Japan's investment in China's production industry was 2,244 million dollars in the first half of 2006, a 31.44 percent decline over the same period in 2005, the First Financial Daily reported, citing data by the Japan External Trade Organization (JETO).

JETO said it sees no end to the declining trend.

The sharp reduction in investment in China comes on the heels of reports that Japanese giant mobile manufacturers including Toshiba Inc, Panasonic Cooperation and Mitsubishi Electric lost ground in China's cutthroat wireless market.

The latest reports that JVC, a leading Japanese developer and manufacturer of sophisticated audio and video products, decided to shut its Shanghai subsidiary have added to the difficulty of moving Japan-made products on the mainland.

The plight of Japanese enterprises in China elicited speculation on whether China's broad market, with its cheap labor and resources, has turned sour for mammoth Japanese electronics manufacturers.

"Craftsmanship was the best face that Japan had to show the world," Hideo Ishino, a 44-year-old lathe operator at an auto parts factory in Kawasaki, an industrial city next to Tokyo told The New York Times. "Aren't the Koreans making fun of us now?"

Samsung Electronics Company Ltd and LG Electronics, South Korea's flagship enterprises and the leading manufacturers of digital consumer products worldwide pose an immense threat to their Japanese counterparts on the Chinese mainland.

Made-in-China products, usually considered cheap and inferior, have gained weight on the mainland and even overseas markets.

Japanese's economic recession since the early 1990s has attributed to the downturn of Japanese enterprises, according to state media.