Uniqlo: leveraging the Chinese market for the first in the world

Yanai is not the first time to come to China, but the significance of this time is somewhat different.

On May 15, the largest flagship store of Uniqlo, the apparel brand of Japan Fast Retailing Group, was unveiled on Nanjing West Road in Shanghai. Yanai, who is Chairman and President of Fast Retailing Group, made a special trip to attend the unveiling ceremony. On the same day, the number of Uniqlo Nanjing West Road stores reached more than 30,000 people, setting a record for the number of single-day customers per store in the Chinese market.

This is just a microcosm of the huge potential of the Chinese market. For Yanai Zhengye, in order to realize the grand goal of building Uniqlo as the world's first-sales clothing brand, the Chinese market is undoubtedly a contestable spot.

Low-key Japanese richest man

For the outside world, the Fast Retailing Group and the Uniqlo do not seem to be the most well-known labels for Yanai, but the words “the richest man in Japan” can make many people brighten up. In the 2009 Forbes magazine's list of billionaires in the world, Yanai is becoming the richest man in Japan for US$6.1 billion. This year, the scale of his personal assets further increased to US$9.2 billion, ranking the top of Japan’s richest people.

It may seem strange to rely on selling clothes one by one to become the richest man. However, the 20,000-year growth experience of the Uniqlo brand has turned this myth into a reality. According to the latest data, Fast Retailing Group, which owns the Uniqlo brand, achieved a turnover of 685 billion yen (approximately US$739 million) in 2009, operating profit of 101.3 billion yen, and a total of 2,173 branded stores. The company plans to expand sales by 10 times in the next 10 years to reach 5 trillion yen.

Yanjing is very indifferent to the title of the richest man. He believes that having money is naturally a good thing, but blindly pursuing interests and only wanting to make money will not be truly successful. A friend familiar with Yanjing Zheng told the China Securities News reporter that Yanai was a low-key person and he was not valued by the outside world. He was more concerned about the quality of the product, just like he said. “It is not like I am pursuing profit like a businessman. It is better to say that I am pursuing sincerity."

Yanai is convinced that the biggest secret of his success is the grand ideal of becoming an industry leader in his early years, and has always linked this vision with the ideals of all employees. In the "Best President of the Year" survey held by an authoritative organization in Japan at the end of last year, Yanai was the first to win with 256 votes, Toyota Toyota, the leader of Toyota Motor, and third Japan. Softbank chief executive Sun Jung is far behind him.

Leveraging the Chinese market

According to statistics, as of February 2010, Uniqlo opened 916 direct-operated stores worldwide, of which 791 were from Japan and 125 from countries and regions outside Japan. Uniqlo ranks fifth in the current sales ranking of global specialty garment manufacturing retailers, but from the sales growth point of view, Uniqlo has surpassed the first and third European producers ZARA and H&M. Uniqlo expects sales to reach 830 billion yen and operating profit of 140 billion yen in the fiscal year ending in August this year.

During the expansion of Uniqlo, the Chinese market has become an important area that cannot be ignored. According to Yanai, the Chinese market is the largest market in the world. Only winning the Chinese market can ensure that Uniqlo gains advantages in the future of global commercial competition. To this end, Yanai is set to achieve the next goal: In the next 10 years, the number of stores in China will be expanded to 1,000, and by 2020 sales will exceed that of Japan, reaching 1 trillion yen (approximately RMB 73.9 billion).

As of May 1, 2010, the total number of Uniqlo stores in China has reached 64, including 15 in Shanghai and 11 in Beijing. Uniqlo stated that it will open 100 direct-operated stores in China's first-tier cities as early as possible, and strive to advance to second-tier cities in one or two years to increase brand awareness.

Growing with partners

In the growth of Uniqlo, Chinese companies played a very important role. Currently, about 85% of UNIQLO's global sales of goods are produced in cooperative factories in China, and the total annual production exceeds 500 million pieces. In the past 20 years, the total number of UNIQLO garments produced by Chinese companies has exceeded 4 billion.

Unlike the simple conclusion of the contract, the relationship between Uniqlo and the partner is more similar to growth, and Yanai is calling it the "fate community." In the cooperation, Uniqlo not only brought orders, but also brought “Technical Craftsmen” team for product development and production management to the partners. Yanai said that what he valued was to bring more orders to each cooperating manufacturer and at the same time strengthen the cooperation between the two parties and play a complementary and mutually reinforcing role.

In fact, Chinese textile companies have already got sweet fruits from the growth of Uniqlo. The Ningbo company Shenzhou Knitting, which has been working with Uniqlo for 13 years, has now become the first large-scale factory for knitwear products. More than 40% of its products are Uniqlo's products. At present, there are 70 Chinese companies that cooperate with Uniqlo, such as Shenzhou Knitting, and the top five companies in the Chinese textile industry are Uniqlo suppliers.

In 2009, UNIQLO was even more amazing. It formed a strategic partnership with China Electronics [1.17 -11.36%] business leader Taobao.com, and set up an online flagship store. In this regard, even Alibaba [15.52 -1.90%] at the helm of Ma Yun felt that it was rare for Yanai to dare to break the original business model and come to cooperate with the Internet.