Japan’s small and micro-sized businesses are facing their toughest squeeze yet under the fiscal policies introduced by Prime Minister Sanae Takaichi. Recent data from Tokyo Shoko Research reveals that corporate bankruptcies surged to a 12-year high, raising fresh concerns about deeper structural challenges in the world’s third-largest economy.
Rising bankruptcies in numbers: Between April and September 2025, 5,172 firms with liabilities of at least 10 million yen ($64,305) filed for bankruptcy—a 1.51% increase from the same period last year. This marks the fourth consecutive year of rising failures, with small operators feeling the brunt of wage hikes and soaring operating costs.
Fragile foundations: Companies carrying liabilities below 100 million yen accounted for over 70% of all cases—their highest share in three decades. Labor shortages alone triggered a record 202 bankruptcies, as firms grapple with mounting labor costs, hiring challenges, and staff turnover.
Analysts warn that without targeted support measures—such as streamlined hiring incentives, flexible financing, and digital upskilling initiatives—Japan’s smallest firms may continue to falter. For entrepreneurs, tech innovators, and young professionals, the current climate underscores the urgency for adaptive strategies and resilience-building amid evolving economic headwinds.
Amid this shake-up, travelers and digital nomads also have a front-row seat. As some small firms pivot to remote-friendly business models or niche tourism services, Japan’s entrepreneurial spirit could spark fresh opportunities for those exploring the country in 2026.
As Japan navigates the “Takaichi-cost” fallout, the coming months will be critical. Will new policy tweaks and private-sector innovations deliver the relief small businesses need to survive—and even thrive—in 2026?
Reference(s):
'The Takaichi Fallout': Rising bankruptcies test Japan's economy
cgtn.com
