Korean media: "Unable to find successors," Japan faces a wave of business closures!
On January 23, the Korean media "Nikkei" published an article stating that Japan entered an aging society ten years earlier than South Korea and has already experienced a wave of closures of small and medium-sized enterprises. Due to elderly managers being unable to find successors, a large number of companies eventually had to close down, leading to a sharp increase in the number of profitable companies that closed down.
According to the Tokyo Shoko Research Company, 16,110 Japanese small and medium-sized enterprises closed down each year in 2000, and 21,122 in 2007, an increase of 31% over seven years. In 2007, the proportion of people aged 65 and over in Japan first exceeded 21% of the total population, marking Japan's first entry into a super-aging society. In 2016, the number of companies that closed or went out of business reached 29,583, close to 30,000 per year. The proportion of profitable companies that closed down exceeded 60%.
According to data from the World Bank, manufacturing accounted for 22% of Japan's GDP in 2022, making it one of the countries with the highest share of manufacturing. Although lower than China (27.5%) and South Korea (25.5%), it is higher than Germany (18.90%) and the United States (10.7%). People were highly concerned that as Japan's manufacturing sector weakened, its economic growth momentum might slow down.
To prevent the chain reaction of small and medium-sized enterprise closures, Japan began actively encouraging mergers and acquisitions around 2008 and enacted laws such as the "Act on Promotion of Business Succession." Starting in 2015, Japan issued enterprise succession guidelines based on mergers and acquisitions and reorganized the registration system for merger and acquisition brokers.
As the Japanese government helped some enterprises managed by elderly executives find new owners, the number of annual mergers and acquisitions gradually increased. In 2014, the number of private company mergers and acquisitions was only 260, and by 2023, it surged 18 times to 4,681. With the increasing activity of management takeovers, the average age of CEOs of small and medium-sized enterprises in Japan also slightly decreased. In 2015, the average age of CEOs was generally between 59 and 65, but by 2023, this number dropped to between 55 and 59, a decrease of 4 to 5 years. The closure rate of profitable enterprises also decreased by 11.6 percentage points, from 64% in 2016 to 52.4% in 2023.
Original: toutiao.com/article/1855067920024586/
Statement: This article represents the views of the author alone.