Reform Called Too Little, Too Late for U.S. Exporters : Japan to Streamline Its Peculiar Retail System

Japan is moving ahead with changes to its labyrinthine distribution system for retail goods with a major report due before the summer, but Washington will not likely be happy with what it hears.

Japanese trade officials are to unveil changes to the nation’s retail system in May. U.S. exporters have long charged that the peculiar system, which helps small family-owned stores at the expense of big department stories, discriminates against them. The bigger stores are seen as more likely than the small stores to stock imported U.S. merchandise.

The small retailers will be hurt most by deregulation of the system.

But officials say the reforms will be less substantial and slower in implementation than the United States would like.

“We are not planning to abolish or adjust the law, because the law itself is only procedural,” said Michinao Takahashi, director-general for commercial affairs at the powerful Ministry of International Trade and Industry. “The problem is in its implementation.”

Takahashi heads the council that is drafting the report, “Marketing Vision of the 1990s.”

“The marketing vision is not for the sake of the Americans,” Takahashi said. “Keeping in mind the future negotiations with Americans, we are looking at the problem.”

MITI is not planning to revoke or change the law regulating large stores, and its views are likely to win out over those of the Fair Trade Commission, which released a research report last week calling for major changes in the law.

The Large-Scale Retail Law, a salient target for critics of the expensive labyrinth of small players, is a process for reporting new store openings to government officials.

The process was intended to be a simple procedure, but local merchants have used it to force long delays in the opening of bigger competitors. A supermarket in Japan takes an average of 15 months to open, due mainly to arguments over opening hours, holidays and what merchandise will be stocked.

Some applications drag on for up to seven years.

The United States has argued that the wait is too long and that local merchants have too much power.

“Our concern is that deregulation of the wholesale and retail sector be carried out in a way that makes it easier for foreign goods to get to the consumer at reasonable prices,” said an American diplomat in Tokyo.

But some experts question whether an efficient system will in fact lead to more imports.

“The way for Americans to increase imports is to research and sell the products that Japanese consumers want,” said Masaei Kasahara of the Japan Chain Store Assn.

Washington is also likely to be disappointed by the speed of change, which, like most deregulation in Japan, will come gradually.

Besides the United States, MITI has the interests of other pressure groups to juggle--large retailers, distributors, local shopkeepers and consumers.

The council will hear each argument and take a consensus. “This is the way of Japanese policy-making,” Takahashi said.

The Large-Scale Retail Law is merely one aspect of the distribution system now under scrutiny.

Tracking Inefficiencies

The MITI council is tracing 13 goods, including clothing, cars and electronics, from manufacturer to consumer in order to judge where inefficiencies lie. Takahashi did not elaborate on what measures might be taken once the study is complete.

MITI is also looking at the widespread use of sole agents by domestic and foreign manufacturers to market their products. That can result in high prices and inadequate marketing, something that importers themselves are beginning to fight by setting up their own sales outlets.

Retail analysts point out that cheaper convenience store chains and discount houses, with their own distribution networks, have sprung up. Consumers are voting with their yen, forcing family shopkeepers to cut prices.

According to MITI, there were 1.7 million stores in Japan in 1982, of which 1.01 million were tiny retailers. By 1985, numbers declined to 1.6 million and 890,000 respectively. The 1988 Census on Commerce is expected to show a similar drop.

The family business has served as a sort of welfare system paid for by higher consumer prices. MITI is taking into consideration the hardship thousands of elderly shopkeepers would suffer if forced out of business.