The Effect of the Revised Large-Scale Retail Stores Law on the Japanese Distribution System - Essay Example

Wholesalers – Intermediaries or middlemen who buy products from manufacturers and resell them to retailers. They take the same type of financial risk as retailers, since they purchase the products, keep them in inventory until they are resold to retailers, and may arrange for shipment to those retailers. Agents and/or brokers – Intermediaries who work between suppliers and retailers. They do not take ownership of the products they sell and are independent sales representatives who typically work on commission based on sales volume.

They can sell to wholesalers as well as retailers. The Japanese distribution system accommodates the cultural and economic concerns of business establishments in Japan. This is such as business relationships are heralded as more important than implementing immediate and profitable business decisions that might trigger a strain in fulfilling social obligations to the participants in the distribution channels. Both Japanese and foreign observers, above all the United States, claimed that such intimate business relationships between an (in comparison to the United States) unusually high number of small players (both retail and wholesale establishments) not only formed a non-tariff barrier to foreign suppliers, but that such business relationships were protected by a legislation (the Large-Scale Retail Stores Law) that was in favor of small-scale establishments.

The revision of the statute as demanded by the United States was therefore seen as hopeful solution to “modernize” the Japanese distribution system (less small-scale operations) and also pave the way for Japanese and foreign suppliers to enter the Japanese market. When Japan surrendered to the American supremacy on August 15, 1945, the Japanese economy was in almost near collapse1 and Japan had to finally accept foreign occupation to