Small Japan firms say high procurement costs biggest hit from Middle East war: survey

[TOKYO] Japan’s small and medium-sized enterprises cited surging procurement costs as the biggest strain from the Middle East conflict, a joint survey by the Japan Chamber of Commerce and Industry and the Tokyo Chamber of Commerce and Industry showed on Friday (Jun 12).

The survey of 2,497 companies across all 47 prefectures, conducted from May 7 to 29, found that rising fuel and petrochemical prices affected 70 to 80 per cent of firms, while supply disruptions for petrochemicals hit more than half.

Rising procurement costs topped the list of business impacts at 74.8 per cent, followed by higher fuel prices at 62.9 per cent and increased logistics costs at 38.7 per cent.

About 46.6 per cent of companies said that they had fully or partially passed on higher costs to customers; 48.4 per cent said they had largely or entirely failed to do so.

Manufacturing, construction, and hospitality and food-service sectors reported the highest rates of cost burden from procurement price increases.

Construction companies were disproportionately affected by supply bottlenecks and order losses tied to delivery delays, compared with other sectors.

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The most common corporate response was price pass-through, cited by 39.7 per cent of firms, followed by stockpiling consumer goods at 38.9 per cent, and building fuel and raw-material inventories at 16 per cent.

Companies urged the government to secure stable energy supplies and provide relief on electricity, petrol and fuel costs, as well as cash-flow support. REUTERS