Toy merchants in Japan Friday formally launched an association to help small toy stores modernize and survive competition from large foreign retailers such as U.S.-owned Toys R Us.

The Japan Association of Specialty Toy Shops, comprising 520 small toy retailers, aims to protect its members from the likes of Toys R Us Japan, the association said.In July, Toys R Us Japan announced plans to open some 100 stores in Japan over the next 10 years. Previously it had announced plans for six outlets over the next three years. Protests by local merchants have helped put the issue of large stores versus small ones on the agenda of U.S.-Japan trade negotiations.

Toys R Us Japan is 80 percent owned by Paramus, N.J.-based toy giant Toys R Us Inc. and 20 percent by McDonald's Japan.

"Japanese small toy store owners must have an organization that speaks for them on a national level," Takanari Seki, the association's vice chairman, told a news conference.

The group will work with operators of small toy stores in regions around the country where Toys R Us plans to open its stores to help them develop ways to compete with the big retailers, Seki said.

He said the association would also work with Japan's government to smooth problems caused by the easing of a law designed to protect small shop owners from encroachment by large retail stores.

After trade talks with the United States in May, Japan relaxed the Large Retail Store Law to make it easier for big retail companies to open outlets in Japan.

"We would like to flourish together with Toys R Us, rather than standing against it," said Toshikazu Koya, the association's chairman.