The Japanese distribution system is well known as being too long and complicated to understand due to Japanese-specific distribution practices such as distribution affiliates, differentiated rebates, fixed retail pricing and the return of goods. The Japanese distribution system may have rationale if it saves transaction costs by sustaining long-term transactions that can induce shared communication and flexibility. However, the Japanese distribution system with partial rationale can also exist in the form of non-tariff barriers, and closed and often unfair terms for foreign firms when they enter the Japanese market.

This study examines the Japanese distribution barriers as one of most important non-tariff barriers of the Japanese market and gives implications for the Korea-Japan trade policy.