Japan’s top 10 industries for bankruptcies this year: a once-hot sector now faces the highest risk

(Tokyo, Dec 31) With elevated costs becoming the “new normal,” Japanese companies are facing a tougher, cash-flow-driven survival test—and attention is turning to which industries carry the highest bankruptcy risk over the next year. A recent analysis suggests the most vulnerable sector is not agriculture or construction, as many might assume, but a critical link in the electronics supply chain.

According to reports, Japanese credit-risk research firm Alarm Box assessed one-year bankruptcy risk among “high-alert” companies. In its top-10 ranking, “electronic parts, devices and electronic circuit manufacturing” came in first, with roughly one in 32 companies deemed at risk of failure. The key factors cited include a large number of firms still unable to turn around persistent losses, and visible capital erosion at some manufacturers—signs of a structurally weak balance sheet and long-term instability.

The report also notes that the earlier semiconductor shortage led to production disruptions and delivery delays, hurting revenue and contributing to bankruptcies. Companies heavily dependent on specific demand streams—such as automotive components or medical-device applications—are especially sensitive to swings in demand and supply constraints. When conditions shift, liquidity pressure can escalate quickly.

Construction-related sectors rank next
Second place went to general construction, with about one in 35 companies facing bankruptcy risk. Disputes over project scope or contract values often trigger credit concerns. Meanwhile, higher workloads can expand working-capital needs; combined with thin margins and rising material and labor costs, some contractors ultimately fail under funding strain.

Third was specialty/subcontracted construction, at around one in 38 companies. Many are downstream subcontractors—such as interior finishing or painting firms—often constrained by chronic working-capital shortages and deteriorating creditworthiness, with some already entering bankruptcy proceedings.

Fourth was agriculture, roughly one in 39 companies at risk, where both livestock and crop operations show cases of losses or liabilities exceeding assets. Rising costs for feed, logistics, and farm inputs are cited as major profit headwinds.

Fifth was pulp, paper and paper products manufacturing, also around one in 39 at risk. Digitalization has weakened demand, while higher pulp and fuel costs have squeezed profitability, leading to withdrawals and legal restructurings. Some carton and paper-bag makers were also reported to be in negative net-worth positions.

From sixth onward, the ranking includes accommodation, general merchandise wholesale, road freight transport, fisheries/aquaculture, and laundry/beauty/hairdressing/public bathhouse services—industries broadly characterized by high sensitivity to cost fluctuations.

Alarm Box concluded that in sectors such as manufacturing, construction, transport, agriculture and fisheries, differences in liquidity resilience during cost up-cycles translate directly into bankruptcy risk. When raw materials, fuel and labor remain expensive for an extended period, industries that pass costs on more slowly are more likely to see widening gaps—and increasing polarization—between stronger and weaker firms.

The study is based on data collected from Dec 1, 2024 to Nov 30, 2025, analyzing 14,143 companies and 255,755 information records related to bankruptcy causes or warning signs.