HIMEJI, JAPAN – JULY 21: A Japanese national flag is seen near Himeji Castle during an extremely hot day on July 21, 2026 in Himeji, Japan. Temperatures have reached dangerous levels across Japan, with 40 degrees Celsius reported today for the first time this year. The Japan Meteorological Agency issued heatstroke warning alerts for 41 prefectures. (Photo by Buddhika Weerasinghe/Getty Images)Buddhika Weerasinghe | Getty Images News | Getty ImagesFounded in 1858, Japanese sesame oil maker Kadoya Sesame Mills has seen the country transform over generations, surviving world wars and Japan’s asset bubble. Now, more than two decades after listing on the Jasdaq Stock Exchange in 2004, Kadoya will go private through a public offering 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 among 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 Teikoku Databank. Japan’s centuries-old companies have achieved lasting prosperity through a long-term outlook fostered by family ownership, strong roots in local communities and a stay-within-its-means approach to business, said Shigeto Nagai, director of Japanese economics at Oxford Economics. Their long histories and years of capital accumulation have also left them solid balance sheets and stable profit margins. “However, they are increasingly concerned that they will not be able to foresee a future of long-term sustained high profits and fear that they will gradually fall into decline,” Nagai said. expenses on selling prices,” Taguchi said. Higher costs are particularly difficult for smaller, domestically focused Japanese companies to absorb, given their weaker sales bases, he said. Therefore, pricing power is a key factor in determining which companies can adapt. Bankruptcies linked to higher prices rose 23.8% to 556 in the first half of 2026, while bankruptcies due to labor shortages increased by 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 its low profits and a recent rise in raw material costs clouded its business prospects. Another major challenge is intensifying domestic competition and labor shortages as Japan’s birth rate declines. and its population is aging, Nagai said. Overseas expansion is another challenge as the domestic market, historically a stable source of income, continues to contract. But there is no one-size-fits-all, Nagai added. Succession is another growing challenge. Bankruptcies linked to a lack of successors rose 16.9% to 312 from a year earlier in the first half of 2026, according to Teikoku Databank. Corporate governance, activist pressure and succession challenges among founder-owned companies are pushing owners and boards of directors to reevaluate their options, along with broader pressures including inflation, tariffs, labor costs and interest rates, said Paul Aversano, managing director and global practice leader at Alvarez & Marsal Global Transactions Advisory Group. “It’s that combination, rather than a single issue, that is shaping decisions,” he said.
