On July 9th, the Japanese prime minister Suga declared a state of emergency for the fourth time. With this declaration, all stores are required to close by 8 pm and are not allowed to serve alcohol under any circumstances. In fact, Japan has been in a state of emergency for roughly ⅔ of 2021 already. Due to these conditions, there have been 3,044 bankruptcies from January to June 2021. The question now is, should companies in Japan really follow the state of emergency laws and put themselves in danger of bankruptcy? Can they do anything to save their own business and make a profit while not breaking the rules?
Context: Restrictions in Japan
Before talking about the business system in Japan, let’s start by getting some context on what Japanese people think about the government and the state of emergency itself. The truth is that the feeling of discontent towards the Japanese government has risen since the start of 2021 for two reasons, namely the frequency of state of emergency declarations and the lack of compensation for business owners. Japanese people are starting to think that the government has declared a state of emergency too many times. The below chart provides justification for such claims. It shows the number of COVID-19 infection numbers in Tokyo in 2021, and shows that the government announced the newest declaration on April 25th, only a month after the second declaration had been lifted. The COVID-19 cases at that time in Tokyo were 635, which was far less than the number of cases on January 7th when the second declaration was declared (in January there were 2447 cases). The second reason is the lack of consideration for those who follow the rules. For example, in Tokyo, the government provides subsidies for all businesses — but only around 500 dollars per day, 1000 dollars at the most. However, if the store makes 2000 dollars per day on average, and gets only 1000 dollars as through from the government, then in theory the store would be losing 1000 dollars a day.
How businesses adapted
In such a harsh situation, business owners developed creative solutions to keep their stores afloat. For example, restaurants offered delivery services and many retail stores turned to online shopping with delivery opportunities Many shops were thus able to survive the duration of the first state of emergency from April of 2020. However, once people became accustomed to those ideas, they stopped showing interest, leaving business owners scrambling to develop new solutions again and again. In reality, there have not been many novel ideas recently, so it is time to think about what they should do not only from a business perspective but also from an ethical one. For instance, they can open the store until midnight, and serve alcohol hypothetically because the Japanese government doesn’t have the capacity to enforce the law everywhere, but if people see such a store, they might post the name of the store to social media and the store could easily be bombarded with criticism. What can Japanese companies/industries do to keep the economy going, but not contribute to the spread of the virus at the same time?
Outlook to the future
One idea for some businesses to keep making money is to seek opportunities outside of Japan. Some countries like China and the United States have reached the point of resuming a pre-pandemic lifestyle. For instance, at the major league baseball game (MLB) last June no players or audience members present in the stadium wore a mask because the vaccination rate at the time was already higher than 55%. Resuming a pre-pandemic lifestyle in these countries means that the demand for products such as Japanese food and cars would increase due to an increased number of people who want to and do go out. There is a survey that asked 2,722 Japanese companies who are interested in overseas business about the impact of COVID-19. In FY2020, 64.8% of 2,722 companies answered that there was a “negative impact” on overseas sales. However, in FY2021, the number of companies saying this decreased to 27.3%. The survey shows that the demand from overseas for Japanese goods has begun increasing again. By exporting Japanese goods and/or food, Japanese businesses have the potential to grow again.
The other idea, especially for small businesses which don’t have a chance to trade with foreign countries, is cooperation between companies. This would mean that some small companies can work together to overcome this unprecedented economic challenge. As small companies do not have as many resources as big companies do they should work together by gathering the know-how of each company. For instance, if a small manufacturing company knows how to make high-quality products but doesn’t know how to advertise their products, and a small advertising agency knows how to do so, then those two small companies can be a good match to help each other getting through these challenging times together.
During the COVID-19 outbreak, the majority of people in Japan did and do their best to still continue with their lives and at the same time cooperate with the country’s government to decrease the number of cases. To decrease the number of people who suffer from economic problems, there are some potential solutions for Japanese companies, such as seeking out opportunities abroad or working together with other companies. Hopefully, the business conditions will improve soon not only in Japan but in other countries around the world as well.