Muji operator Ryohin Keikaku will make a massive cutback on its production sites in China as weak demand for services continues unabated in Japan.

The company has announced it plans to more than halve its 240 contracted production sites in China over two years, seeking to curb costs as personnel expenses rise.

This year Ryohin Keikaku posted a 26% drop in first-quarter net income to CNY2.18bn (US$321,000), while its stock declined 2.8% to CNY3,435. Japan’s higher unemployment rate with weaker household spending, shows signs that consumers are weighing on the nation's recovery and damaging retail sales.