In 1995, no industrialized nation can be an economic island, yet Japan continues to behave like one. Consider the plight of Japan’s direct marketers. The postal service, which the government owns and operates, charges 80 yen—about 80 cents—to mail a domestic first-class letter. Airmail from the United States or Hong Kong to Japan is only 50 cents. A Japanese marketer could send direct-mail advertising pieces to Japanese households far less expensively from the United States or Hong Kong than from anywhere in Japan. Economically, therefore, it makes sense for the direct-mail industry to use competitively priced foreign postal services—or for the government to make the country’s mail system more efficient and less costly. Instead, the government has made it illegal for Japanese companies to mail such materials into Japan from other countries.
A version of this article appeared in the May–June 1995 issue of Harvard Business Review.