‘Discount King’ Thumbs His Nose at Retail Bureaucrats : Japan: Toshio Miyaji’s high-volume, cash-only shops, once viewed as shady, last year rang up $126 million in sales and have made him a folk hero.

Toshio Miyaji has made a career and a fortune out of flouting the rules.

As founder and president of a small Tokyo-based electronics retail chain, Miyaji takes special delight in bending or sidestepping government regulations and the cozy conventions of Japan’s business world.

“I’m 65 already, time is short. If I can change the laws in my lifetime, I don’t mind sacrificing myself,” Miyaji says. “I’m ready to go to jail.”

Dubbed the “Discount King” and “Consumers’ Crusader” by the media, Miyaji’s aggressive business style and flamboyant marketing stunts have made him something of a folk hero in this increasingly consumer-oriented society.

They also have made him richer. While other retailers watch sales languish as Japan’s recession drags on, sales at Miyaji’s Jonan Denki shops shot up to 13 billion yen--about $126 million--in the fiscal year that ended March 31, up from 8.3 billion yen a year earlier.

Miyaji’s spry appearance and friendly western-Japan accent give him an elfin, grandfatherly air that is belied by his sharp eyes.

The secret of his success is in the Louis Vuitton briefcase he uses to haul around some 30 million yen in cash to make purchases on the spot.

Miyaji started out as a “battaya,” a spot trader who buys up leftover inventory from bankrupt stores at steep discounts. Now he uses his cash to buy most of the merchandise he sells directly from manufacturers.

Part of his strategy is to give up his right to return unsold goods to suppliers, one of many arcane Japanese retail practices that help keep prices in this country higher. Miyaji often gets products at less than 60% of list price, about 15% less than more conventional store owners.

His tactics enable Miyaji to sell appliances--from rice cookers to radios--at roughly 30% off standard prices. European cosmetics go for as much as half off list prices.

Miyaji’s high volume, cash-only business once was viewed as slightly shady. But Japanese consumers increasingly on the lookout for good deals and cheaper imports are shedding such qualms as they find ways to skirt a retail system stuffed with price-inflating middlemen.

“I’m buying here because of the president’s consumer-friendly policy,” says Masahiko Nishimura, who ordered air conditioners, a refrigerator and a rice cooker while shopping with his fiancee.

Miyaji agrees with U.S. trade negotiators who accuse government bureaucrats of coddling retail middlemen to shut competitive imports out of the Japanese market.

“If he wants to cut the trade surplus, President Clinton ought to come talk to me instead of wasting time with bureaucrats,” Miyaji suggested during a recent interview at his office in Tokyo’s Shibuya entertainment and shopping district.

The shop looks more like a warehouse than like its sleek, chrome and glass retail competitors--Miyaji doesn’t throw money away on fancy decorations.

In Miyaji, the bureaucrats in charge of regulating Japan’s multitiered retail system face a formidable rival.

When the Food Agency tried to crack down on sales of home-grown rice this spring to counter a shortfall, Miyaji dumped 11 tons of the forbidden grain, packed in plastic bags, in front of one of his retail shops in Tokyo and sold it at half the price he had paid for it. Miyaji says he ran the sale to force the government to confront problems in the way it handles rice distribution.

Over 2,000 people lined up to buy the rice, which sold out in less than two hours.

The Food Agency, which controls sales of the grain, issued a warning to Miyaji for selling rice without a license. But already embarrassed by harsh public criticism over its failure to balance rice supply and demand, it took no action. Agency officials said they didn’t punish Miyaji because he had promised to donate some rice to the elderly or give it away.

Thumbing his nose at the Pharmaceuticals Affairs Law, Miyaji peels the Japanese-language labels listing ingredients and other information off imported lipsticks to hide the identity of his “battaya” supplier.

“I do this because the law is bad,” he says.

Miyaji took some detours on the way to discount superstardom.

The son of a lumber trader in western Japan, Miyaji opened the first of his six Jonan Denki outlets in 1968, after earlier businesses in car battery repair and pinball machine manufacturing failed.

The competition was cutthroat: Miyaji’s ads were torn down and his phone lines cut--he believes by manufacturers outraged by his refusal to play by usual business rules.

Recently, Miyaji was slightly injured in a mugging--the robber who broke into his office was after his famous cash-stuffed briefcase. The thief, who has not been caught, made off with about 1 million yen. Miyaji is still carrying the briefcase around.