Editor's note: Liu Qiang is a research fellow at the Academy of Financial Research, School of Economics of Zhejiang University of China. The article reflects the author's opinion and not necessarily the views of CGTN.

For decades, China has been the core export destination for Japanese seafood products. However, the discharge of Fukushima's nuclear-contaminated water has triggered a profound food-safety and trust crisis, leading to unprecedented disruption in China–Japan seafood trade. In November, China's Ministry of Foreign Affairs stated explicitly that Japan had failed to provide the technical documentation necessary to demonstrate the safety of its products. Furthermore, remarks by Japanese Prime Minister Sanae Takaichi on Taiwan region intensified public sentiment, creating an environment in which the current position of Japanese seafood in the Chinese market can be summarized succinctly: "Even if permitted, there would be no market."

This situation not only reflects acute market volatility but also reveals deeper vulnerabilities within Japan's seafood sector in terms of export composition, risk assessment, and strategic planning. The underlying logic and impacts can be understood through three key concepts: dependence, misjudgment, and cost.

Dependence: Structural vulnerabilities stemming from reliance on Chinese market

In 2022, Japan's seafood exports to the Chinese mainland exceeded 87 billion yen ($557 million), accounting for 22.5 percent of its total seafood exports; when exports to the Hong Kong Special Administrative Region are included, the share approached 42 percent. After the discharge of Fukushima's nuclear-contaminated water in 2023, Japan's seafood exports to China plummeted to 32 billion yen. Moreover, medium- and high-value products such as scallops and sea urchins have long enjoyed stable and large-scale demand in China – demand that other markets (such as Southeast Asia or Europe and the United States) may not be able to absorb at comparable scale or price levels. Japan's seafood industry has become highly structured around these demand patterns. Once Chinese demand becomes constrained, Japanese seafood producers face a cascade of pressures, including stockpiling and overcapacity. Both upstream and downstream segments of the supply chain have limited ability to pivot rapidly. This highly concentrated and inflexible configuration exposes significant structural vulnerabilities when external shocks occur.

Misjudgment: Dual underestimations in technical compliance and political judgments

Japan underestimated the sensitivity of the Chinese market and Chinese consumers toward safety risks. Food safety in China carries significant political and social implications, and Japan's failure to provide the required technical documentation as promised not only breached regulatory expectations but also undermined market trust.

Japan also underestimated the cascading impact that inappropriate political statements can have on public sentiment and consumer behavior. Recent provocative remarks by Takaichi regarding China's Taiwan further damaged the perception of Japanese seafood in the Chinese market. The Chinese Ministry of Foreign Affairs explicitly stated that "even if permitted, there would be no market," indicating that the decline in demand is no longer solely the result of administrative measures but has evolved into a form of consumer rejection driven by public opinion.

Cost: Long-term impacts across industrial chain

Japan's seafood processing sector is expected to face significant disruptions. Seafood products are highly perishable and require rapid inventory turnover. Once the industry loses its largest buyer, cold-chain storage pressure rises sharply, leading to inventory accumulation that not only increases costs but also accelerates product devaluation. At the same time, processed seafood products exhibit strong substitutability in international markets and are highly price-sensitive. Without access to a large-scale market such as China, Japanese processing enterprises are likely to confront declining export prices, weakening profitability, and an increased risk of financial distress or bankruptcy.

The challenge of repositioning Japanese seafood products in international markets has also intensified. Japanese seafood exports rely heavily on China, with a product mix dominated by marine products, frozen seafood, and high-end aquaculture items. In contrast, Europe and the US show a preference for specific fish species and deeply processed products, while Southeast Asian markets focus more on price-sensitive categories. Given the limited substitutability of seafood products, entrenched consumer preferences, and significant differences in sanitary and quarantine standards, Japan is unlikely to redirect production originally targeted at China to other regions effectively in the short term.

Moreover, China's accelerated diversification of seafood imports further complicates Japan's prospects for regaining market share. China is rapidly expanding imports from Southeast Asia, the South Pacific, Latin America, and the Middle East. This shift is reshaping China's seafood supply landscape and gradually reducing its reliance on Japanese products. Even if Japan seeks to recover its previous market position, the difficulty is likely to exceed earlier expectations.

Self-inflicted wound and stark warning

Much of the damage Japan's seafood industry faces is self-inflicted. Losing the Chinese market reflects failures in policy decisions, technical compliance, and diplomatic conduct. This self-inflicted harm not only causes immediate economic losses but also erodes long-established consumer trust and brand reputation. In the context of rapidly evolving global supply chains, such losses are extremely difficult to reverse, not only in terms of market share but also regarding strategic opportunities and partnerships. For Japan's seafood industry, this episode serves as a profound warning: neglecting political and social risks can lead to self-inflicted harm whose costs far exceed short-term economic fluctuations.