Corporate bankruptcies in Japan up, down in 2006

January 19, 2007
By Ken Worsley

Earlier today, Tokyo Shoko Research released their report on corporate bankrupcies in Japan.� As tends to be the case, there was good news and bad news. The good news first:

In December 2006, the number of corporate bankruptcies in Japan declined by 3.5%. Tokyo Shoko’s reoprt put it this way:

From now on, we believe corporate bankruptcies will be an issue for small companies in rural areas that rely on domestic demand.

As they have been all allong. It seems the point they’re trying to get at is that the larger corporations are past the difficult, painful stages of restructuring and have or about to reach the end of the tunnel. And, business� fundamentals� are on� firmer ground. Only time can tell…

The bad news: For 2006 overall, the number of corporate bankruptcies rose by 1.9%, showing a rise for the first time in five years. It bears mentioning that 61.9% of the companies that failed had fewer than five employees.

Tokyo Shoko also said that it does not believe that the rise in overall bankruptcies in 2006 can be attributed to companies overinvesting, as they did in the bubble years. That seems likely, since capital expenditure� has been� fueling this recovery so far, and has not yet showed strong signs of a slowdown, especially with Japan’s November new machinery orders being higher than expected.

Update: Reuters has an article out as well now: Japan corporate bankruptcies down 3.5 percent year to year

Filed Under Business, Economics