Japan Bankruptcies: Updated March 27, 2024.

 

Japan bankruptcies surge in 2023 amid labor shortage, inflation

Article Source:  https://mainichi.jp/english/articles/20240115/p2g/00m/0bu/029000c

Ideas:

Unfortunately, bankruptcies are a part of the business cycle and companies come and go depending on a number of variables, such as product demand, material costs wage increases and the overall condition of the economy.

The Japanese economy, lately, really hasn't been that good and the pandemic of course has made the situation worse and must have increased the chances of some bankruptcies.

For many years, if not decades, banks always came to the aid of ailing companies and bailed them out of negatives situations, but maybe those days are long time, as Japanese banks have become more western like and don't aid ailing companies as much anymore.

Because of labor shortages in some sectors, many companies maybe were forced to increase wages as a way to get the workers they needed, but they really couldn't afford the wage increases and their profit margins suffered as a result.

These days, maybe young people in Japan don't want to work in the construction sector, as maybe the work is seen as too hard.  

The same might be said of the service sector, especially at convenience stores, as many young Japanese don't want to work at conbinis or convenience stores as maybe the pay is not what they want.

And maybe the same can be said for other service type companies such as hotels, where maybe the staff has to work long hours and don't fit a young peoples life/work experience.

And then there is fast food restaurants such as Mos Burger or McDonalds in Japan, where there seems to be almost no young workers and mostly older workers or even elderly retiree type workers.

More companies will probably file for bankruptcy in the future as the Japanese economy goes through some more growing pains related to the fallout of the pandemic and the loss of demand, increases in costs and wages.

As companies continue to increase wages in April of 2024, it might cause more companies to become stressed if they can't pass-on their wage costs to the next in the supply chain, and even if they do, their profit margins might be compromised because of it.

And then there is the significant labor shortage in Japan, as companies will need to increase wages just to attract the talent they need to continue working, and then of course wages will go up and profit margins will be compromised even more.

Have a nice day and be safe!