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In this page: Market Access Procedures | Distributing a Product

 

Market Access Procedures

 
 

Customs Procedures

Import Procedures
Any person wishing to import goods must declare them to the Director-General of Customs and obtain an import permit after examination (if necessary) of the goods concerned. The formalities start with the lodging of an import declaration and end with issuance of an import permit after the necessary examination and payment of Customs duty and excise tax. In this way, measures are taken to ensure the fulfillment of the requirements for the control of foreign exchange and other regulations concerning the importation of goods. More than 90 percent of import procedures is currently computerised.

All steps and required documents are available on the website of Japan Customs.

The Customs Counsellor System assists companies with import procedures.

Specific Import Procedures
Under the "immediate import permission system upon arrival", import permission may be granted as soon as cargo entry is confirmed. To be eligible for this system, importers must file a preliminary declaration online.
For goods whose value is less than or equal to JPY 100,000, a simplified declaration system applies.
Importing Samples
Japan acceded to the ATA Convention in 1973. Goods imported from contracting countries and territories can generally be subject to a procedure on the basis of the ATA Convention and be exempted from Customs duty and excise taxes payable. To find out more, please visit the Japan Customs website
 

To go further, check out our service Import Controls and Export Controls.

 
 

Customs Duties and Taxes on Imports

Customs threshold (from which tariffs are required)
JPY 10,000
Average Customs Duty (Excluding Agricultural Products)
Japan applies a customs tariff that is among the lowest in the world (on average, 2.5%).

For a summary of Japanese customs tariffs, please see the following sheet provided by the WTO.

Products Having a Higher Customs Tariff
Agricultural products (one of the highest rate among industrialized countries) and some processed food products, although the duties applied continue to go down; leather and some manufactured goods.
Preferential Rates
They are granted to imports from the countries with which Japan has signed trade agreements. (See list)

If necessary, the Japanese customs website explains how the Generalized Preference System works in Japan.
Customs Classification
Japan uses the Harmonised Commodity Description and Coding System, generally referred to as the 'Harmonised System,' developed by the World Customs Organisation.
Method of Calculation of Duties
Ad Valorem on the CIF value of the imports.
Method of Payment of Customs Duties
The central Bank of Japan has set up system of electronic payment.
Import Taxes (Excluding Consumer Taxes)
None
 

List of tariffs and local taxes that apply to your product on our service Customs Duties and Local Taxes.

 

Labeling and Packaging Rules

Packaging
The Customs services are very particular about the quality of packaging and labeling. Correct packing, marking, and labeling are critical to smooth customs clearance in Japan. Generally, labeling for most imported products is not required at the customs clearance stage, but at the point of sale. Consequently, it is common for a Japanese importer to affix a label to an imported product after it has cleared customs.
Packing in straw is prohibited in Japan.
Languages Permitted on Packaging and Labeling
Japanese, English and French.
Unit of Measurement
All imported goods as well as transport documents must show metric units of measurement and weight.
Mark of Origin "Made In"
It is not mandatory, except in the case of foodstuffs and drinks.
Labeling Requirements
No specific requirements.
Specific Regulations
Japanese legislation provides specific labeling rules for certain foodstuffs and textile products, electrical appliances and consumer goods. The regulations are not effective when going through Customs. The necessary information must therefore be added between the moment of importing and that of putting the product on the market.

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Distributing a Product

 

Distribution Network

Types of Outlet

Department stores
Clothing, cosmetics, jewelry, food
Mitsukoshi, Isetan, Marui 0101 in Tokyo
Takashimaya,
Sogo in Kanagawa.
Supermarkets and hypermarkets
Food supermarkets and specialized department stores
Aeon, Itoyokado, Daiei, Uny, Izumi, Life corporation, Izumiya, 
Convenience stores
Open 24/24. General food, drink, everyday products
Seven Eleven, Lawson, Family Mart, Daily Yamazaki, Mini Stop, Seicomart, Poplar
Discount stores
Clothing (directly connected to well-known foreign brand names) miscellaneous goods
DonQuijote, Mr Max, Trial company, Takeya, Super Center Plant
Home centers
Gardening, decoration and other items for decorating and fitting out the home
Cainz, Kohnan Shji, Nafco, Homac, Keiyo D2, Komeri, Kahma, Shimachu, Daiki, Tokyu Hands
Cooperative
80% food products and 20% convenience goods and clothing.
Coop Kobe, Coop Sapporo
Drug Stores
Personal hygiene products, cosmetics, beauty products, detergents, sweets and drinks
Matsumoto Kiyoshi, CFS Corporation, Sun Drug, Turuha, Sugi Pharmacy, Create SDS, Kokumin
Specialized stores
Specialized by product or by type of customer targeted: clothing (including kimonos), gardening, alcohol...
Clothing: Aoyama Syouji, Aoki International, Haruyama Shoji
Women and children's clothing: Shimamura, Five Foxes, Akachan
Casual clothing: Fast retailing (Uniqlo), Right On,
Shoes: Chiyoda,
Alcohol :  Kakuyasu
Information technology: Yamada Denki, Yodobashi Camera, Kojima
Others
100 Yen shops: all sorts of products, sold for the one price of 100 JPY.
Daiso Sangyo, Seria, Ninety-nine plus, 
 

Evolution of the Retail Sector

Growth and Regulation
According to the latest USDA Foreign Agricultural Service report, in 2018, the total value of all retail food and beverage sales in Japan was $479.29 billion (¥53,339 billion) an overall increase of 2.3 percent from the previous year.  The food processing industry produced $217 billion in food and beverage products in 2018. Supermarkets account for the majority of food retail sales, at 70%, but the fast growing grocery shop sector now accounts for 14% of sales. Ready-to-eat (REM) or take-away food products represent a growing area. Although Japan is a huge market, it is highly fragmented. The Japanese Food and Beverage (F&B) retail industry includes supermarkets, general merchandise stores, department stores, convenience stores, drugstores, and the internet.

Japan's general merchandise stores (GMS), offer shoppers the convenience of one-stop shopping for groceries, perishables, clothing, household goods, furniture, and electrical goods. GMS's are operated by major national chains that have nationwide networks with hundreds of outlets and typically rely on centralised purchasing. They often purchase foreign products via trading companies.

Supermarkets (SM) stores are smaller in size than GMS's and are more specialised in food and household goods. Supermarkets are facing higher purchasing costs than GMSs. They are seeking ways to stay competitive through product/service differentiation, private brand development, and global sourcing. To gain economies of scale, regional supermarkets are forming alliances through joint merchandising companies with non-competing retailers.

Department store sales have been slowly declining in recent years due to increasing competition with other retailers.

Convenience stores (CVS) are an extremely important sales channel in Japan. They have limited floor space, about 100 m² on average, and typically stock about 3,000 products. Convenience stores derive their competitive advantage from high turnover and efficient supply chains. Convenience stores are notably competing strongly by offering attractive consumer food service options, particularly as fast food offers high potential profits.
Market share
Retailers with the highest food retail sales in 2018 (latest data available):

  • Supermarket: 37,411 billions of Yen ($ 336.2 billion) – 70.1 % share of sales
  • Convenience Store: 7,769 billions of Yen (69.8 billion dollars) - 14.6% share of sales
  • General Merchandise Store: 2,849 billions of Yen (25.6 billion dollars) - 5.3% share of sales
  • Department Store: 1,812 billions of Yen (16.3 billion dollars) - 3.4% share of sales
  • Drugstore: 1,806 billions of Yen (16.2 billion dollars) - 3.4% share of sales
  • Internet: 1,692 billions of Yen (15.2 billion dollars) - 3.2% share of sales

The largest retail outlet is Aeon Co. Ltd, leading player in supermarkets. The second largest retailer in terms of overall sales value is Ito-Yokado, which is a convenience store business. The well-known U.S. brand retailers Costco and Walmart are also successful in Japan.

Retail Sector Organisations
Japan Retailers Association
Japan Department Store Association
Japan Council of Shopping Centres
Japanese Trade Union Confederation (JTUC - RENGO)
 

E-commerce

Internet access
Internet penetration in Japan is currently 82.1% and should reach 83.2% by 2021. Smartphone penetration is a lot less (47.8%) but is projected to grow to 54.4% in the next four years. There were 103.89 million internet users in Japan in 2017, and this figure is projected to reach 104.27 million by 2022. Japan has the 7th fastest internet connection speed in the world (20.2 Mbps) – average internet speeds are higher in developed Asian countries. Japan had the third largest rate of high broadband connectivity (73%) as of 2017. The most popular search engines are Google (69.79%), Yahoo! (25.92%), Bing (3.53%), Baidu (0.44%), Never (0.1%) and DuckDuckGo (0.08%).
E-commerce market
There were nearly 89 million online shoppers in Japan in 2017. That same year, the Japanese B2C e-commerce turnover grew by 16% to US$ 79,247 million. Japan had an online population of 116.8 million people who were aged 15 and older. While Japanese consumers have been rather reluctant to buy foreign products in the past, they have become progressively more open to them over time. Japanese consumers are highly diverse in their interests and tastes, which range from traditional needs to more westernised desires. User penetration is at 66.6% in 2018 and it is expected to hit 72.6% in 2022. Revenue in the e-commerce market is expected to amount to US$ 105.1 million in 2018. The market is expected to show an annual growth rate of 6.2% resulting in a market volume of US$ 133.6 in 2022.
E-commerce sales and customers
In 2017, 79.5% of the population in Japan had purchased products online. By the end of 2018, this figure is expected to grow to 80.3%. In 2017, retail e-commerce sales amounted to US$ 111.33 billion and are projected to grow to US$ 122.46 billion in 2018. In 2017, e-retail sales accounted for 8.2% of all retail sales in Japan, and this figure is expected to reach 9.7% in 2019. In 2018, 80.3 million people in Japan are expected to buy goods and services online. Electronics and media are currently the leading product category in Japan, accounting for US$ 23.73 billion market share, followed by fashion, which generates US$ 22.28 billion in sales. Japan’s e-commerce payment options are many: Credit card and debit card payments account for 66% of payments for e-commerce transactions. A variety of other “eWallet” and E-Payment options are also proliferating. In addition, cash payments for online purchases are accepted at convenience stores (Konbini). About 17% of such payments are made in cash at Konbini after products are delivered, a popular option for many teens without bank accounts or credit cards. 48% of consumers purchase online on a monthly basis. The preferred device to access online retailers is PCs (82%), followed by smartphones (43%), which have been gaining popularity when it comes to online shopping. Still, 92% of online shoppers in Japan buy using desktops, a stark contrast to the amount of smartphone (6%) and tablet (1%) shoppers.
Social media
52.56 million people in Japan are active monthly social network users, with the most popular ones being Facebook (39.32%), Twitter (29.08%), Pinterest (13.73%), YouTube (10.62%), Tumblr (2.58%) and Instagram (2.29%). Their growth is low and there are signs of little time being spent on the social networks. Facebook is showing stagnation in Japan. On the other hand, Instagram is taking off, pushing beyond 10 million users in Japan this year.
 

Direct Selling

Evolution of the Sector
The World Federation of Direct Selling Associations (WFDSA) 2017 report shows retail direct selling in Japan grew 0.4%, was valued at USD 15.329 billion, and involved 3,124,000 independent representatives.

Euromonitor International highlights Japan's direct selling market faces a decline due to recent fraudulent activities and scams. Direct selling companies are looking for alternative sales channels to compensate for sluggish performances (i.e. Avon sells its new Dual Face brand in drugstores and pharmacies). Amway remains the leading company with its nutritional supplements and cosmetic products while Yakult revised (and will continue to revise) its business structure and kept its place as the second largest direct selling company.

The Japanese Direct Selling Association and the National Association for Direct Selling and Distribution promote best practices in the industry.
 
 

Commercial Intermediaries

Trading Companies
 
  • Type of Organization
There are two types of trading companies:
1. The Senmon shosha, specialized in a limited range of products.
2. The Sogo shosha, general trading companies. These are large groups which act as importers-exporters of the whole range of products from bean sprouts to airplanes.
  • Main Actors
Mitsubishi Corporation, Mitsui Co LTD, Itochu Corporation, Sumitomo Corporation, Marubeni Corporation, Sojitz Holdings Corporation, Toyota Tsusho Corporation, Tomen Corporation
Wholesalers
 
  • Type of Organization
There are two types of wholesalers:
1. Import-export wholesalers. They are particularly useful for their logistic organization, information processing, product promotion and selection.
2. Wholesalers who mainly offer a logistic service, stocking goods so as to supply retailers as they need them.
Nevertheless, the shrinking of the Japanese distribution market, making a more direct connection between producers and retailers necessary, has led to an evolution in wholesaling. Indeed, many wholesalers have opted for a more vertical integration of their activity by even developing their own brand names and retailing goods themselves.
  • Main Actors
Clothing: Onward Kashiyama, World, Wacoal
Fashion accessories: Etoile Kaito, Morit, Kiyohara
Food and alcohol: Kokubu, RYOSHOKU LIMITED - Mitsubishi Corporation, Nippon Access
Lingerie and furnishings: Sangetsu, Lic, Nishikawa Sangyo
Furniture: Francebed, Karimoku Kagu, Oliver
Watch and clock making and precious metals: Doshisha, Seiko Watch, Nagahori
Fruit and vegetables : Tsukiji Central Wholesale Market
 

Using a Commercial Agent

The Advantages
More realistic marketing strategy for a small or medium-sized firm.
Import agents are often appointed as sole agents for the entire country.
Where to Be Vigilant
This approach requires great care in the selection of the representative.
Don’t try to use a list of importers as a basis for “cold calls” on prospective agents. It is important to build a personal relationship.
Elements of Motivation
Exclusivity, a limited term of representation, minimum sales, or qualitative indicators of sales efforts.
Frequent communication per fax, mail, phone, plus regular visits to Japan
The Average Amount of Commission
-From 5 to 10% for regular business transactions, and from 10 to 20% for occasional transactions
-1 to 3% in the case of bulk materials (iron ore or coal)
-20% or even higher in the case of medical, laboratory and scientific analytical instruments
Breach of Contract
It does not call for any particular comment. According to the case, the foreign company may have to pay some compensation.
Finding a Commercial Agent
JETRO, Matching business database (TTPP)
Alibaba
Mondo Marketing Agency, Digital marketing and distribution

Learn more about Traders, Agents in Japan on Globaltrade.net, the Directory for International Trade Service Providers.

 

Setting Up a Commercial Unit

The Advantages
Although still costly, establishing a presence and an office in Japan has become less expensive given recent decreases in the costs of labor, office rent, and other expenses.
Where to Be Vigilant
It should be considered in the case of long term sales development.
Different Possible Forms of Settlement
 
  • A Representative Office
Such an office can obtain market data and other information and provide necessary promotional and service support. A representative office is not subject to Japanese taxes and establishing an office does not require special approval. However, a representative office must not involve itself in commercial transactions or generate income, and therefore cannot directly handle commercial orders.
  • A Branch Office
A branch office may take and fill orders and carry out a full marketing program, including advertising, recruiting a sales force, and performing promotional activities. A branch office is liable for payment of Japanese taxes. Furthermore, the establishment of a branch office is considered a direct investment and requires reporting to the Ministry of Finance.
  • A Company
Setting up a wholly-owned corporation will involve more time and expense, but it can offer an effective means of guaranteeing better protection for proprietary information, obtaining credit, and penetrating markets which have subtle but substantial barriers to imports.
 

Franchising

Evolution of the Sector
According to the Japan Franchise Association (JFA), in fiscal year 2019, the number of franchise chains in Japan was 1,324, four more than last year. The number of shops in Japan was 262,869, a decrease of 1,687 shops from last year. Sales decreased for the first time since 2008 (-0.6%) to 26.648 trillion yen.

Popular franchise chains in Japan include 7-Eleven convenience stores and general merchandise stores Ito Yokado (which are both held by parent company Seven & I Holdings Co.. Ltd.), fast food chains KFC and Subway, coffee shop Starbucks, DVD rental shop Tsutaya, and second hand shops Book Off and Hard Off.

Identifying the right business partner in Japan requires time and effort, and it can be difficult to find companies that are willing to invest in master franchise rights or to invest in business concepts that do not have a clear market or strong growth potential in Japan. Therefore, thorough market research and a long-term commitment are necessary for foreign companies that are considering launching a franchise-based business in Japan.

The Medium and Small Retail Commerce Promotion Act (Law No. 110 of 1973) (MSRCPA) regulates franchising that falls under the definition of "specified chain business". A "chain business" is defined as a business that, under an agreement with standard terms and conditions, continuously sells or acts as an agent for sales of products and provides guidance regarding management, primarily targeting medium and small retailers (Article 3, paragraph 5, MSRCPA). A "specified chain business" is defined as any chain business where a member (Article 11, paragraph 1, MSRCPA):
-    Is allowed to use certain trade marks, trade names or any other signs.
-    Must pay joining fees, deposits or any other monies on becoming a member.
Apart from the MSRCPA and the Guidelines concerning the Franchise System under the Anti-Monopoly Act, there is no law that specifically regulates franchising. There are, however, many laws that regulate specific industries or businesses, which may also apply to franchises. The franchisor must therefore comply with the applicable laws and regulations.
Some Big Franchises
Family Mart, convenience stores
Seven-Eleven, convenience stores
Edo Japan, Japanese fast food
Members of Japan Franchise Association
For Further Information
Japan Franchise Association
Japan Franchise Opportunities
 

Finding Assistance

Export Trading Companies
Marubeni Corporation
Mitsui&Co Ltd
Mitsubishi Corporation
Itochu
PMC
Recommended Resource
Japan Trade Portal
Asia Trade Hub
 
 
 
 

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Learn more about Sales in Japan on Globaltrade.net, the Directory for International Trade Service Providers.

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Latest Update: May 2022