Japan Press Weekly

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2016 January 6 - 12 [ECONOMY]

Weakened domestic demand causes drop in number of SMEs

A report the Cabinet Office released late last year shows that the number of small- and midsized enterprises in Japan decreased by about 30% from 5.26 million in 1981 to 3.85 million in 2012.

In particular, the decline in the number of retailors was dramatic. It was halved to 690,000 from 1.53 million during the same period of time, apparently due to a drop in consumer spending and an upsurge in the opening of large-scale retail shops.

The government report also admits that the weak domestic demand following the collapse of the bubble economy may have contributed to the 30% drop in the number of SMEs given the fact that most SMEs do their businesses in Japan and thus are vulnerable to swings in the domestic economy.

However, SMEs still make up 90% of companies in Japan and employ 70% of the total Japanese workforce. Therefore, it is essential for the central government to implement an economic policy centering on support for SMEs in order to improve the domestic economy as a whole.