JAPAN FACES CHALLENGE OF TOYS `R' US

``There's no way for us to compete,'' against the volume discount prices of Toys `R'' Us, says Kisaburo Yarita, chairman of the Federation of Japan Toys and Dolls Stores Associations. If the US company succeeds in entering the market, ``I think the number of Japanese toy stores will be reduced by half.'' Politicians and toy-store owners are besieging the Ministry of International Trade and Industry to stop Toys ``R'' Us, but a media spotlight on the case makes it difficult.

``Sears and K-Mart may come to Japan in the future,'' says Tatsuki Kubo, spokesman for Toys ``R'' US partner McDonald's Company (Japan). ``If our plan is not realized, other stores will never be accepted.''