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Costs Increased Several Times From Dock to Store Shelf : Japan's Consumers Pay High Price for Imports

December 01, 1985|SAM JAMESON | Times Staff Writer

TOKYO — During a visit to Tokyo's Tsukiji fish market, Mayor Ed Koch of New York said he was told that the best tuna sells for $9 a pound and comes from New York.

"When I asked them what they were paying New York fishermen for that tuna, there was total silence," he added.

Prime Minister Yasuhiro Nakasone's government, however, recently did shed some light on what happens to the prices of other foreign products after they reach the Japanese ports:

- A bottle of Chivas Regal, Old Parr, Logan or Haig & Haig Pinch Bottle whisky, all identified as imports on which the heftiest margins are levied by Japanese importers, wholesalers and retailers, costs a mere $3.50 to $4.50 landed at a port in Japan. But for the consumer, it is priced at $50. Top-quality brandy, like Courvoisier V.S.O.P., imported at $4.50, sells for $60.

- Top-quality imported wine, for which the consumer pays $15 a bottle, lands at Japanese ports at for a cost of as little as $2.40.

- A cosmetic item imported at a cost of 50 cents often will wind up on a store shelf priced at $5.

- A man's overcoat costing $180 at the dock will sell for $600 in the store.

- As much as 50% of the retail prices of such food products as bananas, grapefruit, jam, tea, lamb, honey, natural cheese, flavorings, instant coffee, tuna and shrimp goes to distributors. They also pocket as much as 70% of the price that Japanese consumers pay for lemons, olives, frozen vegetables and candy.

- Prices of such imports as watches, leather briefcases, cooking utensils, toys, textiles, ceramics, smoking pipes and some furniture items after tariffs are paid, more than triple as they pass through the distribution system.

- Prices before tariffs of shoes, leather briefcases, cooking utensils and shirts rise by four times or more before reaching the consumer.

Four government agencies were ordered by Nakasone to examine how Japan's often-criticized distribution system contributes to making foreign products expensive here. They failed to find any item among the 59 imports that they surveyed that did not at least double in price from dock to counter.

The National Tax Agency, the Economic Planning Agency, the Ministry of International Trade and Industry (MITI), and the Agricultural Ministry, in separate reports, concluded, however, that the distribution system was not the main culprit. Although exceptions--such as whisky, brandy and wine--were found, the ministries and agencies reported that, in general, distributors do not make bigger margins, in percentages, for foreign products than they do for domestic goods.

All of the agencies cited only percentages, not absolute sums of money, in disclosing the breakdown of what goes into a retail price of consumer goods. The amounts of middlemen's margins could be determined only in a few cases in which the agencies cited the retail price of the item they surveyed.

Import Agents Cited

The culprit, in most cases, was identified as the Japanese import agent.

The Economic Planning Agency discovered that distribution costs account for an average of 59% of the retail prices of the 15 daily-use consumer products it surveyed, compared to 40% for similar domestic products. But if import agents' margins were subtracted, distribution costs for the foreign products amounted to 44% of the retail prices, on average, or only slightly higher than distribution costs for domestic goods.

Import agents took a margin equivalent to 15% of the retail price of the foreign goods that they handled but spent between one-third and two-thirds of that amount to advertise the foreign products, the Economy Planning Agency and MITI found. Wholesalers get 14%, while retailers, on average, take 34% of the retail price, the Economic Planning Agency added.

The major case of outright profiteering involved imported whisky, brandy and wine.

The Tax Agency's survey showed that import agents add an average of $22.50--as much as 45% of the price a consumer pays--before they pass along a bottle of Chivas Regal to a wholesaler, who, in turn, supplies a retailer. The import agent's fee was the biggest single part of the retail price.

As much as 73% of the price paid by the consumer for imported whisky is raked off by import agents, wholesalers and retailers, compared to an average of only 23% of the retail price which goes to distributor costs for Japanese whiskey.

The revelation, with its implied criticism of the huge markups, stirred a protest from the Scotch Whisky Information Center here. It charged that the report was designed to detract attention from a European Community study that condemned Japan's system of taxes and classifications of whisky as favoring domestically blended alcoholic beverages.

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