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Finnish Nokia has previously said it will cut costs 'decisively', expecting global mobile phone sales to shrink next year amid an economic downturn.

Japan is the world's fourth largest mobile phone market after the United States, China and India. But it makes up only a tiny part of sales at Nokia, whose products have failed to lure customers away from more sophisticated Japanese ones.

Mobile phone companies also see limited scope for growth in Japan, where 109 million subscribers, or some 85 percent of the population, already own a mobile phone. In addition, a new sales model based on higher handset prices is expected to slash annual mobile phone sales in Japan by some 20 percent.

"In the current global economic climate, we have concluded that the continuation of our investment in Japan-specific localized products is no longer sustainable," Nokia executive vice president Timo Ihamuotila said in a statement.

He added that Nokia's Japanese business would concentrate on research, development and sourcing for the global market as well as specific projects such as the Vertu brand.