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Friday, Sept. 19, 2008

Foreign magazines stuck in limbo

Distributor Yohan's bankruptcy leaves stores scrambling to meet customer demand


Staff writer

The National Azabu supermarket in the posh Minami-Azabu district in Minato Ward, Tokyo, offers an impressive variety of imported foods and other goods. But its selection of foreign magazines and books has been sharply curtailed since July 31, when Yohan Inc., which had a virtual monopoly on the sector, went bankrupt.

News photo
Mixed media: Foreign magazines, most of them old issues, are displayed at the National Azabu supermarket in Minato Ward, Tokyo, this week. MINORU MATSUTANI PHOTO

"We receive complaints from four or five customers every day," said Hiroshi Hirota, in charge of book and magazine procurement at National Azabu.

The supermarket, which relied on Tokyo-based Yohan for its entire lineup of foreign magazines, is feeling more pain than its customers.

In August, it saw a 60 percent plunge in foreign magazine sales and a 10 percent drop in foreign books from the same month last year, Hirota said.

Bringing in Time, Fortune, Newsweek, BusinessWeek and The Economist is no problem, but "for everything else, we are not getting them properly," he said, adding the supermarket offered about 700 different foreign magazines until the end of July.

In early September, Hirota received delayed shipments of 40 other titles. The People magazine issue, for example, was dated Aug. 15, he said.

National Azabu isn't alone. The shortage is being felt by all the bookstores that stock foreign magazines and books nationwide, said Makoto Moroyama, a reporter for Shinbunka newspaper, which specializes in the publishing industry.

"Yohan's bankruptcy was too sudden and it is taking a long time for other book distributors to establish a supply system," he said. "Simply put, they do not have the knowhow for handling large volumes of foreign magazines and books."

No statistics are available on the size of the market for foreign magazines and books, or on how big a hold Yohan had.

Moroyama said Yohan probably controlled about 95 percent of the market for foreign magazines, while a Tokyo-based market researcher said the figure was at least 80 percent.

Yohan, founded in 1953, commanded about half of the market for foreign books, Moroyama said.

The situation in Japan was rare in that one company effectively dominated the entire market, he said. Many publications, like Time and Newsweek, are rivals, so they usually prefer to use different distributors, he said.

Only a handful of the 1,000 or so foreign magazines Yohan was dealing in are now being distributed, Moroyama said.

But three companies — Japan Publication Trading Co., Nippon Shuppan Hanbai Inc. and Kinokuniya Co. — are taking over some of the titles.

Tokyo-based Japan Publication Trading, which imports and exports books, CDs and DVDs, said it has signed contracts with 400 magazines, all from the United States.

But in reality, the only magazines the company is properly supplying are Time and Fortune, Moroyama said.

Miyuki Tsutsui, the company's purchasing chief for foreign magazines, said it gets the 400 titles "whenever they are shipped" and declined to say when they would be distributed properly. She stressed that the company is sorry for making customers wait.

Atsushi Ogi, who manages the company's foreign book division, said the volume bought from overseas publishers and sold to Japanese bookstores has "increased astonishingly."

Meanwhile, Nippon Shuppan Hanbai, Japan's largest publication distributor, has been supplying Newsweek, BusinessWeek and The Economist to bookstores via wholly owned subsidiary DIP Inc. since Yohan went bust.

Nippon Shuppan Hanbai and Japan Publication Trading are competing to win contracts with the British, French and German magazines Yohan used to handle, Shinbunka's Moroyama said.

Kinokuniya Co., Japan's largest bookstore chain, said it is having a difficult time procuring U.S. and some British magazines to which Yohan had exclusive rights, but all other magazines are fine because it has been importing them itself.

It has never bought foreign books from Yohan, so there are no problems on that end, spokesman Hideo Sakamoto said.

Also, Tokyo-based Kinokuniya signed a contract with about 50 Italian magazines that Yohan used to import and has started selling them to other bookstores, he said. Besides those titles, Kinokuniya sells what it imports only at its outlets.

These three companies should learn from Yohan's mistakes, according to the market researcher, who asked to remain anonymous.

The researcher said Yohan went under because people are increasingly shunning bookstores and buying foreign publications via the Internet and other routes, and that Yohan was flooded with massive inventories of books returned by the stores.

It didn't help that one of its investors, Polaris Principal Finance Co., was having a dispute with Yohan executives, which slowed its business, he said.

In addition, Yohan handed its logistic management duties to a cheaper firm in April that failed to handle inventory-sorting. This forced it to send employees to book warehouses to do work manually, costing the company sales opportunities, the researcher said.

As Yohan's cash flow worsened, it was unable to pay foreign publishers for magazines and books and finally declared voluntary bankruptcy at the Tokyo District Court with ¥6.5 billion in debt on July 31.

Group company Yohan Book Service, which operates Aoyama Book Center and other bookstores, filed a request with the court to apply the Civil Rehabilitation Law, and secondhand book dealer Bookoff Corp. has said it is willing to take over Yohan Book Service's operations.

A Bookoff official said no decision has been made. Yohan Book Service and its legal adviser Oh-Ebashi LPC and Partners declined to comment on the current situation.



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