China still top spot for Japan

According to the survey, Japanese enterprises with a shorter presence in China have a stronger willingness to increase investment in the market.

Some large-scale investment projects have been launched by Japanese companies in several Chinese cities in the first three months of the year.

Sumitomo Group, one of the largest Japanese conglomerates, invested 3 billion yuan ($482.7 million) to jointly expand real estate business with Hong Kong Yida Group in Dalian, Liaoning province.

Japanese food manufacturer, Ajinomoto Group Corp, is planning to spend $13.6 million to expand its production line in Shanghai.

As the first step toward gaining a foothold in the Chinese market, Meiko Trading Co Ltd invested $6 million to establish electronic equipment leasing shops in China, the first of which will be opened in Hong Kong.

"Being optimistic about economic growth in China, Japanese companies will continue to invest in the Chinese market," said Jiang Yuechun, director of the Department for World Economy and Development at the China Institute of International Studies.

"More capital from Japanese companies may flow into the retail and service industries in which business could be developed very well without enormous spending on technology," said Yao from the CASS.

Fueled by huge demand in China, Japanese casual wear designer, manufacturer and retailer Uniqlo is planning to open more stores in China.

Japanese investment in China declined 6.7 percent year-on-year to $1.27 billion in the first two months, but its investment in China in March surged 43.2 percent to $1.02 billion, according to the Ministry of Commerce.

Chinese enterprises are trying hard to promote competitiveness, including technical skills and brand image, in which they are weaker than their Japanese counterparts.