How Uniqlo is occupying the market in China

Recently, the Japanese apparel brand Uniqlo's parent company Fast Retailing Group announced that the company will be in Hong Kong in the form of pre-sale securities (HDR) on the listing of the Hong Kong stock Exchange. This listing does not issue new shares do not raise the way to raise the visibility and influence in the Chinese market, consolidating China as its largest overseas market leading position.

In Japan, Uniqlo has been selling at a low price strategy, but in China, the response is not very optimistic, so penning adjustment strategy, the customer base positioning in the middle of the crowd, and the introduction of Japanese-style services and advanced retail experience, has lasted 8 years, so that China has become the largest overseas market.

According to the Chinese data of Uniqlo, by the end of November 2013, Uniqlo has 856 shops in Japan, 512 overseas, including 270 Chinese wine, which is expected to increase to 1000 by 2020. Such data is enough to illustrate everything.

Last September 30, Uniqlo opened the world's largest flagship store in Shanghai, with more than 8,000 flat super shops over the 5000-ping flagship store in Tokyo Ginza and the flagship Uniqlo store in New York's Five Avenue.

And penning, CEO of the Global senior executive vice president of Fast Sales group, and the revelation of Penning's 8 years in charge of China, how to make Uniqlo take root in China and gradually develop into the world's largest overseas market.

Here is Mr. Penning's oral record:

Yanai was just a small town owner.

I came out of school to join Uniqlo, I studied in Japan, is a master of business, the main financial and economic. Since the business and business related, I think why not find a company to practice, to see if my book knowledge can really apply to the reality. The chance is to meet the fast sales in the recruitment shop long, I want to try, did not expect the interview is Mr. Yanai interview. It was in 1994, when Uniqlo was still a small company, with sales probably less than one-third of the current market in mainland China. I did not know that fast and Uniqlo, even the location of the company Sks County do not know where, because I have been living in Tokyo.

I ran to the pass to interview, saw the boss Yanai after, was a great impact. In our words, he was just a small boss of township enterprises, when in the country, green mountains and blue Hills. But in the country let me see that there is such a business, his dream is very huge, he told me at that time, not to say that a good township enterprises, his first sentence is to become the world's largest enterprises, the world's first enterprise, you to assist me, or you to assist me.

I think it's strange. He asked me what you would do in 10 years. I said I wanted to be a boss. He is also very strange, because Japan's lifetime employment system makes many ordinary employees do not have the ambition of the boss, as long as in a business honest work for 30 years, 40 years, this lifetime is guaranteed. He listens to me to be the boss, he is very approving, say you come, let you have the big opportunity, (here) is lets you become the boss the enterprise. I was also very simple, feel is also an opportunity, came to the Uniqlo.

I did it from the clerk. Many people can not imagine, a master's to do a shop assistant, every day to sweep the floor, folding clothes promising? In fact, I have had such a doubt, I entered three months later, every day in the sweeping and shouting "welcome", I often ask myself: I have a future?

At that time often can see Yanai, I think he this person dares to say, very forthright, won't say leave a few words, he thought words will speak out.

I did the shop for half a year, and then do shop operations to do for the time. But our age was very hard, the foundation is to play the most solid, I told the staff today, they were surprised: now Uniqlo a shop about 1000 square meters, with 30 employees to 40 people, and we were more than 500 square meters of shops, normal attendance number is 3 people. At that time although not so many customers, but my store budget is also more than 1 million RMB one months, this is not low, at that time our price is lower than now, because the brand has not been made out, and the store is almost 600 square meters. I contacted all kinds of business, and I said to my staff, "I'm definitely stepping on a sewing machine faster than you, and I'm folding my clothes right now, which is the basis."

Success in positioning in Hong Kong

Because our business is growing, there are all kinds of new business, all kinds of challenges. I have been in the shop after the operation, for a long time to do overseas supply chain to build development. Because I am Chinese, a large part of the business is to build a supply chain in mainland China, for nearly six years, and then began to help Uniqlo in the early development of China's mainland to do retail.

We entered China as early as 2001, because we had not joined the WTO, we did not allow foreign capital to come in directly, we cooperated with a supplier in the form of the retail point of cooperation, the State has such provisions. At that time the brand also called Uniqlo, help to create goods, and then back to the head office to participate in mergers and acquisitions business.

I really started taking over the Chinese market in 2005 when the Hong Kong market was going to expand and I was appointed CEO of the company in Hong Kong. Hong Kong's Uniqlo store was very successful and was opened September 30, 2005. Hong Kong's model was surprised by Japan, I made the gross margin is higher than the Japanese market, my price is also more expensive than the Japanese market, I am not a single to raise prices, but let this increase in the acceptable range. How to get the consumer to accept it? is the greatest satisfaction (for the consumer) to accept through this shopping experience.

To sum up, the success of Uniqlo in Hong Kong lies in our emphasis on experience, service, details, the most important thing is to achieve a precise positioning target customer base.

In Hong Kong, if Uniqlo is facing the general public, it will inevitably lead me to compete with some local brands such as our own. With the local brand to compete, my own value is difficult to maximize the play out, because I am the international brand, from this point of view, I to the Uniqlo positioning is higher than Hong Kong local brand high-end, Customer base aimed at the middle class.

The position in Hong Kong and mainland China is the same, the middle class, but the action is different. Hong Kong and the mainland have a very different place is that Hong Kong is very pro-Japanese Hari, the locals think that Japanese things are very attractive, because their main consumer groups from the Japanese animation, playing Japanese toys grew up, Japan is very emotional. I wanted to maximize the added value from Japan. To give a simple example, in terms of publicity, Uniqlo was in Japanese on the signboards at the time, which is not possible in China and must be in Chinese, but Hong Kong is allowed and there is no specific requirement, and I have used it skillfully.

At that time, Japanese colleagues felt very strange, saying that we were originally from Japan, why to speak Japanese, listen to hear tired. I say no, you do not know the people of Hong Kong, because I feel in Hong Kong, let them know that one more Japanese, it will feel that your value will be a grade, this is very important. But in mainland China, it is impossible to do so because of a number of issues of national sentiment, or problems with institutional rules. But it can be done in other ways, for example, when consumers in the mainland have not yet received what is really good service, we strengthen the service of Uniqlo. We have a word is "Uniqlo equals service", in the service to make customers surprised, customers to your brand will be looked at, will feel that you provide value is valuable. I grew up in Beijing, Beijing before a wangfujing department store and Xidan shopping malls, they sell things are thrown over, we have experienced as a child.

Uniqlo China price higher than Japan could

After the success of Hong Kong, the company considered to bring some new changes to China, when my predecessor, Morninghill, was also a Chinese in charge of mainland China. I was in the end of 2005, when the mainland has nine stores, two in Beijing, six in Shanghai, one in Hangzhou, the board of directors gave me the first task is to turn off the two stores in Beijing, focus on the Shanghai shop to do a good job.

Uniqlo had not opened up for a long time in mainland China. The reason is to copy the Japanese approach, for everyone, take the lowest price in the market. But what kind of problems will inevitably arise, we must face the problem of China's tax. China's tax is very high, such as 17% value-added tax, as well as overseas procurement of some raw materials to have higher tariffs, resulting in a certain cost pressure. To relieve the pressure, we have changed a lot of products to logo design, Chinese style, we use the fabric is different from foreign, why do this, because the price must be lowered, prices down after the sale of a problem, we are not the lowest price, because many enterprises The industry will compete with us at a lower price. The result of this competition is that everyone is doomed.

In the face of such a difficult situation, I keep thinking, the question is where. Later I found that Chinese consumers do not need a price war, the preferential price is gratifying, but more importantly, your goods will bring him what kind of value, it is very important. For the international brands such as Uniqlo, it is very important for customers to bring the sales experience that he could not enjoy at home, after all, at that time, not so many people can go abroad as casually as today, to travel and contact with the outside world. So we have foreign relatively in the retail aspect of the more advanced things to move in, such as good service and so on. This has caused a certain impact on Chinese consumers, which has aroused their interest and become a bright spot.

Of course, the introduction of Japanese-style services is to pay the cost, at that time we put the positioning of the redeployment, in Japan Uniqlo customer base is all people, in China is adjusted to the middle class above the crowd, my strategy is higher than Japan's pricing of 10%-15%, this strategy is still continuing.

After all these years, I feel like I'm starting a business. I start from scratch, Hong Kong is from zero, Taiwan is also from the zero, the mainland China from more than 30 people, a small size to do now more than 10,000 of Chinese employees, the entire greater China region has about 16,000 people, such a large enterprise, eight years ago is zero. This is not a start-up, I feel very substantial. From this point of view, I think the most profound impact on Mr. Yanai is this: To do things in an entrepreneurial mindset, not for individuals or for some short-sighted interests, but for longer-term goals.