Saizeriya Thrives While Gusto Struggles in China

A striking contrast has emerged between two Japanese restaurant chains operating in China: Saizeriya, an Italian-style eatery, is thriving, while Gusto, a family restaurant chain, is struggling to find similar success in the same market.

According to reports, Saizeriya now operates around 604 restaurants in China, reflecting strong growth. Meanwhile, sushi chain Hama-zushi has expanded to about 200 locations, suggesting that despite challenges, some Japanese food brands continue to see opportunity in the Chinese market.

This divergence highlights what has been described as a "twist" in the behaviour of Japanese companies operating abroad. Even as concerns about "China risk" — the political and regulatory uncertainty tied to doing business in the country — continue to grow, some firms are choosing to expand their presence rather than pull back.

Adding to these concerns is a recent revision to China's National Defense Mobilization Law, a piece of legislation that allows the government to mobilize civilian resources, including private companies, during times of national emergency or conflict.

Some observers have characterized this legal update as a potential "final piece" in preparations linked to Chinese President Xi Jinping, with speculation that it could be connected to tensions surrounding Taiwan. Such interpretations have heightened unease among foreign businesses that maintain a significant footprint in China.

For Japanese companies in particular, this raises difficult questions about the risks of what has been called excessive "dependence" on the Chinese market. Firms with deep supply chains or large numbers of physical locations in China may find themselves especially exposed if political tensions escalate or if the government invokes emergency mobilization powers.

The situation illustrates a broader tension facing many Japanese businesses: the pursuit of growth in one of the world's largest consumer markets versus the need to manage exposure to a business environment shaped by unpredictable political and legal developments. As chains like Saizeriya continue to expand even amid these warnings, it remains to be seen how companies will balance ambition with caution in the years ahead.