The number of bankruptcies of Japanese companies has increased sharply!

Recently, a survey data released by Tokyo Shoko Research, a Japanese private enterprise credit survey agency, showed that in the first 11 months of 2024, a total of 9,164 Japanese companies went bankrupt. It is expected that the number of bankrupt companies in Japan will exceed 10,000 in 2024, setting a new high in 11 years. Earlier, another survey data released by Imperial Database, another large private survey agency in Japan, also showed that the cumulative number of corporate bankruptcies in Japan from January to November 2024 was 9,053. Although the December data has not yet been counted, the number of Japanese corporate bankruptcies throughout the year has risen to a high point since 2015.

In this regard, Tokyo Shoko Research analyzed that with the depreciation of the yen and the rise in raw material prices, corporate profits have been further squeezed. In addition, due to rising labor costs and staff shortages, the number of bankruptcies of Japanese companies has also increased significantly, especially in industries with the most serious labor shortages such as catering and tourism. The report of Imperial Database Company of Japan also listed rising costs as the main reason for the bankruptcy of Japanese companies. Among them, the construction industry, manufacturing industry, retail industry and catering service industry are the industries with the largest number of cost-driven bankruptcies. At the same time, many Japanese companies are also facing a shortage of staff.

Looking ahead, the Tokyo Chamber of Commerce and Industry reported that as the Bank of Japan may further raise interest rates, the number of bankruptcies of Japanese companies is expected to rise, especially in some industries with fierce global competition, such as transportation, artificial intelligence and software. Another rate hike by the Bank of Japan will increase the financing and debt repayment costs of Japanese companies, especially those whose operating profits are not enough to repay debt interest, and their burden will be further increased. In February 2024, the Bank of Japan announced the end of its negative interest rate policy, and then at the monetary policy meeting in July, the Bank of Japan raised the policy rate to 0.25%. At present, analysts including UBS Group and Nomura Securities still expect the Bank of Japan to raise interest rates twice in 2025.