A Uniqlo store in Nantong, Jiangsu province. The Japanese casual wear designer, manufacturer and retailer is planning to open more stores in China, at a time when many Japanese companies still consider China to be their top investment destination. PROVIDED TO CHINA DAILY

Investment from Japan surges 43.2% to $1.02 billion in March

China will remain the top destination for Japanese investment over the next five years, although Japan's capital inflow to the country may slow down and India is growing fast as another attractive option, according to a survey by the Japan External Trade Organization.

JETRO Beijing Deputy Director-General Dai Hakozaki said: "China is still the most suitable place for Japanese companies to invest in the coming five years."

A poll on Japanese companies' foreign investment orientation over the next three to five years was conducted by JETRO earlier this year.

Of the more than 1,000 Japanese companies surveyed, 62.1 percent chose China as the first place they would invest within the next five years, 10.7 percentage points lower than in 2011.

India has been developing into an alternative and is the second most attractive overseas investment destination for Japanese companies, Hakozaki said.

India was favored by 56.4 percent of respondents, down from 58.4 percent in the previous year.

"Low labor costs in other developing economies including India and Vietnam have increased their competitiveness as investment markets for Japanese companies," said Yao Haitian, a researcher at the Institute of Japanese Studies at the Chinese Academy of Social Sciences.

"It's still difficult to estimate whether India will overtake China as the biggest overseas investment destination for Japanese investors," Hakozaki said.