Japanese Distribution System

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The term "distribution system" refers to a system of interdependent organizations that are involved in carrying out marketing activities in order to create and deliver value in the form of products and services to intermediate and final customers or clients.


Wholesalers - Intermediaries or middlemen who buy products from manufacturers and resell them to retailers. They take the same type of financial risk as retailers, since they purchase the products, keep them in inventory until they are resold to retailers, and may arrange for shipment to those retailers.
Agents and/or brokers - Intermediaries who work between suppliers and retailers. They do not take ownership of the products they sell and are independent sales representatives who typically work on commission based on sales volume. They can sell to wholesalers as well as retailers.
The Japanese distribution system accommodates the cultural and economic concerns of business establishments in Japan. This is such as business relationships are heralded as more important than implementing immediate and profitable business decisions that might trigger a strain in fulfilling social obligations to the participants in the distribution channels.
Both Japanese and foreign observers, above all the United States, claimed that such intimate business relationships between an (in comparison to the United States) unusually high number of small players (both retail and wholesale establishments) not only formed a non-tariff barrier to foreign suppliers, but that such business relationships were protected ...
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