This paper considers a classic traditional Japanese "industrial district" (jibya sangyo) famous for its ceramic tableware, and looks at the dynamics and limitations of its success since the Second World War. The Arita ceramicware industry has an impressive history going back to the seventeenth century, and a notable record of post-war success. It has shared many of the features of classic Italian industrial districts, notably the "Marshallian industrial atmosphere" and (despite their ambiguities) producer traditions of trust and co-operation. But, unlike the most successful Italian districts, it has not gone on to link craft to innovation in products and techniques, and it has not developed a dynamic design culture. This paper considers two factors that have played an important role in this trajectory. Entrepreneurial innovations in distribution systems were a powerful factor in Arita's post-war success but ultimately soured its long-term development. Its legacy of quality and tradition has been its most powerful asset, but it has also been divisive within the community and has impeded its ability to develop both its art and its technical base.