Updated Feb. 8, 2026. The Japanese chemical industry is the country’s second largest manufacturing industry behind transportation machinery.
In its broader definition, which also includes plastic and rubber products, it made up over 14 percent of all output value in Japanese manufacturing.
With around 930,000 people, it employs around 10-11 percent of Japan’s manufacturing-related workforce.
Transportation machinery includes Japan’s most notable industry, automotive, which in turn is highly dependent on raw materials provided by the chemical industry.
The Backbone of Japan’s Economy
As the strength of Japan’s economy lies in its industry, one can say that the chemical industry is the backbone of Japan’s economy.
And its scale is truly global. With around 48 trillion yen ($306 billion) of global shipment value in 2023, Japan’s chemical industry ranks fourth in the world in recent rankings, following China, the U.S., and Germany.
The Japanese chemical industry is dominated by a group of major corporations. Most of them are highly diversified and sport a large number of subsidiaries.
They are typically embedded in a strong network of alliances with other companies through their membership in keiretsus, sets of companies with interlocking business relationships.
In 2023, several Japanese firms appeared among the world’s leading chemical companies by sales, including Shin-Etsu Chemical., Mitsubishi Chemical, Sumitomo Chemical, Mitsui Chemicals, and Toray Industries.
Besides many other larger companies, which include Asahi Kasei. or Resonac, for example, there are a multitude of smaller specialty chemicals firms producing on very high levels of product quality.
Industry Make-up
The Japanese Chemical Industry in a Broader Sense encompasses Plastics Products (about 4 percent of Japan’s total manufacturing value output), Rubber Products (about 1 percent), and the Chemical Industry in a Narrower Sense (about 9-10 percent).
The latter can be divided into five general areas: Fertilizers, which accounted for about 1 percent of the Chemical Industry in the Narrower Sense in earlier breakdowns, Inorganic Chemicals (about 7 percent), Organic Chemicals (about 42 percent), and End Products (about 50 percent).
Organic Chemicals include Basic Petrochemicals (about 9-10 percent of the total), Aliphatic Intermediates (about 4-5 percent), Cyclic Intermediates, Dyestuffs and Pigments (about 7-8 percent), Plastics (about 12-13 percent), Synthetic Rubbers (about 2 percent), and other organic chemicals (about 5-6 percent).
End Products include Oil and Fats, Soap, Detergents and Surfactants (about 4 percent of the total), Paints (about 3-4 percent), Drugs & Medicines (about 27-28 percent), Agricultural Chemicals (about 1 percent), Cosmetics and Toothpaste (about 5 percent), Gelatins & Adhesives (about 1 percent), Photo-sensitized materials (about 1 percent), and other chemical end products (about 6-7 percent).
A Force to Reckon With
As with many other industries in Japan, strengths of the chemical industry are innovation and product quality.
In recent years R&D expenditures by chemical companies have remained substantial; historical figures showed about $25 billion in 2013, and more recent company and industry reports indicate that R&D spending continues at a multi‑billion‑dollar annual pace concentrated among the largest firms and focused increasingly on specialty materials, pharmaceuticals, and sustainability technologies.
Together with steady capital investments and a materially higher overseas production ratio, which rose from about 21 percent in 2013 to roughly the high‑20s/low‑30s percent range for the chemical sector by the early 2020s, while the average overseas production ratio across Japanese manufacturers is now in the high‑30s percent range, the Japanese chemical industry and its companies remain a force to reckon with for global customers and competitors.