The number of company bankruptcies in Japan increased by 35 percent in 2023 compared to the previous year due to rising prices and labor costs, a local credit research company has reported.
According to a survey conducted by Tokyo Shoko Research Ltd., the number of bankrupt companies in Japan with debts exceeding 10 million yen (about 68,189 U.S. dollars) reached 8,690 in 2023. The total debt of bankrupt companies exceeded 24.026 trillion yen.
Small and medium-sized enterprises with fewer employees constitute the majority of bankruptcies, according to the report, noting that the number of companies with debts below 100 million yen accounted for 74.7 percent of the total number of bankruptcies.
Companies with debts exceeding 1 billion yen increased by 24 percent compared to the previous year, totaling 211 companies. Additionally, two companies had debts exceeding 100 billion yen.
Analysts suggested that various factors contribute to the significant increase in bankruptcies. Many small and medium-sized enterprises, previously relying on interest-free and unsecured loans provided by the government during the COVID-19 pandemic, are now facing new challenges such as increased upstream costs, soaring labor costs, and a shortage of manpower, leading to operational difficulties and a breakdown in fund circulation.
The report suggested that the number of businesses facing difficulties in fund circulation is expected to continue to rise as after April of this year, the peak repayment period for preferential loans provided by the Japanese government to small and medium-sized enterprises during the pandemic is approaching.
It is also projected that the number of corporate bankruptcies in 2024 may exceed ten thousand. (1 U.S. dollar equals 146.69 Japanese yen)