In 2025, Japanese companies executed 48 cross‑border M&A transactions in the chemicals and materials sector across the Asia-Pacific region. The year was characterised by pronounced regional contrasts: China saw a concentration of divestitures, India and Singapore experienced increased minority investments aimed at securing future growth options, Thailand underwent governance‑driven restructuring of legacy joint ventures, and Vietnam focused on the localisation of intermediate materials. These sector‑specific dynamics collectively defined the landscape of Japanese outbound M&A activity throughout the year.
China: Portfolio Restructuring and Geopolitical Risk Adjustment
All ten chemicals‑ and materials‑related transactions involving Japanese companies in China were divestitures. These primarily took the form of joint‑venture unwinds and the disposal of non‑core operations. The backdrop of rising geopolitical uncertainty, regulatory compliance burdens, and volatility in feedstock procurement prompted many Japanese corporates to reassess manufacturing footprints and accelerate portfolio streamlining. The emphasis in 2025 shifted toward risk adjustment and the rationalisation of long‑held Chinese assets.
Singapore: Minority Investments to Access Advanced Materials and Biochemical Innovation
Singapore continued to serve as a strategic hub for technology-oriented investments. Japanese corporates executed a series of minority placements into companies operating in advanced materials, biochemical innovation, and sustainable materials. These investments provided early access to emerging technologies while reducing entry risk into next‑generation material ecosystems. For many investors, Singapore functioned as a platform to establish technical understanding and prepare for subsequent expansion across Southeast Asia.
India: Building Collaborative Platforms to Accelerate Market Entry
India recorded a notable number of minority investments that aimed to build early collaboration structures with domestic players. Localisation requirements and an expanding consumer and industrial base encouraged flexible deal structures that allow for staged capital injections, joint development, or subsequent manufacturing expansion. Early alignment with Indian partners became essential for accelerating market participation and responding to the country’s evolving regulatory and industrial policies.
Thailand: Strengthening Governance through Equity Increases and JV Reorganisation
In Thailand, Japanese companies focused on strengthening governance within long‑standing joint ventures. Equity increases and organisational restructuring were used to reinforce decision‑making authority and reduce earnings volatility. These efforts reflected a broader reassessment of historical JV frameworks, with investors seeking to modernise governance and ensure alignment with current global and regional strategies. The trend represented a systematic update of long‑term partnerships rather than a shift into new business areas.
Vietnam: Localisation of Intermediate Materials as a Central Investment Theme
Investment activity in Vietnam concentrated on intermediate materials such as corrugated packaging, construction glass, and food‑ingredient manufacturing. These categories depend heavily on local sourcing due to transportation costs and lead‑time sensitivity, and they benefit from stable demand tied to consumer markets and construction activity. While intermediate materials attracted sustained interest, Vietnam’s ecosystem for high‑value materials—including semiconductor chemicals and advanced polymers—remained in an early stage of development. As a result, investment themes continued to gravitate toward segments closely linked to domestic consumption and supply-chain localisation.
Notable Transactions
- Kuraray (Thailand): Increased stake in its Thai JV to 73.4%, strengthening governance and supply stability in advanced materials.
- Mitsui Chemicals (China): Fully divested its petrochemical JV, advancing geopolitical and regulatory risk adjustment.
- KITZ Corporation (India): Acquired an Indian producer of corrosion‑resistant and high‑purity materials, enhancing high value‑added valve capabilities.
- Sumitomo Chemical (Taiwan): Acquired a semiconductor process‑chemical manufacturer to reinforce quality control and supply‑chain stability.
- T. Hasegawa (Vietnam): Acquired a local food‑ingredient company, expanding local development and ASEAN supply diversification.
Distribution of Transactions
Among the 48 transactions observed in 2025, China accounted for 10, followed by India with 7, Singapore with 6, and Taiwan and Thailand with 4 each. Vietnam, South Korea, and Malaysia formed a secondary cluster of activity. The concentration of deal closings in May, June, and November suggests alignment with budgeting cycles, internal governance processes, and regulatory timelines across counterparties.
Macro Context and Valuation Considerations
The rise in both divestitures and minority investments reflects a recalibration of risk–return expectations among Japanese corporates. Staged investments, earnout structures, and explicit pricing of quality‑transfer risks gained importance across the region. These considerations were especially relevant in segments where production transfer, customer qualification, and supply‑chain validation are inherently complex.
In high‑value categories such as semiconductor materials and performance polymers, transfer‑related risks—ranging from customer approval processes to the continuity of commercial flows—played a decisive role in valuation outcomes and deal feasibility assessments. These factors emerged as central determinants of investment strategy across the chemicals and materials landscape in 2025.