Nearly 3,000 Japanese companies operate in Taiwan—many in critical sectors like semiconductor materials, retail, and logistics. Since U.S.-China tensions intensified after Nancy Pelosi’s 2022 visit to Taipei, large Japanese firms have held annual evacuation simulations, often attended unofficially by government representatives.

However, Japanese diplomats and risk officers have clarified that, due to the absence of diplomatic relations with Taiwan and constitutional restrictions on overseas deployments, military-led extractions are unlikely. “You’re on your own if you put significant assets in Taiwan,” one executive recalled being told.

This cautious stance has triggered a steep decline in Japanese foreign direct investment—from $1.7 billion in 2022 to $452 million last year—while U.S. and UK investment surged.

No Formal Guarantees Amid Rising Cross-Strait Risks

Japan’s constitution requires host-country approval for foreign deployments—a condition impossible to meet in Taiwan, which Japan, like most countries, does not officially recognize. Although Tokyo evacuated nationals from Afghanistan in 2021 without formal approval, officials argue Taiwan presents a different legal and geopolitical challenge.

With no clear security guarantees from Tokyo or Washington, some Japanese firms now question whether Taiwan remains a viable investment destination. The Defense Ministry has offered only vague guidance, saying responses to a Taiwan emergency would be assessed “on an individual and specific basis.”

Japanese officials insist they are committed to protecting citizens abroad, but the lack of a formal contingency plan leaves companies in legal and operational limbo. As tensions across the Taiwan Strait rise, Japan’s business community must weigh profit against risk in an increasingly volatile environment.