Himeji, Japan – July 21: The Japanese flag is seen near Himeji Castle on a very hot day on July 21, 2026 in Himeji, Japan. Temperatures across Japan have reached dangerous levels, with today reaching 40 degrees Celsius for the first time this year. The Japan Meteorological Agency has issued a heatstroke warning for 41 prefectures. (Photo credit: Buddhika Weerasinghe/Getty Images)
Budhika Weerasinghe | Getty Images News | Getty Images
Kadoya Sesame Factory, a Japanese sesame oil manufacturer founded in 1858, has survived world wars and Japan’s wealth bubble, and has seen the country change over generations.
More than 20 years after listing on the JASDAQ stock exchange in 2004, Kadoya will be taken private through a tender offer backed by Japanese private equity firm Integral. The move comes as the company weathers rising raw material costs and heightened geopolitical risks.
Experts told CNBC that Japan’s long-established companies are being tested by a variety of factors, from a shrinking domestic market to labor shortages to succession issues. Bankruptcies of Japanese companies with more than 100 years of history are occurring at a record pace, reaching 112 in the first eight months of 2026, according to Teikoku Databank.
Shigeto Nagai, Head of Japan Economics at Oxford Economics, said 100-year-old Japanese companies have achieved lasting prosperity through family ownership, strong roots in local communities, and a long-term perspective fostered by a within-your-earnest approach to doing business.
Due to our long history and capital accumulation over the years, we have also achieved a healthy balance sheet and stable profit margins.
“However, they cannot foresee a future in which they can maintain high profits over the long term, and there are growing concerns that they will gradually decline,” Nagai said.
Rising costs, shrinking market
Harumi Taguchi, chief economist at S&P Global Market Intelligence, said rising costs and labor shortages are major challenges for Japanese companies in the post-pandemic business environment.
Mr. Taguchi pointed out, “While inflation has made it easier for companies to pass on costs compared to the deflationary period, many companies are still unable to fully reflect increased expenses in their sales prices.”
He said it will be particularly difficult for small to medium-sized, domestically focused Japanese companies with weak sales bases to absorb the cost increases. Pricing power is therefore a key factor in determining which companies can adapt.
According to Teikoku Databank, bankruptcies related to high prices increased by 23.8% to 556 in the first half of 2026, while bankruptcies due to labor shortages increased by 12.4% to 227.
Sube Shoten, a tofu manufacturer founded in 1877 during the Meiji era, reportedly ceased operations in May and began preparations to file for bankruptcy due to low profit margins and recent spikes in raw material prices making business prospects uncertain.
Mr. Nagai said that another major issue is intensifying domestic competition and labor shortages due to Japan’s declining birthrate and aging population.
As the domestic market, which has historically been a stable source of income, continues to shrink, overseas expansion is also becoming an issue. However, Nagai added that there is no “one-size-fits-all” prescription.
inheritance and ownership
Recruiting successors is also becoming an increasingly important issue. According to Teikoku Databank, there were 312 bankruptcies related to a lack of successors in the first half of 2026, an increase of 16.9% from the same period last year.
Paul Aversano, managing director and global practice leader in Alvarez & Marsal’s Global Transactions Advisory Group, said the weaker yen, corporate governance reform, activist pressure and succession issues in founder-owned companies, along with broader pressures such as inflation, tariffs, labor costs and interest rates, are forcing owners and boards to reevaluate their options.
“It’s not a single issue that shapes decisions, but a combination of them,” he said.
