International Channel Management
The Japanese Distribution System has been under a lot of scrutiny and assessment and analyses by foreigners, and these analyses have attempted to find out the reason behind the absolute 'no go' principle that they find when they attempt to export any product to Japan. In a basic comparison between Japan and the United States of America, for example, while there is one single retail store for every 68 persons in Japan, in America, there is one retail store for every 120 persons. (Japanese Business Environment) The Japanese Distribution is virtually in the midst of a big controversy today, wherein the distributive structure and the various trade practices followed by the Japanese are under question. (A new perspective on the Japanese distribution system: structure and trade practices) The fact is that the Japanese Distribution System came into being during the early years of the seventeenth century, when several cottage industries in combination with the growing urban population gave rise to the phenomenon of a brand new class of people, known as the 'merchant class'. Another important fact to remember is the truth that almost all Japanese companies generally operate on the principle of very little equity, and a large amount of debts, wherein the manufacturers are ready to supply their goods to wholesalers in return for what are known as 'promissory notes' with terms that range from six months to more.
How can the manufacturer give away his goods on the basis of a mere promissory note? This is possible because of the extremely strong personal relationships between all the members of the entire channel. These members routinely share and distribute any vital information that may be pertinent to their work, and it is often said that this type of sharing information wherever and whenever necessary has its roots in the traditional village life of the people of yester years, when planting, irrigating, and the harvesting of crops had to be a shared activity rather than an individual activity if it was to actually succeed. Therefore, it can be stated that sharing is an important component of the Japanese Distribution System. In addition, the system exists in order to serve the social and the economic purposes that are required, and, more often than not, the social goals end up overshadowing the economic goals, and this means that the channel members in the distribution system are very much like the various members of one single family, whose members are tied together with the tight bonds of tradition as well as of emotion. If, as it dose tend to happen, one particular channel member had to be dropped from the system due to some reason or another that particular member would have to suffer a loss of face and pride, and this would have the tendency of leading the member into an unwonted tragic situation. (Future of Japanese Distribution Systems)
Therefore, the other members, and the entire system functions well despite the inefficiency or the incapabilities of a single member or a few members in the entire Japanese Distribution System, who's numerous members generally tolerate any inefficient members within the system. While in the United States of America, there is a well placed social welfare system that looks after the unemployed on a temporary basis, and even offers unemployment compensation, there is no similar system in Japan. In this country, the Japanese Product Distribution System acts as a provider of numerous jobs and also acts as a virtual buffer against unemployment. Most Japanese retire at the age of fifty-five, and at that age, they can avail of a lump sum pension that would actually amount to up to three years' salary, but since it is a fact that most Japanese also live up to long past the age of seventy and more, they utilize this lump sum amount and invest it in a small business of their own, and this serves the purpose of providing these individuals with a regular source of income for the rest of their lives. (Future of Japanese Distribution Systems)
Some people do attempt to find part time jobs with their previous employers or their subsidiaries or in their suppliers, and some try to invest the amount in certain small retailers or in wholesalers so that they have some sort of income during their retirement years, and most Japanese tend to opt for the latter. The distribution system therefore is seen as having the required social aims that would help maintain the retirees...
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