Retailer Says: Government Out!

ISAO NAKAUCHI is a rebel in Japan Inc. The 66-year-old chairman and president of Daiei, Inc., the nation's largest supermarket-chain operator, wants the government to take its hands off the distribution industry and let the free market decide. He spoke to correspondent Keiko Kambara earlier this week.

What is blocking imports into the Japanese market?

The biggest reason in the distribution system is stores belonging to one manufacturer - the Keiretsu system. They all vertically belong to the same chain. For example, a shop that sells only Matsushita products cannot sell Toshiba washing machines. Keiretsu blocks United States products from being sold in Japan. It makes it impossible for others to penetrate. Those who break down this Keiretsu [barrier] are large retailers like us.

Take electric home appliances, for example. We can freely sell Matsushita, Hitachi, or Toshiba. And we have the freedom to sell American products.

The US is claiming that Japan does not import enough.

American farmers are export-minded. They know the situation around the world, such as soybeans in China and wheat in the Soviet Union. They are thinking to sell their products worldwide. In that sense, they consider the world market. But American manufacturers of industrial products are lacking in export-mindedness. To my sorrow, they do not think about selling their goods to foreign countries, since their domestic market is so huge. I want US manufacturers to study more about the Japanese market and make products that are tailored to the needs of each market. McDonald's, IBM, Nescaf'e ... some are making efforts. Although the Japanese side has problems, US manufacturers also have to become export-minded.

The US says that their products will sell better if there are more large retailers here.

I agree. We are concerned about the Japan-US trade imbalance ... that the economic issue may become an emotional one. We have a will to sell American products. So if there will be more stores with the will like ours, which is to improve the bilateral trade imbalance, those stores, compared to 1.5 to 1.6 million Japanese small retailers, have more willingness to buy products from the US. Japanese consumers, despite their second GNP [gross national product] ranking in the world, cannot have a sense of affluence.

What we find most problematic is the fact that Japanese consumers are buying products at more expensive prices than any other part of the world, and that Tokyo is the city with the highest commodity prices. We have to make efforts to solve this problem. By importing consumer goods from the US, Southeast Asia, and Europe, we have ... to improve the current situation where prices are so high only in Japan.

What kind of changes should be made to the Japanese distribution system?

No intervention by the government, and deregulation. The bureaucracy intervenes with laws and stops free competition. That's the problem.