Albion Monitor /News

Japan Suicides, Bankrupcies as Asia Economy Crisis Spreads

by Suvendrini Kakuchi

(IPS) TOKYO -- They could not pay the salaries of their nine employees. So the middle-aged couple who owned a picture and photo frame shop in Tokyo decided the only noble thing left to do was to kill themselves.

A few days earlier, three men who each headed a small company producing auto parts apparently fulfilled a suicide pact by hanging themselves.

Close friends since their school days, the three had just had their loan requests turned down by banks, and were facing debts worth as much as 3.7 billion yen ($29 million U.S.).

"With the weak economy, we need loans from the banks to survive, but the biggest problem is they are saying no"
All has not been well in the world's second richest economy in the past few years, but the situation seems to be getting much worse.

And with more bankruptcies seen in the coming months, sociologists fear a steep rise in suicides in Japan, especially among those who own or run small or medium-sized companies. Available statistics show that a total of 24,104 Japanese killed themselves in 1996.

To the Japanese, suicide is a way of expressing remorse or shame. Saving face is so important to them that public apology is second nature especially among public officials who are found to have committed grave offenses.

Japan's small and medium-sized firms, many of which are family-owned, make up almost 90 percent of the country's corporate world. Considered the backbone of the Japanese economy, they supply large corporations with inexpensive parts or machinery.

But the recession has decreased demand while cheaper supplies from neighboring countries have increased in volume. As a result, many of the small and medium-sized firms have had a drastic reduction in the number of contracts, pushing them on the brink of bankruptcy.

The couple who owned the photo shop, for example, had invested in expensive framing work during the so-called 'bubble economy' years of the 1980s. But the lack of orders in the last few years had made it difficult for them to pay back incurred debts.

According to the Teikoko Data Bank, companies that filed for bankruptcy in January alone reached 1,502, a 24.8 percent rise from the year-ago figure.

Kiyostunaga Shitara, who is in charge of a union of middle managers, says the banks are largely to blame for the situation because they were very keen to lend during the boom years, especially if the company offered land as collateral. Today, though, most banks are scrambling to limit their bad loan exposure, which is estimated to run into trillions of yen.

"The bubble was created by them," says Shitara. "Now that it has burst and resulted in a dip in land prices and loss in the stock market, there are problems."

An auto parts trade union official also complains: "With the weak economy, we need loans from the banks to survive, but the biggest problem is they are saying no. Most of the auto parts businesses are now facing a situation where they will have to just give up."

Despite his frugal ways, Maeda says he now has to deal with a 30 percent reduction in his annual income
The government, for its part, is looking at a two-pronged approach to jumpstart the economy by way of tax reductions to drive up market demand, as well as public funds to bail out banks.

But the plan has failed to reassure most of Japan's struggling companies, some of which have noted that the situation calls for more urgent action.

One company owner says he is watching the rising volume of cheaper imports from China and the rest of Asia with quiet resignation. Still, he says bravely: "We are ready to take the worst."

Fish storeowner Nobuyuki Maeda, meanwhile, says the news about the deaths of the three auto parts executives sent shivers down his spine because "I could have been one of them."

He recalls that during the mid-80s, the bubble economy had boosted his daily earnings at such a heady pace that he was tempted to move his small shop into one of the glitzy shopping complexes being built nearby.

"My fellow businessmen encouraged me to expand as they were doing," says Maeda, whose shop is located in Meguro, an upper-class residential area in Tokyo. "If I had done so, I would have had a huge debt now with no hopes of repaying it."

Yet despite his pragmatism and frugal ways, Maeda says he now has to deal with a 30 percent reduction in his annual income. Customers, including some of the bigger supermarkets, are tightening their purse strings.

Maeda and his wife -- his only helper in the shop -- are working double time to keep the business afloat.

Nobuyuki, 53, wakes up at five every morning to make a better bargain at the wholesale market and gets home only after nine every night. The only reason his wife leaves the shop two hours before he does is to prepare dinner. But Nobuyuki remains worried about the future.

"I can make ends meet and pay back what I owe," he says. "But what if I fall sick tomorrow?"

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Albion Monitor March 16, 1998 (

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