Japan Bankruptcies: Updated April 14, 2025.

Japan bankruptcies in FY 2024 top 10,000, highest in 11 yrs

Article source: https://mainichi.jp/english/articles/20250408/p2g/00m/0na/034000c

Ideas:

Its unfortunate that any business has to go bankrupt, but that is part of the market economy in there some that do really well and some that don't do so good.

Besides a lack of sales or a lack of profit there are other reasons that companies go bankrupt such as labor shortages, not able to find the workers a company needs and the price prices of raw materials which many small companies have very thin profits margins to work with.

In Japan the labor shortage is especially difficult to overcome and now workers have many choices to choose from and if a company can't pay what the wages workers need or want they can't get the workers they need. 

It might be even more of a challenge in the rural areas of Japan and or in the areas that there is not a metro area for young workers to go to.

It very possible the number of bankruptcies in Japan of small companies might be a good indicator that the Japanese economy is not trending in the right direction. But at the same time, many times, bankruptcies are a sign of a market adjustment meaning there might have been too many companies of some sectors and the market is just adjusting to make sure supply and demand are in some kind of equilibrium.

Unfortunately market adjustments affect real people and companies are made of up real people with families and 10,144 bankruptcies is way too many and those 10,144 now will probably not participate in the Japanese economy, and it should be remembered no company is an island as every company is involved in some kind of supply chain or some kind of connection to other companies that might be affected too.

While the special tax deferral measure were good and very needed, maybe there should have been a measure that allow these small companies to continue on with some kind of other government assistance.

Small companies make up the bulk of any economy and not just Japan's economy,  with 89.4 percent of the total companies going bankrupt, what kind of message does that say to entrepreneurs in Japan who want to start a business. What does that say about their chances of survival and the Japanese government, if they haven't already, should do all they can to help and support small businesses with less than 10 employees.

It might be a guess gut of the 3,398 companies in the service sector that went bankrupt, many of them might have been mom and pop retail stores, which have very thin profits margins and the economy being the way it is maybe they couldn't afford to buy new products and or the demand for their products just wasn't there.

There is always the idea that maybe they couldn't increase wages to keep their employees or higher new employees, as again, as there is a labor shortage, workers have a choice and can easily change jobs or find new jobs.

And with the construction sector there is the possibility that young people in Japan don't want to work in the construction industry as they prefer, if qualified prefer to find jobs with large Japanese companies.

And of course because of the increase in raw materials, some construction companies might not have been able to buy the materials they need as maybe their profit margins are just too thin.

In an economy there are always going to be sectors that do better than other sectors and maybe on this occasion the logistics is doing much better than other sectors. as maybe they are able to find the workers they need and have the profit margins needed to even increase their wage to attract new talent.

But even at 424 cases there could be many reasons a company might go bankrupt such as low demand for their services, less than good skills doing business and there is is always the idea of the market adjusting the supply of logistics firms in the market.

Have a nice day!