Corporate bankruptcies surge in Japan in 2023, exceeding 8,000

The key findings from the research reveal that business failures with debts of at least 10 million yen rose sharply, experiencing a 35.2% increase from the previous year, totalling 8,690 cases. This marks the second consecutive yearly rise, signalling economic stress among Japanese corporations.

The number of corporate bankruptcies in Japan witnessed a significant surge in 2023, surpassing 8,000 for the first time in four years. This data, reported by Tokyo Shoko Research, a prominent credit research agency, indicates a challenging landscape for businesses in the country.

The key findings from the research reveal that business failures with debts of at least 10 million yen rose sharply, experiencing a 35.2% increase from the previous year, totalling 8,690 cases. This marks the second consecutive yearly rise, signalling economic stress among Japanese corporations.

Several factors contributed to this notable increase in corporate bankruptcies. The rise in the prices of materials, coupled with wage increases, has reportedly impacted corporate earnings. The construction industry faced particular challenges, with workforce shortages leading to increased labour costs. Additionally, spikes in the prices of raw materials and energy added to the financial strain. Some companies were further burdened by the repayment of loans provided under the government’s pandemic-relief program.

The survey conducted by Tokyo Shoko Research covered 10 industries, and all of them witnessed a surge in bankruptcies. The service sector led with 2,940 cases, marking a substantial 41.7% increase. The construction industry followed closely with 1,693 cases, reflecting a significant rise of 41.8%.

The total liabilities left by bankrupt companies increased by 3.1%, reaching 2.4 trillion yen. Notably, Panasonic Liquid Crystal Display Co, which applied for liquidation in September 2023, held the highest debts among the companies, totalling 583.6 billion yen.

The surge in corporate bankruptcies poses challenges to the Japanese economy and raises concerns about the financial stability of businesses across various sectors. It underscores the complex interplay of factors such as material costs, labour shortages, and the aftermath of government relief programs on corporate financial health.

As Japan navigates these economic challenges, stakeholders and policymakers will closely monitor the trends in corporate performance and work towards creating a supportive environment for businesses to weather these financial difficulties.