【Aging, safety net and fiscal crisis in Japan】No.241: Small/medium-sized companies and COVID-19

The Ministry of Economy, Trade and Industry has set up 1,050 business consultation counters for COVID-19 nationwide. By the end of March 2020, the counters received about 300,000 consultations from small/medium-sized companies with poor cash flow.

Table 1 shows the number of small/medium-sized companies and their added value. The number of small/medium-sized companies was 3,578,176 in 2016. The added value they produced was JPY 135.1 trillion (US$ 1.25 trillion), which accounts for 52.9% of the added value of all companies. Accommodation/Food services is the industry most affected by the economic stagnation caused by COVID-19 because their added value is not large (JPY 6.6 trillion), but there are 509,698 companies and the average company size is small.

The impact of COVID-19 on small/medium-sized companies is not limited to a reduction in domestic demand. Figure 1 shows the number of overseas subsidiaries by destination country. Figure 2 shows the number of overseas subsidiaries of large companies by destination country. The number of overseas subsidiaries of small/medium-sized companies is 8,887, which is about half that of large companies. However, if the second wave of COVID-19 infection is larger than the first one, it is feared that the supply chain of small/medium-sized companies will also be seriously damaged.

Table 1 Number of small/medium-sized companies and their added value （2016）

Figure 1 Number of overseas subsidiaries of small/medium-sized companies

Figure 2 Number of overseas subsidiaries of large companies