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Send  Share  RSS  Twitter  23 Jan 2009

Business: Japan Defaults on SA Exporters

 





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The Japanese would literally prefer ‘to fall on their sword’ rather than do the dishonourable thing and not pay a creditor, says Ismail Dadabhay, General Manager Exports. “We have now had not just one default, but two: including the liquidation of KK Robin of Japan, owing a South African exporter JPY10, 054m – about R1,2m, while another company has defaulted on JPY54,3m, about R5,8m due to cash flow problems.”

Japanese bankruptcies (< JPY10m) amounted to 1,147 in December 2008, up 28.7% year-on-year according to Teikoku Databank (DTB), while the liabilities involved increased by 44.7%. For the year as a whole, bankruptcies totalled 12,681 (up 15.7%), with the associated debts being 117% higher than in 2007. By industry, the number of business failures in the transportation and communications industry (500 cases) surged 37.0% from the previous year. In addition, the construction industry (3,446 cases, up 17.3% year-on-year) and the wholesale industry (1,950 cases, up 18.6%) recorded huge rises. By main cause, the number of recession-induced bankruptcies came to 9,992 cases (8,445 cases in the year-ago period).

DTB’s Economic Trends Research indicates that manufacturing, construction and real estate are currently the most distressed sectors, affecting both large and small to medium enterprises. With the recession deepening, recovery remains a distant hope. Both internal and external demand is slowing, forcing a reduction in local capacity and similarly in capital investments.

This is a clear sign that the global economic slowdown has many more surprises in store for exporters around the world. 2009 could well see record post-WWII delinquencies.

According to Dadabhay, while some of the countries that have disclosed a dramatic increase in corporate failures recently include the USA, England, Ireland, Germany and even (of all places) Sweden, others might not be so keen to publicise the fact.


 
 
 
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