Business failures in Japan top 10,000 for second year amid rising costs

The number of corporate bankruptcies in Japan surpassed 10,000 for the second year in a row in 2025 as smaller businesses were hard hit by soaring labor costs and surging prices, Tokyo Shoko Research, a credit research firm, said Monday.

The survey showed that the number of business failures with liabilities of ¥10 million or more grew 2.9% from the previous year to 10,300 in 2025, rising for the fourth consecutive year.

Total liabilities left by failed companies dropped 32% to ¥1,592.3 billion. Bankruptcies with debts of less than ¥100 million accounted for 7,892 cases, or three quarters of the total.

By industry, services topped the list with 3,478 bankruptcies, up 4.4%, followed by construction, with 2,014 cases, up 4.6%.

The number of failures related to labor shortages, such as soaring labor costs, surged 35.9% to 397, the highest level since statistics began in 2013.

The number of bankruptcies linked to rising prices, or a company’s failure to pass on higher costs to clients, climbed 9.2% to 767.

Many smaller firms face financial difficulties as they are forced to raise wages to secure labor.

Companies that struggle with excessive debts face additional risks, including rising interest rates, U.S. tariffs and tensions between Japan and China, Tokyo Shoko Research said.