Japanese companies prepared to close retail stores, restaurants, movie theaters and offices, while expanding work-from-home policies, after the government declared a state of emergency in major metropolitan areas.
Isetan Mitsukoshi Holdings Ltd., Lumine Co. and Rakuten Inc. are closing stores, while Nintendo Co. said it will shut its flagship Tokyo shop until further notice. Toyo Tire Co. said after the declaration it would close its headquarters and other operations in Hyogo Prefecture for a month, while workers telecommute. Sega Sammy Holdings Inc. said it would close all offices in the affected areas for a month too, including its main Tokyo site.
Critical businesses in manufacturing and technology will keep operating. Automakers, including Nissan Motor Co. and Honda Motor Co., plan to continue assembly, while Toshiba Corp.-affiliate Kioxia Holdings is maintaining normal operations at its Yokkaichi plant, a key producer of memory chips for iPhones and other smartphones. Grocers and convenience stores, including those operated by Seven & I Holdings Co. and Lawson Inc., will remain open so residents can shop for essentials.
The state of emergency declaration affects Tokyo, Osaka and five other prefectures, which together account for about half of the country’s economic output. That’s fueled concern that output will tumble by as much as 20 percent in the current quarter, driven by an anticipated drop in retail and entertainment.
“A big drop in April-June GDP is unavoidable because the service sector, which accounts for a big chunk of Japan’s economy, will be asked to shut down,” said Yuki Endo, senior economist at the Hamagin Research Institute. “Most of employment in this sector is part-time. Employment conditions for part-time workers will deteriorate greatly.”
Kao Corp., which makes cosmetics and household products, said it would extend work from home for corporate staff until further notice, while beauticians and salespeople stop working in stores. Rakuten plans to temporarily close 568 of its mobile shops, a spokesman said. SoftBank Corp. has reduced hours in some retail locations, and closed a number of stores in Tokyo, Osaka, Sendai and Kanagawa prefecture after staff came down with the virus.
Just weeks ago, Japan appeared to have missed the worst of the coronavirus outbreak that slammed China, Europe and the U.S. But in recent days, the number of infections has surged to record levels for the nation, a cautionary tale for countries that think they have avoided the pandemic’s fallout. Infections rose to a total of more than 4,000 from less than 400 about a month ago.
Business leaders, including Rakuten founder Hiroshi Mikitani, called on Prime Minister Shinzo Abe to move quickly in declaring the emergency, a step that gives prefectural governors more authority to arrest the spread of the virus. Due to civil liberties written into Japan’s postwar constitution, governors can ask people to stay at home and avoid public interactions, but citizens can ignore the requests with no penalty.
Many companies are waiting for more guidance from the government. It’s not yet clear whether governors will compel retail stores, restaurants and bars to close, like cities in the U.S. and Europe have done. They may also set rules for closures or cleanings if infections are discovered at stores or factories.
“We are preparing to make an announcement about our company-wide policy after we examine each of our businesses’ situation and requests from prefectures,” said Panasonic Corp. spokeswoman Yayoi Watanabe.
Financial institutions, including Nomura Holdings Inc. and Mitsubishi UFJ Financial Group Inc., said they will continue to support their customers, though they may scale back retail operations.
Of Japan’s automakers, Nissan has the biggest presence among the areas under the emergency declaration. Its headquarters is in the capital of the affected Kanagawa prefecture. The Oppama plant in Kanagawa, which makes the Leaf electric vehicle and the Note, has the capacity to churn out 240,000 cars a year.
Toyota Motor Corp. has three factories in Fukuoka, another area under the emergency order. The plants have a combined output capacity of almost half a million vehicles a year. The company is considering how to respond to the emergency declaration, a spokesperson said.
Companies are trying to maintain a sense of normalcy as the virus hits. Fast Retailing Co., which runs the Uniqlo clothing chain, is scheduled to open several new stores in the coming weeks, including its biggest ever in Ginza. Rakuten still plans to debut its new wireless service on April 8. Mercari Inc., an auction site, moved its entire orientation for new hires online this month because its employees are working from home.
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