conditions all make Japan an attractive manufacturing location,” says Marcus Schürmann, Chief Executive Officer of AHK Japan and Delegate of German Industry and Commerce in Japan.
Especially in times of global uncertainty, Japan offers compelling advantages. “Serving Asian markets from Japan is a strategically attractive option for German manufacturers,” Schürmann adds.
Japan as an Export Hub
Many of the German manufacturers have had a presence in Japan for decades: 76% of surveyed companies have been producing in Japan for more than 20 years. 59% operate a single production facility, while 41% run two or more sites in the country.
The main reasons for local production are clear: for 79%, proximity to customers is the top priority, while 59% point to the specific requirements of Japanese clients. 38% emphasize the stability of supply chains as well as the availability of highly qualified personnel who reliably meet the strict quality standards of industrial production. For 29%, the aspect of risk mitigation is also crucial – Japan serves them as a foundation for diversification within the global production strategy.
A striking finding is how many German companies use their production sites in Japan not only for the domestic market but also as export hubs. 71% serve both Japan and overseas markets, with the most important destinations being ASEAN countries (41%), China (38%), and North America (29%).
According to survey participants, Japan stands out for its high industrial efficiency and comparatively moderate labor costs. 95% confirm that unit labor costs are below German levels – with 47% estimating them to be as much as 30% lower.
Looking ahead, 57% of companies plan to expand their production capacity in Japan over the coming years. Meanwhile, 35% report growing interest from their German headquarters in using Japan as a base for manufacturing and diversification.
At the same time, the shortage of skilled labor remains a key challenge: 82% cite the recruitment and retention of qualified employees as their biggest difficulty. Skilled machine and plant operators, technicians, and technical specialists are in highest demand. Moreover, 50% of companies now require English skills for managerial positions in manufacturing.
The survey results highlight that Japan remains a stable, attractive, and future-ready manufacturing location – especially for German companies aiming to plan long-term in Asia, spread risk, and stay close to their customers.
About the Survey:
From 20 May to 6 June 2025, AHK Japan conducted its first survey of 69 German companies operating their own manufacturing or assembly facilities in Japan (with a total of 84 group entities). The response rate was 49% (34 companies).
The survey highlights that Japan remains a highly attractive manufacturing location for German businesses. Key factors include internationally competitive cost structures, Japan’s role as a regional hub, a well-qualified workforce, and long-term business relationships that provide stability and reliability.
