Many of you have likely experienced selling personal items, such as used clothing or electronics, via online auctions or flea market apps. The "reuse" or secondhand market in Japan is currently booming. In 2023, the market size grew by 7.8% year-on-year to reach 3.1227 trillion yen (approx. $20 billion USD / £16 billion GBP). Estimates suggest this expansion will continue and potentially reach the 4 trillion yen mark by 2030.

While consumer-to-consumer trading via apps has permeated daily life, doing this as a business requires strict adherence to Japanese law. What regulations govern these transactions?

In this article, we outline the "Kobutsusho" (Secondhand Dealer) License, a mandatory requirement for anyone looking to launch a business involving secondhand goods in Japan.

What is "Kobutsu" Business?

To commercially trade secondhand goods, you must obtain a Secondhand Dealer License. The application is submitted to the police station with jurisdiction over your business office. This is a unique feature of the Japanese system compared to business licensing in many other countries.

First, what constitutes "Secondhand Business"? The law generally classifies it into three types:

1. Secondhand Dealer (Kobutsusho): Buying, selling, or exchanging secondhand goods (either your own inventory or on consignment).
2. Secondhand Market Owner (Kobutsu-ichiba-nushi): Operating a physical market or exchange where Secondhand Dealers trade with one another (B2B).
3. Secondhand Auction Broker: Facilitating the buying and selling of secondhand goods via auctions (specifically electronic/online auctions defined by government decree).

For most readers: If you plan to start a used car dealership or export vintage Japanese clothing to overseas markets, you fall under Category 1 (Secondhand Dealer).

Note regarding Category 2: A "Market Owner" strictly refers to someone managing a venue for licensed dealers. A standard flea market targeting general consumers does not fall under this specific definition.

Defining "Secondhand Goods" (Kobutsu)

Under the Secondhand Articles Dealer Act, what exactly counts as a "used" item? It is broadly divided into three definitions:

1. Items that have been used. (The obvious category).
2. Items that have not been used but were traded for the purpose of use.
3. Items from the above categories that have been maintained or repaired.

Important Distinction: Category 2 often surprises foreign entrepreneurs. In Japan, even if an item is "New in Box" or in "Mint Condition," if you bought it from a consumer or another retailer for the purpose of resale (rather than direct from the manufacturer or wholesaler), it is legally considered "secondhand." Category 3 refers to items repaired without altering their fundamental nature.

The 13 Legal Categories of Goods

When applying for your license, you must classify your goods into one or more of the following 13 specific categories defined by the Enforcement Regulations:

1. Fine Arts (Paintings, sculptures, crafts, etc.)
2. Clothing (Kimono, Western clothing, other apparel)
3. Watches & Jewelry (Eyeglasses, gems, accessories, precious metals)
4. Automobiles (Including parts)
5. Motorcycles & Mopeds (Including parts)
6. Bicycles (Including parts)
7. Photography Equipment (Cameras, lenses, optical devices)
8. Office Equipment (Computers, calculators, copiers, fax machines, typewriters, etc.)
9. Machinery & Tools (Electrical machinery, construction tools, chemical machinery, etc.)
10. General Props & Goods (Furniture, media/games, musical instruments, sports equipment, CDs/records, etc.)
11. Leather & Rubber Goods (Bags, shoes, etc.)
12. Books
13. Tickets & Vouchers (Gift certificates, department store vouchers, stamps, etc.)

The Application Process

To determine if you need a license, ask yourself two questions. Are the goods "Kobutsu"? Does my activity constitute a business?

If the answer is yes, you must appoint a Manager (Kanrisha) for each business office.

• Requirements: No specific certification is needed to be a Manager, but they cannot be a minor and must not fall under specific "disqualification clauses" (such as certain criminal records or bankruptcy without reinstatement).
• Corporate Officers: If applying as a company, all officers must also clear these background checks.

Once you have verified eligibility, you will gather the necessary statutory documents and submit them to your local police station.

A Professional Tip: In many Japanese police stations, there may only be one or two officers assigned to the Safety Division who handle these specific licenses. We strongly recommend making an appointment before visiting. If you show up unannounced and the officer is out on patrol or in a meeting, they cannot accept your application, and you will have to return another day.

Timeline and Next Steps

Once your application is successfully accepted, the standard review period is roughly 40 to 60 days, though this varies slightly by prefecture. When the permission is granted, the police station will contact you to collect your license, marking the official start of your business.

This covers the broad framework of the system. In our next article, we will dive deeper into the specific conditions for obtaining the license and critical compliance points you need to know to operate successfully.

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