Market Scene : Tiny Tokyo District Is Wired for Electronics Buffs : * More than 400 stores are crammed into 700 square yards. If a gadget isn't there, it doesn't exist anywhere.

By SONNI EFRON

May 12, 1992 12 AM PT

TIMES STAFF WRITER

TOKYO — The place looks like a giant integrated circuit.

It functions as a miniaturized model of Japan’s mighty electronics industry.

It’s called Akihabara, Tokyo’s tiny, teeming electronics district, and an international mecca for gadget lovers, computer buffs, audiophiles, techno-nerds and, probably, spies.

More than 400 stores--some the size of a tatami mat--are impossibly compacted into about 700 square yards of prime Tokyo real estate. Every electronic gizmo imaginable is on sale here, including some new products that won’t arrive in the United States for months or years.

“There is no electronic part or product we don’t have,” boasts Tsuyoshi Sato, who runs a local merchants’ group. “It’s like a Hong Kong bazaar.”

Want to see a high-definition television? At about $17,000 apiece, mom-and-pop stores aren’t stocking the huge sets yet. But manufacturers have plunked down demonstration models in Akihabara, where the world’s fussiest consumers come in droves to preview the latest and greatest technologies.

“We want our newest products on the shelves in Akihabara,” said Sharp spokesman Kuniaki Akagi. “Every electronics company does.”

How about a new Walkman? This year, it’s called the Scoopman, a tiny recorder from Sony that uses a postage stamp-sized cassette of digital audio tape and costs about $700. The truly surreptitious can slink away with a microcassette recorder that can be concealed in the palm of a hand and is aptly named the Spy.

Need a transformer? One store sells thousands of different models that will adapt current for any instrument anywhere in the world. Another shop sells nothing but ball bearings.

In a tortuous underground maze are dozens more tiny shops that sell high-tech components, liquid crystal displays (LCDs), microchips, hard disk drives, central processing units and computer software from around the globe.

Before the Cold War thawed, East Bloc buyers were often seen here brandishing stacks of yen and snapping up precious computer parts.

Now that export restrictions on high-tech products have eased, Russian shoppers buy ready-made computers instead of assembling them themselves, merchants said. But foreigners still make up about a third of the clientele, coming from China, Taiwan, Korea, Southeast Asia, Europe, Africa and the Middle East.

“We have an awful lot of Taiwanese customers,” said Hiroyuki Kimura of Akihabara Electronic Parts, which generates $2 million in annual sales out of a 10-by-4-foot booth two floors below street level. “They buy parts, bring them back to Taiwan and put the computers together there,” he said. “It’s still cheaper” than buying a ready-made computer in Taipei.

African computer dealers come to buy hard disks. Electronic engineers from big corporations buy components to use in prototypes. Sallow, disheveled buyers could be mistaken for mad inventors or terrorists as they paw over obscure parts, memory chips, semiconductors, sensors, specialty tools, walkie-talkies, oscilloscopes, timers, plugs, ports and communications gear.

Then there are the computer, software and video games stores.

“This place is fun because they really have everything,” said shopper Jun Yamashita, 31, who emerged onto the street holding a new Toshiba Dyna Book notebook computer. “If you bargain really hard you can sometimes get a discount . . . but the store owners are not very polite.”

Above ground, Akihabara is anything but picturesque. Its shabby buildings seem to stagger under the weight of hundreds of lurid neon signs. Its streets are disproportionately populated by teen-aged boys and middle-aged men. And everywhere, tinny music blares from the world’s most powerful boomboxes.

Many stores are little more than street stalls that hawk space-age electronics as though they were peddling fish. Computer notebooks and digital diaries are heaped on half-exposed tables along with dozens of different models of portable compact disc players and camcorders. This spring, tiny liquid crystal display televisions are hot. So are hand-held computers that use an electronic pen instead of a keyboard--but so far they are only available in Japanese.

Nearby, appliances stores also overflow their doors, spilling washing machines, refrigerators, vacuum cleaners, microwave ovens and the ubiquitous electric rice-cookers out onto the sidewalks.

Advertising is done by loudspeaker and with garishly colored banners. “Personal computers! Word processors! Ah, cheap!” read one. “Fax machines! Telephones! Videos!”

Competition is ferocious. Ordinarily reticent Japanese buyers can be seen hopping from store to store, haggling like rug merchants for 10% to 30% discounts.

Such price-slashing also means fierce competition within Japan’s famously complex distribution system. Vendors vie for close relationships with the wholesalers, who may offer volume discounts or better terms for favored outlets.

By the time Japan broadcast its first radio program in 1925, Akihabara was already a commercial district with bicycle shops, antique stores and blacksmiths. It burned to the ground in the bombing of March, 1945. Then, a black-market that sold electronics salvaged from war materiel sprang up in the shelter of the train station, where many stores remain today.

Immediately after the war, radios were hard to come by, but students from the nearby Tokyo Electric University used to support themselves by building their own radios and selling them in Akihabara.

By 1950, 50 of Akihabara’s 120 stalls were selling specialty electronics. In 1953, Japan broadcast its first television show. Akihabara was the cheapest place in Tokyo to buy a TV, and its golden age was born.

Today, the district’s hype and hustle draw crowds in good times and bad. Akihabara accounts for 30% of all sales of electronic goods in Tokyo, and 4% of all electronics sold in Japan, said Akira Nagano, spokesman for Matsushita Electric Industrial Co.

Japan’s economic slump has hit the electronics industry especially hard. The stocks of electronic companies have plummeted even deeper than the ailing overall market, their profits have been puny, and Taiwanese and Korean competitors are gaining ground. Akihabara’s vendors complain that the manufacturers haven’t come up with a “must have” new product to stimulate demand, now that most consumers already own a videocassette recorder, a compact disc player and several television sets.

“Japanese have money, so if the manufacturers can produce something they want, it will sell,” said Takashi Onda, a corporate planner at Yamagiwa Corp., one of Akihabara’s largest retailers. “But few products have fresh appeal.”

Sales of what the Japanese call “white things,” or household appliances, are down 10% from last year, Onda said. “Black things,” or audio equipment, is off 20%, he said. Even the Scoopman, while a novelty, is running into resistance because consumers aren’t convinced that prerecorded music will be available on the stamp-sized cassettes anytime soon, Onda said.

When the manufacturers do get a bright idea, however, they are likely to test it in Akihabara, which is the industry’s favorite market research laboratory.

Sharp even invites buyers from Akihabara stores to its marketing meetings, Akagi said. “We show them prototypes that we’re thinking of manufacturing and ask their opinion.”

Akihabara sales figures are also used to help decide production runs. “We can gauge the customer reaction very quickly, so it’s very useful,” Matsushita’s Nagano said. If a product flops in Akihabara, chances are it will never be exported.

Now, the city of Tokyo has plans to bring urban renewal to the heirs of the ramshackle shops that have been peddling electric parts since World War I. There is talk of building an electronics museum, spacious showrooms, and even an international commodities market to trade semiconductors.

“We may move but we want to keep the same atmosphere,” Sato said. “People like it this way.”