business

Nearly 36,000 Japanese firms shut down business due to COVID-19

23 Comments

Nearly 36,000 Japanese companies have chosen to discontinue their business so far this year, mainly due to the hit from the coronavirus crisis and up sharply from a year ago in a sign of the pain the pandemic is inflicting on the fragile economy.

The total number of companies closing businesses, without going through bankruptcy procedures, may top 53,000 by year-end. That would be the most since relevant data became available in 2000, Tokyo Shoko Research said on Wednesday.

"With the pandemic expected to be prolonged, an increase in companies that discontinue business is unavoidable," the think tank said in a report.

The number of companies that discontinued business stood at 35,816 from January through August, up 23.9% from the same period of the previous year, according to the report. That would make up roughly 1% of the 3.58 million firms in Japan.

Of the total, 31% were service-sector firms, followed by construction firms at 18% and retailers at 13%, the report said.

The government and the central bank have deployed various measures since March to ease corporate funding strains, which have helped keep bankruptcy numbers largely unchanged from the previous year's levels, the report showed.

But some companies are struggling to stay alive not because of a cash crunch but diminishing prospects of a pick-up in demand, it said.

Japan suffered its biggest economic slump on record in the second quarter as COVID-19 hit demand. Analysts expect growth to rebound only modestly in the current quarter as the pandemic keeps households and companies from boosting spending.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

23 Comments
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Sounds about right...not the ridiculously low fake 500 that government says went out because of corona.

5 ( +8 / -3 )

The continued destruction of the economy and of small business around the world.

By the pandemic? No! By the people who are handling the situation. Handling our lives. And if you criticize, they’ll say you’re only interested in money - as if you were sitting around counting banknotes - and not about people’s families and livelihoods being destroyed.

7 ( +11 / -4 )

Suga print the money as usual!. people are hungry and useless public servants are increasing the debts!

0 ( +5 / -5 )

This is the same like I said already in another article here:

This happened because of the great Ultraparanoia, according the Corona Virus, heated up every day by fear mongering people and the media.

Many people will loose jobs, existence and will struggle a lot to put food on the table as long as this Ultraparanoia crazy Corona fear will go on.

3 ( +9 / -6 )

36,000 firms...

I can’t imagine the number of employees who’s lost their job from 36,000 firms.

Sad.

14 ( +14 / -0 )

When you consider the relatively miniscule number of fatalities due to covid19 in comparison to the massive economic destruction resulting from the blatant over-reaction to try to "contain" the virus, it's utter insanity. I suppose there may have been more deaths by suicide because of the situation than by the actual illness itself. Ridiculous.

11 ( +13 / -2 )

The number of companies that discontinued business stood at 35,816 from January through August, up 23.9% from the same period of the previous year, according to the report.

That means that roughly 28,907 businesses did close in the same time frame last year and the number went up by about 6,909. Kind of shocking to read that kind of sensationalism from an article by Reuters. Even if most have named COVID-19 as the reason, I doubt that it was really the reason for every closure when almost 29,000 closed down last year when there was no virus around. That does not mean that the virus did not have a great impact, but to me it is kind of dishonest to attribute it all to the virus. We have no idea to what extent other factors like the tax increase affected those businesses either.

Like SPRING said, it's always (ok there are exeptions) a sad thing when a business has to close down though since people will lose their job. I hope those people will soon find a new one.

-1 ( +3 / -4 )

COVID was certainly the reason. A large number of Japanese firms were barely treading water before COVID, and Japan was already in recession before the pandemic thanks to the consumption tax increase.

Many businesses had been hanging on by a thread hoping for a change in fortunes brought along by an Olympic boom. There was no boom, and even if the games go ahead as planned next summer, there will be only a fraction of the original attendance.

The construction boom Tokyo has been enjoying is certainly over. Small construction projects which were mainly space for small businesses around the city have been stopped. Places which had been cleared for the construction of these businesses are now being turned into parking lots, or have had their project signs replaced with “land for sale” signs.

Japan and the Japanese had been betting heavily on increased tourism brought about by the Olympics, and instead of an increase, tourism has stopped. Hostels around Tokyo are boarded up, the new hotels are largely vacant.

6 ( +7 / -1 )

Planned destruction of the global trading and financial system is going full steam ahead. No way the almost miniscule death rate justifies this amount of socio-economic damage caused. Shadowy agenda being implemented before our eyes.

1 ( +3 / -2 )

Despite this figure and further negative outlook, I try to look in a bright side, regard the crisis as a wind of opportunity. A large majority of Japanese firms are very small, and they are unproductive or under-productive (some are only surviving as rent-seekers or under state-run support programmes). They may be encouraged to merge or realign.

My concern is that closed firms and sacked personnel with good potentials could be "sold cheap" to foreign rivals.

-4 ( +0 / -4 )

Many of these will be the SME (Small and Medium Sized Enterprises), which can be sole owners or employ from 5-10 people up to a few hundred people, depending where you get your definition. Typical cash reserves might be 2-3 months only, enough to pay overheads and staff, and barely anything for the owners. A number will be highly specialist companies with skilled staff, but with few job opportunities, they'll just wind up.

The knock-on effect is then on to the families of these staff, unable to pay mortgages, rents, schooling, local shops and restaurants, etc.. Sad times indeed.

3 ( +3 / -0 )

The poster Confusius is correct to point out that what matters is the excess number compared to a typical year, not the total number of firms. The headline is incorrect.

1 ( +1 / -0 )

It's all so sad

2 ( +2 / -0 )

My two, make 32002.

2 ( +3 / -1 )

@Goodluck , Good luck!

The support given to very small companies (1/2) employees has been helpful in many cases. Likewise large companies have benefited from government support.

Its the small and medium sized companies who have not received sufficient support.

-1 ( +0 / -1 )

Many businesses had been hanging on by a thread hoping for a change in fortunes brought along by an Olympic boom. There was no boom, and even if the games go ahead as planned next summer, there will be only a fraction of the original attendance.

This is why you don't hold everything in one basket. NOr Hoping everything going well over one event.

0 ( +1 / -1 )

Yup, we know of two companies in our building that have ceased trading due to the virus.

1 ( +1 / -0 )

With a rapidly aging population, how many were businesses run by elderly owners who were likely to have closed them within the next few years anyway?

1 ( +2 / -1 )

The postponing of the Olympics (because of the virus) has contributed greatly to this number. Many new businesses were created for the Olympics and are now in bankruptcy. I know of a guy who borrowed nearly a million bucks (que-sen-maan yen) to set up a limousine mini-bus service. He has had to declare bankruptcy coz he can’t keep up the repayments with no business. Let’s hope the government of this so-called ‘rich country’ steps up to the plate and helps these people out.

-1 ( +1 / -2 )

its funny because the Japanese government were actually on the reasonable side when it came to the response to the virus(aside from those masks)

i think the Australian, british, french, and all those governments who increased the hysteria and implemented ridiculous measures in their own countries ( which made others follow suit) should pay for all this.

0 ( +1 / -1 )

this is a rare instance where I think there should be some intervention when it comes to helping businesses survive. it wasn't there competency or lack of natural demand that caused all this damage. it was the irrational response to a common cold that itself caused an unnatural lack of demand. poor companies who don't have the reserves to ride this out should be compensated by anyone contributing to this hysteria. ofcourse big media outlets who benefited from all this at the expense of poor business owners should be paying for it. companies like cnn have the reserves to ride this thing out.

the rich do really get richer eh.

0 ( +1 / -1 )

This is why you don't hold everything in one basket. NOr Hoping everything going well over one even

you can't always have this mindset or nothing would get done. no innovation or no entrepreneurship. being overly risk averse is just as bad as being reckless.

0 ( +0 / -0 )

“this is a rare instance where I think there should be some intervention when it comes to helping businesses survive. it wasn't there competency or lack of natural demand that caused all this damage. it was the irrational response to a common cold that itself caused an unnatural lack of demand. “

Not quite a common cold, but not that dangerous either. Otherwise agreed

-1 ( +0 / -1 )

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