Japanese media: Survey shows that the number of corporate bankruptcies in Japan hit a record high in July
2024-08-13
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[Global Times Special Correspondent Yan Yan Global Times Reporter Ni Hao] As the Japanese stock market is rising in 2024, the number of bankruptcies is also growing rapidly. Not long ago, Japan just broke the news that 74 "century-old brands" went bankrupt in the first half of the year. Another latest survey on the 8th showed that the number of bankruptcies of Japanese companies hit a new high in July.
According to a report by Kyodo News on the 9th, Tokyo Shoko Research released a survey on the 8th showing that the number of bankruptcies of Japanese companies (debts of more than 10 million yen, or about 490,000 yuan) in July was 953, up 25.7% from the same period last year, and a year-on-year increase for 28 consecutive months. This is the first time in nearly 11 years that the number of bankruptcies in July has exceeded 900.
In terms of industry, the service industry had the largest number of bankruptcies, at 240, followed by the construction industry at 191 and the retail industry at 182. In terms of the size of bankrupt companies, small and medium-sized enterprises accounted for the majority, with more than 90% of bankrupt companies having fewer than 10 employees.
The number of bankruptcies due to rising prices increased to 69, with the largest number in the transportation and manufacturing industries. The depreciation of the yen has increased the prices of fuel and raw materials that rely on imports, which has squeezed corporate profits. Although the yen is currently appreciating, it will take time to achieve the effect of suppressing the prices of imported products, and the severe situation may continue.
Bankruptcies due to labor shortages caused by rising labor costs increased by 78% to 32 cases, exceeding the same month last year for five consecutive months. It is reported that due to the previous high prices caused by the depreciation of the yen and the rise in raw material prices, small companies that were unable to increase employee wages due to weak price pass-through were gradually eliminated.
According to a survey conducted by Seongnam Shinkin Bank on about 700 customers, only 27% of companies said they would increase wages by 2025. As for the reason for not raising wages, 52% of companies said they did not have the funds to increase wages.
Rising prices and a shortage of staff have already hit small businesses. In addition, the interest-free, unsecured preferential loans provided by the Japanese government to companies during the epidemic are about to expire. The central bank's decision to further raise interest rates in July has made things even worse for small businesses. "For companies with excessive debt, interest rate hikes will drag down their profits," the Commerce and Industry Survey said: "Rising interest rates will lower the profits of many companies, and the number of bankruptcies is expected to continue to increase after the fall."
According to the report, the cumulative number of bankruptcies in the first seven months of 2024 reached 5,807, 23.4% higher than the same period last year. The operating environment for small and medium-sized enterprises may become more severe in the future, and the number of corporate bankruptcies in 2024 is expected to reach about 10,500.
Zhou Yongsheng, a professor at the Institute of International Relations of China Foreign Affairs University, told the Global Times that although the Japanese stock market continued to rise in the first half of the year, funds in the capital market did not flow into these unlisted small companies. However, Zhou Yongsheng said that although the bankruptcy of small companies is not uncommon in Japan, the record high number still shows that there are areas in the Japanese economy that need attention at the micro level. "This time, Japan's unexpected interest rate hike on July 31 was an important reason to stop the depreciation trend of the yen and curb the price increase caused by imported inflation, so as to reduce the pressure on corporate operations."
(Source: Global Times)
