Japanese Company Bankruptcies Surpass 10,000 for First Time in 11 Years... Worsening Management Difficulties for SMEs

Over 10,000 Companies Go Bankrupt...
75.8% Have Fewer Than Five Employees
Weak Yen and Labor Shortages Cited as Main Causes for Small Business Failures

The number of corporate bankruptcies in Japan exceeded 10,000 in 2024, marking the highest level in 11 years.

A bird's-eye view of high-rise buildings and a dense cityscape seen from an observation deck in Tokyo. Photo by AP Yonhap News

On the 14th, Kyodo News and Nihon Keizai Shimbun (Nikkei) reported this, citing data from Tokyo Shoko Research, a corporate credit investigation firm.

According to Tokyo Shoko Research, the number of bankruptcies with debts exceeding 10 million yen in 2024 reached 14,000, a 15.1% increase from 8,690 cases the previous year. This is the first time since 2013 (10,855 cases), when the effects of the Great East Japan Earthquake were still felt, that annual bankruptcies have surpassed 10,000.

The main causes of the increase in bankruptcies were identified as rising costs due to the weak yen and severe labor shortages. Small and micro enterprises were found to be more vulnerable to this worsening business environment.

Nikkei reported, "Most bankruptcies occurred among small and micro enterprises, with companies having fewer than five employees accounting for 7,582 cases, or 75.8% of the total."

By industry, the food service sector was notably impacted. According to Kyodo News, bankruptcies in the food service industry exceeded 3,000 for the first time since 1990. This is analyzed as a result of a combination of changed consumer patterns after COVID-19 and rising labor costs.

Tokyo Shoko Research expects the trend of rising interest rates to continue in 2025, forecasting that the business environment for companies is likely to deteriorate further.

Additionally, factors such as the end of COVID-19-related financial support, lack of technological capabilities, and delays in talent development are predicted to increase the risk of bankruptcy for companies struggling to pursue independent business operations.