NRI Papers
No. 194 May 1, 2014
  The Possibility of Developing "Japanese-Style Distribution Infrastructure" in the ASEAN Region  
Masakuni NEGISHI and Takashi SHIMASAKI

In contrast to Japan's shrinking distribution market, the fast-growing ASEAN (Association of Southeast Asian Nations) distribution market, where modernization efforts are under way, has been drawing much attention. However, little progress has been made in developing a Japanese-style distribution system overseas because of its intricate structure. Currently, serious consideration has been given to exporting "Japanese-style distribution infrastructure" as a package and developing such infrastructure in overseas markets.

Japanese-style distribution infrastructure that needs to be developed in foreign markets consists of "hard infrastructure," such as roads and ports, and "soft infrastructure," such as business practices and rules, distribution structure and an appropriate way of dividing roles.

A look at ASEAN countries reveals that they face the necessity of meeting increasingly modernized consumer needs, while maintaining their existing complicated multilayer distribution industries. In this regard, Japanese-style distribution infrastructure would be able to better meet the needs of these countries because the structure is closer to that of Japan than to that of Europe and the U.S., thus having greater competitiveness than that of Europe and the U.S.

In developing this infrastructure in foreign markets, the following three measures should be strengthened: (1) promoting exports, (2) supporting business development in target markets and (3) supporting business expansion in target markets.

The key points for success in this undertaking include: (1) ensuring transparency, clarity and openness in the division of roles and establishing rules for profit sharing, (2) setting up an organization dedicated to global development that has expertise in region-specific distribution systems and creating headquarters functions and (3) receiving support from the Japanese government in the form of "mid- to long-term investments," rather than obtaining "subsidies that have only a short-term effect."

Contents
I Why Should "Japanese-Style Distribution Infrastructure" be Developed in the ASEAN Distribution Market Now?
II What "Japanese-Style Distribution Infrastructure" is Needed?
III Needs of Target Countries and Competitive Strength of "Japanese-Style Distribution Infrastructure"
IV Mechanisms Needed to Build "Japanese-Style Distribution Infrastructure"
V Key Points for Success in Developing "Japanese-Style Distribution Infrastructure"

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