TOKYO -- Chinese investment is flowing into the backbone of Japanese industry: small and midsize component makers that supply major manufacturers like automakers and electronics brands. In 2018, buyers from China acquired a record 25 unlisted companies in Japan.
Many of the target businesses have been pushed to the brink by slumping sales and an inability to find successors for aging leaders. For some, backing from China not only keeps them afloat but also unlocks new sales channels across Asia. But there are also concerns about how the U.S.-China trade war might affect them, and Japan Inc. is under pressure to do more to shore up its supply chains.