According to a report in the Financial Times, the Japanese government is contemplating new regulations for foreign investors in that country. If the new regulations are passed, large foreign retailers would have difficulty establishing a presence in Japan. This has sparked accusations that Japan is trying to protect its small local retailers from foreign competition.

According to experts, the Japanese Ministry of Economy, Trade and Industry, and the Ministry of Land are considering new rules that would discourage foreign retailers from settling on agricultural land on the city outskirts.

The move would have major repercussions for retailers like Ikea, the Swedish furniture group that pans to open two new stores there next year. US retail giant Wal-Mart has ties with Japanese retailer Seiyu.

“These new regulations would be tantamount to a regression in regulations governing retailers,” Kazumasa Konno, director of the Japan Chain Stores Organisation, told the FT. “From the point of view of a foreign company, these new regulations and laws would deter investment by retailers. Japan would be seen as a difficult country in which to establish operations.”

It would also impact plans by Japanese retailers like Aeon and Ito-Yokado to expand their operations and set up new stores.

Experts have pointed out that building permission will be subject to local governments, which protect the interests of their local retailers. They will be concerned that large foreign retailers will bankrupt smaller local ones.

Large retailers can argue that the new regulations are unconstitutional because they are in violation of a law that prohibits supply-demand manipulation. In fact, Aeon has already done so.

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