Shogi is way more popular than Chess in Japan, pretty much everyone knows how to play. Imagine trying to persuade Chess players to play Shogi instead !?!?
Why are there not Japanese Grandmasters?

Because there are no international-level tournaments in Japan, a Japanese person could only get IM/GM norms by competing overseas. That is very expensive, and most Japanese get little time off from their jobs, so in practice they would have to be independently wealthy.

lol a lot of people here saying ‘hikaru was born in japan’, race doesn’t determine someone’s ability to play chess, so there’s nothing to be surprised about. hikaru moved to the states at a young age, where chess is a more popular than japan. as far as chess is concerned he is american.

Because there are many earthquakes in Japan and the pieces just don't stay on the boards long enough.

They arent any good against "blunder move I make but I win" school. They are very good at straight swords lines but who can win an easy match without hide and seek moves!!

The best chess player in Japan is a FIDE master. But the player quit + Japan is more go and other games. Like the best player in my league are all non Japanese.
The best player in Japan who is active is currently Thanh Tu

Hikaru Nakamura was born in Japan and is obviously a japanese by ethnicity.
And frankly, if chess is just not popular in Japan - their loss.

Japan has no Chess GM. Why? I guess Japanese prefer Go and Shogi.
And the top name on the list is of Vietnamese origin.
https://en.m.wikipedia.org/wiki/Tr%E1%BA%A7n_Thanh_T%C3%BA
First of all there have to be Japanese GMs. They're too smart not to have any. Second of all Shogi is probably more prestigious than chess in Japan.
The Japanese can do anything a gaijin can do. They even invented a special alphabet to study foreign ideas.