Prime Minister Shinzo Abe’s victory in the snap Lower House election earlier this month, an endorsement of his economic policies, may help the nation’s biggest companies get richer while extending a surge in bankruptcies among smaller ones.

Toyota Motor Corp. and Honda Motor Co. are expected to post record profit this year after the policies known as “Abenomics” weakened the yen, boosting their earnings from overseas. Aggregate net income at 196 of the largest listed companies will rise to a record ¥18 trillion ($151 billion) this fiscal year, based on a survey of analyst estimates.

At the same time, the number of Japanese companies citing the weaker yen among the reasons for going bankrupt has almost tripled this year as surging costs of imported food, metals and construction materials squeeze small businesses, said Teikoku Databank Ltd.

Japan may see a continued rise in such bankruptcies, especially of small companies outside large cities, the research company estimated.

“There’s a huge gap between the big exporting companies and smaller companies,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Abenomics is designed to create a strong economic structure in which the strong survive and the weak go away.”

Small and mid-size businesses account for about 32 million jobs in Japan, more than double the 14 million offered by big companies, which mostly gain from currency depreciation, according to a 2014 report by an agency at the Economy, Trade and Industry Ministry.

When Abe took office in 2012, Uchida Co., which supplies molds to automakers, bet on growth by building a new factory. Two years later, the company is not profitable. Indeed, Abenomics may yet put the company out of business, said Takumi Tanaka, Uchida’s senior managing officer.

The yen’s 28 percent plunge versus the dollar under Abe has pushed up costs for imported materials, while a consumption tax increase and a 16-month decline in real wages have stymied domestic demand at Uchida’s customers, including Honda. Japan’s economy is in its fourth recession since 2008, even as the weaker yen spurred a record stock rally.

“We expected that Abenomics would help both big companies and smaller suppliers like us, so we invested ¥800 million to build a new factory,” Tanaka said in an interview. “We dug a deep pit of risk, and now we keep waiting in the hole for the economy to get better.”

The yen broke through 120 versus the dollar on Dec. 4 for the first time since 2007, as Abe’s handpicked central bank chief pumped a record amount of cash into the economy to stoke inflation. While some small firms struggle to pass on higher costs of imported materials to customers, large exporters are reporting higher profit and the total number of corporate failures is in decline.

Even as domestic auto industry sales declined in seven of the eight months since the consumption tax was raised on April 1, Honda, Uchida’s biggest customer, will probably report record net income of ¥609 billion this fiscal year, according to the average of 23 analyst estimates. Toyota forecasts annual profit of ¥2 trillion, also a record.

Abe secured a pledge this week from companies to spread the wealth generated by the weaker yen by boosting wages. Data from the Bank of Japan show the companies are hoarding record amounts of cash and also investing heavily overseas.

“I want companies with high profits that are benefiting from the weak yen to raise wages, investment, and on top of that, consider the prices they pay their suppliers,” Abe said at a meeting of business and labor leaders on Dec. 16.

Japan’s recession, deepened by companies’ reluctance to plow gains from the weak yen back into domestic investments and consumers’ hesitance to spend, prompted Abe to call an election, betting he would emerge with firmer support for his economic agenda.

The administration has said it will address concerns about companies hurt by a weak yen in a stimulus package that may be compiled this month.

The package cannot come soon enough for the auto-parts and materials suppliers in Tokyo’s Ota Ward, which have seen their fortunes go from bad to worse under Abenomics.

Ota Ward had 4,362 factories in 2008. By 2010, that had dwindled to 1,748, according to figures compiled by the local government. Most of the survivors were betting on Abenomics to reverse the trend but are still waiting for that to happen.

The shifting exchange rates — as the yen held near postwar highs versus the dollar for much of 2009 to near the end of 2012, before plunging to the lowest in seven years as of this month — have added to their woes, said Toshiaki Funakubo, 70, chairman of the Ota Ward Industrial Association.

With the yen appreciation of the past several years, companies started procuring from suppliers outside Japan, he said in a phone interview. The transition has ended the era when a drop in the yen automatically boosted the economy by stimulating exports.

“Even with the yen at 120 to 130 to the dollar, jobs are not going to come back from China in the next couple of years,” said Kazuo Takahashi, chairman of Takagi Co., a tool-maker that’s been in business since 1866. “Prices will just go up and life will get harder.”

Companies like Tanaka’s might benefit little from Abe’s plans for a corporate tax cut, since they would not owe much to the government anyway, given previous annual losses.

“I still believe Abenomics has a chance, though I feel the moves are way too slow,” Funakubo said. “We’ll all go bankrupt waiting.”

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.