The Japanese retail market remains one of the largest and most vibrant in the world. After many years during which the presence of European retailers was more or less limited to the luxury sector, the last decade has seen the rapid establishment of new European retailers both in fast fashion and home interiors. Their success clearly benefits Japanese consumers by offering them greater choice, often better prices and, frequently, completely new products previously not available on the market. It also benefits the Japanese economy at large, by creating considerable employment and helping to revitalise cities that were previously in decline. Japanese retailers and wholesalers themselves gain from the presence of European competition as it provides incentives to further strengthen their global competitive edge.
With the implementation of the EU-Japan EPA, the market access for European products and services has improved. Tariffs has been reduced. In most cases it has gone down to zero already on the day of entry into force. The EBC is also hoping for a more harmonisation of standards and regulations between the two economies. Where harmonisation is difficult or requires time to implement mutual recogition of standards, approvals and test result shall be established to improve the situations. The EBC would like to point out that the protection of the consumer will not be reduced as both economies have robust systems in place to achieve this. We are hoping that EU and Japan will work closely in this respect and make use of the regulatory cooperation mechanism in the EPA.
European wholesalers and retailers still face considerable barriers in the Japanese market that make it difficult to take advantage of global-scale logistics. This creates higher costs and therefore higher prices for Japanese consumers. The Government of Japan still continues to insist on applying unique national rules and regulations to products that have already met European standards. Japan’s reluctance to accept EN (European) and ISO standards or CE (conformité européenne) markings delays the introduction of new products to the market and increases import costs. While sharing the Government’s concerns regarding consumer protection, the EBC believes that European rules more than adequately address these same concerns, ensuring safe and good-quality products. Mutual recognition of rules and regulations therefore makes sense and would create a level playing field for all players. Just one example of the barriers encountered by European retailers and wholesalers is the unique labelling rules, specified by Japan’s Consumer Affairs Agency (CAA). Other examples include non-acceptance of non-SI units (International System of Units), importing process for food contact products (UCP) regulated by Food Sanitation Law, and non-recognition of global standards and European approvals. Furthermore, non-harmonised procedures for importing, certifying and labelling consumer products are unnecessarily costly and complex.
The Japanese Electrical Appliance and Materials Safety Act, known as the Denan Law, is a further source of unnecessary cost and complexity for retailers and wholesalers. The Ministry for Economy, Trade and Industry (METI) lists various groups of products that fall within the scope of this Law. However, it is often difficult to decipher whether a specific product is covered or not, resulting in uncertainty about test requirements. In addition, there has been a lack of harmonisation in this field, and where the Japanese equivalent to the IEC (International Electrotechnical Commission) standards is used, it is not always based on the most recently updated IEC standard.
Finally, the EBC is also concerned about Japan’s Antimonopoly Law, following an apparent relaxation of prohibited vertical restraints with no safe harbour, and enforcement of the Subcontractor Law, without bright-line rules, against retailers and wholesalers. As a result, application of the Law has become more unpredictable and non-transparent, thereby increasing the difficulty of compliance. There is a real risk that this situation could be exploited and the market manipulated, so we urge the Japan Fair Trade Commission (JFTC) to issue as soon as possible clear written guidance that facilitates compliance.
Key issues and recommendations
Denan Act or PSE requirements
Prohibitive import, testing and certification procedures
Competition law/Anti-trust legislation
Limitations on selling liquor via telecommunication channels
Mr. Karl Hahne
President & Representative Director
Hafele Japan K.K.
Totsuka-ku, Yokohama 244-0806
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