OSAKA -- Mister Donut, Japan's biggest doughnut shop chain, is giving up on the mainland Chinese market after almost 20 years of business there.
Higher labor and other operating costs drove the exit. All 10 Mister Donut stores in Shanghai will close on Monday.
The chain, which is owned by Japanese cleaning services group Duskin, opened its first directly run location in the Chinese city in 2000. After an initial period of expansion, it faced rising competition in recent years and began paring back unprofitable shops.
The closures were announced on the chain's Chinese website. Mister Donut plans to wind down its mainland Chinese subsidiary but will consider re-entering the market at a later date in another way, such as through franchise deals.
"China's desserts market holds the promise of further growth," a Duskin representative said. "This is without a doubt an attractive region."
Originally a U.S. chain, Mister Donut now has a bigger presence in Asia after most of its North American locations converted to Dunkin' Donuts stores. Japan's first Mister Donut opened in 1971 in the Osaka suburb of Minoh, according to the company website.
Duskin said it has no plans to withdraw from other Asian markets where it operates Mister Donut stores -- Indonesia, the Philippines, Taiwan and Thailand.