HIMEJI, JAPAN – JULY 21: A Japanese national flag is seen near Himeji Castle on an extremely hot day on July 21, 2026 in Himeji, Japan. Temperatures have reached dangerous levels across Japan and 40 degrees Celsius was reported today for the first time this year. The Japan Meteorological Agency has issued heatstroke warnings for 41 prefectures. (Photo by Buddhika Weerasinghe/Getty Images)
Buddhika Weerasinghe | Getty Images News | Getty Images
Founded in 1858, Japanese sesame oil maker Kadoya Sesame Mills has seen the country transform over generations – surviving world wars and Japan’s housing bubble.
Now, more than two decades after listing on the Jasdaq Stock Exchange in 2004, Kadoya is set to go private through a takeover bid backed by Japanese private equity firm Integral. The move comes as the company faces rising raw material costs and increased geopolitical risks.
Long-established Japanese companies are being tested by factors ranging from a shrinking domestic market and labor shortages to succession challenges, experts told CNBC. 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 the Teikoku database.
Century-old Japanese companies have achieved lasting prosperity thanks to a long-term outlook fostered by family ownership, strong roots in local communities and a business approach that stays within their means, said Shigeto Nagai, head of Japan economics at Oxford Economics.
Their long history and years of capital accumulation have also earned them healthy balance sheets and stable profit margins.
“However, they are increasingly concerned that they cannot foresee a future of high and sustainable profits in the long term and fear that they will gradually slide into decline,” Nagai said.
Rising costs, falling market
Rising costs and labor shortages have become major challenges for Japanese companies in the post-pandemic business environment, said Harumi Taguchi, senior economist at S&P Global Market Intelligence.
“Although inflation has made it easier for companies to pass on their costs than during the deflationary period, many still fail to fully reflect increased expenses in sales prices,” Taguchi pointed out.
Higher costs are particularly difficult to absorb for smaller Japanese companies focused on the domestic market, given their weaker sales bases, she said. Pricing power is therefore a key factor in determining which companies can adapt.
Bankruptcies linked to rising prices jumped 23.8% to 556 in the first half of 2026, while bankruptcies linked to a labor shortage climbed 12.4% to 227, according to Teikoku Databank.
Sube Shoten, a tofu maker founded in 1877 during Japan’s Meiji era, reportedly ceased operations in May and began preparing to file for bankruptcy as low profit margins and a recent rise in raw material costs have dimmed its business prospects.
Another major challenge is intensifying domestic competition and labor shortages as the birth rate declines and the population ages, Nagai said.
Expanding overseas poses another challenge as the domestic market, historically a stable source of revenue, continues to contract. But there is no one-size-fits-all solution, Nagai added.
Inheritance and property
Succession is another growing challenge. Bankruptcies linked to the lack of successors increased by 16.9% to 312 year-on-year in the first half of 2026, according to Teikoku Databank.
A weaker yen, corporate governance reforms, activist pressure and succession challenges among founder-owned companies are pushing owners and boards to reevaluate their options, alongside broader pressures including inflation, tariffs, labor costs and interest rates, said Paul Aversano, managing director and global practice head of Alvarez & Marsal’s Global Transactions Advisory Group.
“It’s this combination, rather than any single issue, that shapes decisions,” he said.
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