The global distribution process is more difficult in Japan than in other global markets because the distribution is monopolized by a huge number of small traders who deal with many small retailers. The conventional Japanese system serves consumers who make small purchases and from small stores that are easy to reach. Similar numbers of wholesalers support a huge proportion of small stores with small records.
We will write a custom Essay on Japanese Distribution Challenges specifically for you
301 certified writers online
The flow of goods normally is through three or four middlemen before reaching the consumer, and this has been noted as unusual practice (Cateora, Philip, & Graham, 2011, 417). This has made the distribution channels longer compared to the shorter ones and larger stores found in the U.S. In Japan, the small stores account for 59.1 percent of retail sales, while in the United States small stores generate 35.7 percent of food sales (Cateora, Philip, & Graham, 2011, 413).
Another reason is an inability by the global distributors to adapt to the working scheme and put up with cultural and trade variations in Japan. Also, the distribution channel is organized by manufacturers, and the trading belief is modeled by a distinctive culture, and laws that protect the foundation of the system-the smaller retailers (Yoshinobu, 2004, 32).
The practice of often visit the small stores, the importance of new and fresh products, quality and large scale traders offering financial support are key aspects that benefit the many small retailers and maintain them in huge numbers. The Japanese channels are controlled by manufacturers who depend on large scale traders, and other categories of traders along with the system. These are brought together by common practice, and enticements set to enhance robust trade for their commodities, and to dismiss rivals from the distribution system (Cateora, Philip, & Graham, 2011, 414).
Here the wholesalers’ serve as an agent who extends the manufacturer’s powers in the distribution channel (Cateora, Philip, & Graham, 2011, 414). This brings up great economic ties and interdependence initiated by trade duties and the extensive system of Japanese delivery systems in a relationship-oriented trade paradigm that underscoresreliability, coherence, and companionship. Efforts to improve the efficiency of the distribution system, new types of middlemen, and other attempts to change traditional ways are typically viewed as threatening and are thus resisted (Cateora, Philip, & Graham, 2011, 418).
The Large-Scale Retail Store law-termed as Daitenbo was established to safeguard the minor traders from large traders invading the market. The Act ensures that any store larger than 5, 382 square feet (500 square meters) (Yoshinobu, 2004: 18) shall have endorsement from the prefectural government to be constructed, extended, stay operational in the evening or alter the days of the month they must remain unoperational (Cateora, Philip, & Graham, 2011, 419).
This is achieved by vetting all business suggestions for innovative big stores by the Ministry of International Trade and Industry. Upon the unanimous acceptance of the plan by the local retailers, the MITI immediately approves it. However, without approval by all minor traders in the vicinity the strategy is taken back for interpretation and amendment, and this may take several years for endorsement. This legal requirement is applicable to both local and international companies (Cateora, Philip, & Graham, 2011, 419).
Pacts between the United States and Japan based on the Structural Impediments Initiative (SII) have had a significant effect on the Japanese distribution channel. This has led to de-regulation of retailing and has promoted guidelines on dominating business practices by cartels. The consultations meant to start new markets for American companies have been found to generate substantial evidence of flaws in the system. The Japanese business people are challenging the conventional system, and the consumers have started to alter their approach towards shopping, and old-fashioned retailing practices by reacting positively to reduced prices.
Cateora, Philip, & Graham, J. (2011). International Marketing, 15th Edition. Irwin McGraw Hill, 413-428.
Yoshinobu, S. (2004: 18 (1/2)). Some reasons why foreign retailers have difficluties in succeeding in the Japanese Market. Journal of Global Marketing, 21-44.