Expected costs of the Great East Japan Earthquake for Japanese companies

Some first figures are now available that give a glimpse on the extent of the immense hit the Japanese economy is experiencing due to the earthquake and even furthermore we can get some first ideas on what a huge challenge the Japanese have to overcome in the near future. Simply looking at the numbers for the first three months causes my head to spin. How can you comprehend an assumed loss for the first three months of 2011 at Hitachi for JPY Mio 50,000 (JPY 50,000,000,000 or based on today’s exchange rate USD 614,494,032.70) as given by Nikkei Shimbun? Or Sumitomo Metal Industries with a loss of JPY Mio 62,000, or then at NTT JPY Mio 110,000? From high-tech companies to chemical companies, train companies to supermarket, it seems to me all the major Japanese industries are affected. As a last example a company closer related to everyday life: Aeon. About 200 department stores and supermarkets were affected by the Great East Japan Earthquake resulting in an assumed loss of JPY Mio 30,000. These are sums that cannot be balanced out in the GDP over a short time. While before the earthquake discussions were going on that the Japanese GDP has shifted the country to the third place after China, honestly I am wondering now how much further down the line Japan can be found in the future.
I have to say the weeks after the earthquake I was truly concerned about the future of Japan from a business perspective. All of the sudden acquaintances started to promote a back to the basics trend and purchasing brand items were seen as a waste of money. Could it be actually possible that Japanese women are moving away from their favorite luxury brands? Actually there was at first some concern that Louis Vitton and the similar range brands might face some turnover challenges, but at the end Japanese women went back to their roots and shopping brand items are favored again. As it had happened with the Kobe earthquake in the past, now a few weeks after the earthquakes designer stores are full again. I guess as long there is enough money from the general public to purchase higher priced luxury items, there is hope for the rest of the industry to catch up as well.

Brought to you by Sibylle Ito (シビル伊藤)

2 thoughts on “Expected costs of the Great East Japan Earthquake for Japanese companies

  1. I heard that when the Kobe earthquake happened, the economy grew at last because of buildings demand.
    Of course victims didn’t come back.
    I’m sure that there is hope as you say.

    • Dear Cocomino,

      I truly appreciate your visit to this blog and comments again.
      Although I am hopeful that Japan can get the economy back up again, I am concerned about the bump in negative growth that we have to face this year. Japanese economy was not growing enough compared to the countries dept and now we have to increase our dept while having to expect overall less rosy economy.
      I can only wish for the best, when Japanese women as the main consumers shop like crazy.

      I will try my best to buy local,

      Sibylle Ito

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