Why are Japanese businesses increasingly absent from the list of the world's 500 largest companies?

In 1995, when Fortune magazine (USA) first published its modern-day annual Global 500 list, ranking the world's 500 largest companies by revenue, the company topping the list was Mitsubishi (Japan).

The list of the world's 500 largest companies has changed after nearly 30 years. Pictured: Toyota's electric car on display in Tokyo, Japan. (Source: Reuters)

At $176 billion, Mitsubishi's revenue is larger than AT&T, Dupont, Citicorp and Procter & Gamble combined, Fortune said.

Five other Japanese companies are also in the top 10, including Mitsui, Itochu, Sumitomo, Marubeni and Nissho Iwai (later Sojitz). Japan is the second most represented country on the Global 500 list, with 149 companies. The US is the top country with 151.

Still, Japanese companies in the top 500 have the largest total revenue in the world, surpassing both the US and Europe.

But now, the situation is completely different.

According to the list released earlier this month, Japan has 41 representatives in the Global 500 this year, much lower than the US and mainland China, with 136 and 135 companies, respectively.

Japanese companies on the list also had a combined revenue of $2.8 trillion last year, equivalent to 6.8% of the global total. The ratio was 31.8% for the US and 27.5% for China.

Toyota Motor is the largest Japanese company on the list, ranking 19th with $274 billion in revenue. Mitsubishi has fallen to 45th with $159 billion.

Explaining the reasons, Fortune said that due to the weak Yen, few innovative companies and the rise of China, these are also the challenges that the Japanese economy in general is facing.

In 1995, China had only three representatives in the top 500. But now, it has 135 - replacing many Japanese representatives. In fact, Chinese companies are now encroaching on many areas of Japanese strength.

This year, China surpassed Japan to become the world’s largest auto exporter, thanks in part to the boom in electric vehicles, led by automaker BYD and battery maker Contemporary Amperex Technology.

Fortune commented: "The bigger problem is that Japan's economy has been stagnant for a long time, leaving fewer growth opportunities for established companies and startups. Over the past decade, Japan's gross domestic product (GDP) has increased by only 5.3%. Meanwhile, the US increased by 23% and mainland China increased by 83%."

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