Centuries-old Japanese businesses closing at record rate amid cost and succession crises

Historic Japanese companies are closing or selling at a record pace as rising costs, labor shortages, and succession gaps overwhelm traditional business models. According to Teikoku Databank, bankruptcies among firms with over a century of history reached 112 in the first eight months of 2026.

Kadoya Sesame Mills, a maker founded in 1858, recently announced plans to go private through a tender offer backed by private equity firm Integral. The company, which listed on the Jasdaq Securities Exchange in 2004, cited rising raw-material costs and geopolitical uncertainty as primary drivers behind the shift.

Inflation has given businesses more room to raise prices than during the long deflationary period, yet many still cannot fully pass higher expenses to customers. Smaller, domestically focused companies struggle the most to absorb these increases due to weaker sales bases. Pricing power now separates the adaptable from the vulnerable.

Bankruptcies tied to higher prices jumped 23.8% to 556 in the first half of 2026, while closures linked to labor shortages climbed 12.4% to 227. An aging population and falling birth rates have tightened the workforce further, making it harder for legacy firms to maintain operations. Sube Shoten, a tofu producer founded in 1877, halted operations in May and prepared to file for bankruptcy after profit margins collapsed under raw material costs.

Succession gaps are accelerating the trend. Bankruptcies caused by a lack of heirs rose 16.9% to 312 in the first half of 2026 compared to the previous year. A weaker yen, corporate governance reforms, and activist investor pressure are also forcing owners to rethink traditional family-run structures.

"However, they are increasingly concerned that they cannot foresee a future of sustained high profits over the long term and fear they will gradually fall into decline," said Shigeto Nagai of Oxford Economics.

Companies are exploring overseas expansion to offset a shrinking domestic market, though no single strategy fits every situation. Broader pressures including tariffs, interest rates, and labor costs are compounding the strain on balance sheets that once seemed bulletproof.

"It is that combination, rather than any single issue, that is shaping decisions," noted Paul Aversano of Alvarez & Marsal's Global Transaction Advisory Group. Legacy firms that adapt their financial and ownership models will likely survive, while those tied to outdated structures face an uncertain future.