Japan likes catchy phrases especially onomatopoeic ones. Did you know that onomatopoeia itself is in katana? (オノマトペ); I think the rising popularity of manga and anime may be to blame.
ゾンビ企業 (Zonbi kigiyou, Zombie businesses) has appeared in many headlines recently. It has a ring to it.
In 2023 bankruptcies amongst small and medium sized businesses rose to pre Covid levels. Pundits are predicting further rises as zero zero loans (another onomatopoeic phrase!) dished out in the Covid era are rolled back. The (very modest) recent rise in Japan’s central bank interest rates may precipitate further increases.
According to Bloomberg about 1 in 6 Japanese companies are zombies.
Japan is not alone in having zombie businesses. According to America’s Federal Reserve, about 10% of its corporate stock are zombies.
Zombies aren’t just small companies. Look at WeWork, look at Chinese property developers…An interesting blog post from the UK pointed out there are different types of Zombies…the debt zombie, the arrested development zombie and the cash injection zombie.
According to the Teikoku databank, a credit ratings agency, retail businesses account for 28% of zombies in Japan, followed by transport companies. Most have 5 or fewer employees.
Actually many Zombie companies are private or family owned, and may not be showing too much profit, if any, for tax reasons. There may also be altruistic reasons to keep the company afloat.
A friend’s family own a distillery in Kyoto. Her father is ageing. It’s wholly private, and family owned, it’s never been hugely profitable. But none the less, it’s been in business for a couple of hundred years. It makes enough profit to pay the family enough. It would probably be classed as one of these zombie companies. It employs several workers and sales people. It’s never going to expand dramatically. In a country where the population is actually declining, that’s considered perfectly respectable
Commentator in the Financial Times, 2023 (edited for brevity)
From what I’ve read opinion in Japan on zombie companies is not that positive. Many believe Zombie companies hoard precious labour resources, especially cheap unskilled workers. Others believe that because Zombies survive through aggressive pricing, they devalue everyone.
The spectre of zombie companies is a percipient wake up call.
Many of our projects involve finding and facilitating cross border introductions and deals. Recently a potential partner in Australia was very enthusiastic about meeting our client, actually too enthusiastic which raised question marks.
A few weeks later I read the company had called in the receivers.
Maybe we just avoided encountering a Zombie…