2. Discuss the Distinguishing Features of the Japanese Distribution System.

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Chapter 11 – International Marketing Channels

Discussion Questions

|1. |Define: | | |Distribution process |Manufacturer’s export agent (MEA) | | |Distribution structure |Norazi agent | | |Distribution channel |Manufacturer’s agents | | |Facilitating agency |Foreign distributor | | |Agent middlemen |Foreign-country broker | | |Merchant middlemen |Managing agent | | |Home country middlemen |Foreign sales corporation (FSC) | | |Dealer |Structural Impediments Initiative (SII) | | |Import jobber |Large-Scale Retail Store Law | | |Export Trading Company Act (ETC) |Government-affiliated middlemen | | |Export management company (EMC) |E-commerce | | |Webb-Pomerene Export Association (WPEA) |Complementary marketing |

2. Discuss the distinguishing features of the Japanese distribution system.

Distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market. The distribution system is different enough from its United States or European counterparts that it should be carefully studied by anyone contemplating entry. The Japanese system has four distinguishing features: 1) a structure dominated by many small wholesalers dealing with many small retailers; 2) channel control by manufacturers; 3) a business philosophy shaped by a unique culture; and 4) laws that protect the foundation of the system, the small retailer.

High Density of Middlemen. There is a density of middlemen, retailers and wholesalers in the Japanese market unparalleled in any Western industrialized country. The traditional structure serves consumers who make small, frequent purchases, at small conveniently located stores. The high density of small stores with small inventories is supported by an equal density of wholesalers. It is not unusual for consumer goods to go through three or four intermediaries before reaching the consumer—producer to primary, secondary, regional, and local wholesaler, and finally to retailer to consumer.

Channel Control. Manufacturers depend on wholesalers for a multitude of services to other members of the distribution network. Financing, physical distribution, warehousing, inventory, promotion and payment collection are provided to other channel members by wholesalers. The system works because wholesalers and all other middlemen downstream are tied to manufacturers by a set of practices and incentives designed to ensure strong marketing support for their products and to exclude rival competitors from the channel.

Business Philosophy. Coupled with the close economic ties and dependency created by trade customs and the long structure of Japanese distribution channels is a unique business philosophy that emphasizes loyalty, harmony, and friendship. The value system...
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