In the good old days when Japan's domestic industry was protected and foreign goods were shut out, even the most inefficient companies thrived. But as pressure from the US and elsewhere grew, Japan was forced to open up its markets. Now a reaction has sprung up and companies under pressure are urging the Government to slam the gates shut once more. Leading the charge are textile makers concerned about a flood of cheap towels from China. The market for domestically made towels has simply dried up. The Japan Towel Industry Association - there is one association for just about every industry in Japan - is tapping a network of politicians within the ruling Liberal Democratic Party (LDP) and has formally asked the Government to 'safeguard measures against increasing imports'. The industry has promised to reform itself so that it can restructure and compete. At first this looks like the Japan of old, when industries routinely sought government protection in defiance of liberalisation pressures from abroad. On the plus side for the industry, World Trade Organisation rules allow countries to implement emergency import curbs in cases where domestic industries are threatened. On the minus side, Japan is a different nation to the days when firms could find a ready ear among LDP politicians. These days consumers wield far more power than companies. While the Government is not keen to see Japanese industry suffer, it is equally unhappy about annoying consumers, who are beginning to form a more powerful lobby and demanding lower prices. Since consumer spending is seen as the key to Japan's economic recovery, the lobby is important. The industry's plight is exemplified by Haruo Yamano, 53, a towel manufacturer from the Osaka area. He was featured last week in an investigation by the Asahi newspaper. The region accounts for 40 per cent of towelling made in Japan, but output is half the level it was 10 years ago when import controls were in place. Half the towel makers are now bankrupt. In Mr Yamano's own factory, three of his seven weaving machines are idle. 'If we operate all the machines, it means we will be producing towels that will only remain in storage,' Mr Yamano told Asahi. When Mr Yamano visited China recently he saw plants that were far more efficient than his antiquated factory, with weaving machines under a single roof producing 10 per cent of Japan's entire output. The equipment was better and the workers were paid a tenth of the salary of Japanese workers. Yet there are about 200 other plants in China just like it. In keeping with the way things used to be done in Japan, the LDP and the opposition Democratic Party have set up working groups to help the textile industry. Even Prime Minister Yoshiro Mori is on board. 'I have expectations for the rebirth of the textile industry, which will be able to compete with imports,' he told the Japan Textile Federation. Mr Mori and other politicians have one eye on the Upper House election this summer, which could result in the LDP losing its majority. The Ministry of Economy, Trade and Industry, which wields the real power in determining trade policies, is also starting to cast a sympathetic eye on the industry. But the other eye is turned firmly in the direction of Japanese consumers, who have become used to cheap imports and can now buy clothes at reasonable prices. They also have a few heavy-hitters in the corporate world on their side, including clothing chain Uniqlo. It has been the major success story of Japanese retailing, buying good quality clothes from abroad and selling them at affordable prices in stylish shops. 'There is no need for Japan to have all kinds of industries,' Tadashi Yanai, president of Uniqlo's parent retailing company, told the Asahi. 'The Japanese textile industry has high technology but unless it considers ways to lower costs and conduct global marketing, it will only perish. Government protection will only end up spoiling the sector.' Textiles are the most notable, but not the only product, to tumble in value as a result of cheap imports. Last month one manufacturer cut the price of steel tubes by 28 per cent, a level half that of nine years ago when import controls were in place. It was the cue for many industries to say the company was 'confusing' the markets. 'Confusion' is a word Japanese groups use for anything that upsets the order of marketing in Japan. Imports are causing 'confusion'. So are companies such as Uniqlo. And the idea that manufacturers now have to compete, and reduce prices, in order to attract consumers, is causing unprecedented confusion. But despite their protests, even textile manufacturers and their associations admit that they are bucking the trend of the times. 'Even if protective measures are implemented now, it would be too late,' an industry spokesman told the Asahi. 'There is no other way for the industry to survive but to create products that attract consumers.'