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Fukushima businesses struggling to stay afloat despite government help

Rokutaro Kurihara, managing director of a company that runs a shopping complex in Iitate village in Fukushima Prefecture, is struggling to keep his business afloat.

Jan 29, 2021

Commercial complexes built as part of revitalization projects in areas affected by the triple meltdown at the Fukushima No. 1 nuclear power plant in March 2011 are struggling to stay afloat.

Faced with difficulties due to swelling costs, business operators often turn to local municipalities for financial aid to help them overcome crises. But the financial struggles will not end soon, given that only a portion of the residents who evacuated from the disaster-stricken areas have returned or are expected to.

Those outlets are now facing a testing moment that will determine whether they can continue with their businesses.

A small village in Fukushima Prefecture located northwest of the power plant, Iitate, which was issued evacuation orders after the nuclear disaster, built the commercial complex Michi no Eki Madeikan for ¥1.4 billion. However, business at the commercial building, which has a convenience store and a vegetable stand, has always been touch and go.

Madei Garden Village Iitate runs the business using a ¥33 million payment from the local government. But even with those funds, the operator saw a deficit of ¥9 million in fiscal 2017 and ¥8 million the following year.

Faced with a severe financial crisis, the company was forced to seek financial aid worth ¥35 million from Iitate in 2018.

After revising its business strategy, the company managed to reduce running costs and decrease the deficit to ¥300,000 in fiscal 2019.

“We are expecting a profit in fiscal 2020. I’ll be dealing with the accumulating debt as a priority,” says Rokutaro Kurihara, the company’s managing director.

Kurihara’s company is among those operating at 12 commercial facilities in 10 towns in areas that used to be designated as no-go zones, including the town of Namie and Tamura city.

Since most of the stores and shops shut down when residents evacuated from the region, local governments have built them for returning residents.

But many of them share the same fate as Kurihara’s.

In the town of Tomioka, Sakura Mall Tomioka, which houses various shops including a grocery store, operates with support from the the town and Fukushima Prefecture, covering its yearly losses worth ¥22 million.

But an official at the municipal government warns that the town will need to raise its rent after the prefecture’s subsidy program ends at the end of fiscal 2021.

Not all tenants deal with financial stress. However, businesses that continue to attract customers worry they may lose them to competitors outside the region.

The operator of Kokonara Shopping Street, a shopping complex that opened in 2018 in the town of Naraha, believes that they cannot meet customers’ needs because they do not have much space. Recent estimates show that cashiers at the center’s 10 stores, including a supermarket and a retailer with daily necessities, served as many as 570,000 customers in fiscal 2019.

But Shigeki Nemoto, who runs a supermarket at the Kokonara shopping facility with limited products available, says he may lose his customers to a nearby, larger shopping complex.

“Our shop is really small and we are struggling to source the product lineup we would like to offer to respond to the needs of our customers,” Nemoto said, adding that he had to reduce its range of meat and fish products.

His store is about 500 square meters, about half the floor space of an average supermarket.

“The neighboring city of Iwaki has a supermarket twice as big as ours with a floor space of 1,000 square meters and we’re worried that we’ll lose out to the competition,” Nemoto added.

Meanwhile, shops operating in areas where the government-run revitalization projects are ongoing depend on workers engaged in the projects for their business.

For instance, Minamisoma city built the only supermarket in its Odaka district, which had its no-go status lifted in 2016, for ¥240 million in 2018.

But the daily number of customers now hovers at around 250.

Many workers for the government reconstruction project visit the store in the afternoon or in the evening to purchase take-out meals or daily necessities. But when the reconstruction project finishes, those workers will disappear as well.

“Operators in the area should invest more in mobile catering and delivery services to boost potential demand and lure former residents back,” a Minamisoma official said.

This section features topics and issues from the Tohoku region covered by the Kahoku Shimpo, the largest newspaper in Tohoku. The original article was published Dec. 30.


January 30, 2021 Posted by | Fukushima 2021 | , | Leave a comment