Chinese restaurant chains with thousands of outlets across mainland China are flooding into Japan. From Haidilao hot pot to Yang Guo Fu malatang to budget drink chain MIXUE, Chinese-origin eateries are becoming an increasingly common sight on Japanese streets. With fierce competition at home pushing them overseas, these chains are targeting both the Chinese population living in Japan and the booming inbound tourism market.

A Brief History of Chinese Chains in Japan

Chinese restaurant chains first began seriously entering Japan in the late 2000s. The first wave consisted of hot pot restaurants. Mongolian hot pot chains like Xiaoweiyang and Little Sheep led the charge, followed by Sichuan-style premium hot pot chain Haidilao, which opened its first Japan location in Ikebukuro in 2015.

Haidilao gained attention for its distinctive "hospitality" approach cultivated in mainland China, offering complimentary nail services, snacks, and entertainment during wait times. The chain now operates more than 8 locations across Tokyo, Osaka, Kanagawa, and Fukuoka, drawing both Chinese residents and Japanese customers.

Around 2018, a "second wave" brought more casual Chinese street food chains. Yang Guo Fu, specializing in malatang (spicy numbing soup), established its first Japan store in Ikebukuro and has since expanded to over 20 locations nationwide, including Ginza, Osaka, Kyoto, and Fukuoka.

Why the Expansion Rush Now?

Several structural factors are driving Chinese restaurant chains to expand into Japan.

First, there's brutal competition in the Chinese domestic market. As China's food service industry has grown, chain restaurants have proliferated, leading to what's been called the "9.9 yuan war" (about $1.40 USD price competition) in the drink sector. Between January and August 2024, 1.63 million food service establishments closed in China, a five-year high. Companies hitting growth ceilings at home are increasingly looking overseas.

Second, there's a substantial Chinese population in Japan. Approximately 800,000 Chinese nationals live in Japan, creating natural demand for hometown flavors. Among students and younger generations especially, trends from mainland China spread rapidly through social media, and information about new chain openings goes viral almost instantly.

Third, inbound tourism provides a tailwind. In 2024, approximately 6.98 million Chinese tourists visited Japan, ranking first in travel spending by nationality. These visitors often prefer eating at familiar brands even while abroad, providing Chinese chains with a stable customer base.

Winners and Losers in the Japanese Market

After roughly a decade of expansion, Chinese chains in Japan have seen mixed results.

The standout success story is Yang Guo Fu malatang. In 2024, malatang became a genuine trend among Japan's Gen Z, with TikTok and Instagram posts about "hour-long waits" going viral. The chain now counts Japanese women as 70% of its customer base. The customizable nature, choosing your own ingredients, and the novel "spicy numbing" flavor profile resonated strongly with younger consumers.

On the other hand, budget drink chain MIXUE (蜜雪氷城) has struggled. Despite operating over 40,000 stores in China to become one of the world's largest restaurant chains, the company has only managed about 10 locations in Tokyo and Osaka since its 2023 Japan entry, far short of its stated goal of 1,000 stores by 2028. The ultra-low pricing that drives success in China has proven difficult to maintain in Japan, and critics point to insufficient market research.

Coffee chain Cotti Coffee proclaimed it would "surpass Starbucks' store count with 2,000 locations within one year" upon entering Japan, but currently operates fewer than 10 stores.

Impact on Japan's Food Service Industry

The influx of Chinese chains is affecting Japan's domestic food service industry in several ways.

Most notably, an entirely new market category has emerged: malatang. Following Yang Guo Fu's success, Japanese-origin malatang chain Shichiho has also grown rapidly, forming partnerships with major food service operators to franchise aggressively and now operating over 25 locations centered in the Kanto region. Major food manufacturers like Nissin have entered the market with cup-style malatang products.

The spread of hot pot culture has also influenced how Japanese consumers enjoy shabu-shabu and other communal dining. Self-service ingredient selection and spice customization, Chinese-style approaches, are gaining acceptance in Japan.

Competition has intensified as well. In areas with large Chinese populations like Ikebukuro, Takadanobaba, and Shin-Okubo, "authentic Chinese" restaurants have clustered densely, competing not only with each other but also with Japanese establishments.

Two-Way Traffic: Japan-China Food Service Relations

Interestingly, food service business between Japan and China has become bidirectional.

Many Japanese chains have significant presence in China: Yoshinoya operates 696 stores, Saizeriya has 456, and Sushiro, Marugame Seimen, and Ippudo all maintain substantial footprints. For Japan's food service industry, China represents one of the largest overseas markets.

Chinese expansion into Japan, by contrast, is relatively new. What was once a one-way street, Japanese companies entering China, has become two-way traffic as Chinese companies develop the capability to open markets abroad. This reflects the maturation of China's food service industry and its growing global expansion capabilities.

The situation of food service companies from both nations competing and coexisting in each other's markets represents a new dimension of Japan-China economic relations.

Looking Ahead

Given the economic slowdown in mainland China, expansion into Japan is expected to continue strengthening. New entrants are anticipated particularly in tea drinks, coffee, and fast food sectors.

However, simply transplanting Chinese business models won't guarantee success in Japan. Yang Guo Fu succeeded partly through fortunate timing that aligned with taste trends among Japanese youth. MIXUE and Cotti Coffee's struggles, meanwhile, have been attributed to entering without sufficiently understanding Japanese market characteristics.

Going forward, the ability to capture Japanese consumers, not just Chinese residents, will determine which Chinese chains succeed in Japan.

In Japan, the "gachi-chuka" (authentic Chinese food) boom has made genuine Chinese cuisine more accessible than ever. How does your country view foreign restaurant chains entering the market? Does coexistence with local food culture work well? We'd love to hear about the situation in your country.

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