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Japan has long been generally known as a retail graveyard, where even global giants like Tesco, Walmart and Carrefour have failed. The rise of Chinese platforms signals a fundamental shift in one among the world’s most closed consumer markets.
Historically, Japan’s retail and ecommerce sector has been defined by its insularity. Local groups comparable to Aeon, Uniqlo and Rakuten have long dominated, because of intricate supply chains, loyal customer bases and supportive regulatory environments. Cultural aspects add one other layer of difficulty for foreign entrants, from the long-standing preference for domestically made products to geopolitical tensions, particularly amongst older generations.
Yet lately, a striking reversal has been under way. Chinese firms, including PDD Holdings’ Temu and Shein, have broken through barriers once considered impenetrable, offering products at prices that undercut local retailers by as much as 90 per cent. Chinese-owned TikTok is preparing to enter Japan’s online shopping market in the approaching months, signalling an extra deepening of China’s retail push into the country.
Their value proposition is obvious: as rising living costs weigh down on households, local consumption habits are being reshaped. Ultra-low prices speak louder than legacy brand loyalty. A broader shift in consumer psychology can be playing a task. Younger shoppers, less attached to national brands and more immersed in global digital platforms, are more willing to experiment. Meanwhile, the standard gap that when shaped perceptions of Chinese products has narrowed, with many items now meeting the expectations of increasingly price conscious buyers.
This shift extends to Japan’s ecommerce sector, which has proven just as difficult to enter as its physical retail landscape. Local giant Rakuten controls nearly a 3rd of all online sales, constraining the expansion potential of foreign entrants. Even globally recognised platforms like Amazon Japan and Yahoo Shopping have spent a long time adapting to the local market. Amazon entered Japan greater than 20 years ago, investing heavily in logistics, customer support and cultural localisation. Yahoo Shopping, while foreign in name, is now fully operated by Z Holdings under SoftBank.
What US and native groups took a long time to construct, Chinese platforms are achieving in a matter of months. While they still trail behind incumbents by a large margin in market share and offer a relatively narrow product range, the shift signals that even probably the most guarded markets at the moment are vulnerable to digital disruption, especially when economic stress and generational change collide.
june.yoon@ft.com
