Sino-Japanese relations enter a new stage Uniqlo and MUJI will welcome major benefits

The improvement of Sino-Japanese relations is equally important for the clothing brand Uniqlo Uniqlo and the apparel and grocery brand MUJI MUJI, which have already promoted the role of the Chinese market to a strategic and even prima facie.

In the Chinese market, MUJI, which for the first time saw a decline in comparable growth rates, suffered a bottleneck after breaking through 200 stores in the past few quarters. Due to consumption upgrades, Chinese consumers have increased spending on experience in medical, health, tourism, catering and other experience. On the contrary, they pay more attention to price/performance in apparel, while MUJI’s price has lost competitiveness in the middle class, even though the brand is “ Under the new pricing strategy, prices have been cut 9 times.

As for Uniqlo, which has a thousand store target in the Chinese market, the brand is gaining more favor by providing more collaborative and fashionable products to consumers based on the best-selling basic models. As of FY 2018, Uniqlo had a net increase of 78 stores to 633 in mainland China. In the past month, the brand has increased by 11 stores in China. As of the end of September, the Uniqlo brand has 644 stores in the Chinese mainland market. There were 28 in Hong Kong and 66 in Taiwan. As of September 30, the total number of stores in Uniqlo Greater China market was 738.

The high-speed opening of the store relies on the accelerated growth of Uniqlo in Greater China, especially in the Chinese mainland market over the past year. At the beginning of the month, UNIQLO parent company Fast Retailing Co. Ltd. (9983.T) The annual report released by Fast Retailing Group showed that UNIQLO’s overseas business revenue exceeded the domestic market for the first time as of the end of August. During the reporting period, overseas Uniqlo revenue was 896.3 billion yen, up 26.6% year-on-year, while Japan Uniqlo revenue increased by 6.7% to 864.7 billion yen.

In addition, with the expansion of stores and the growth of same-store sales, the operating profit margin of overseas Uniqlo has significantly increased. The operating profit margin of 13.5% is only 60 basis points lower than the 13.9% of the Japanese market, while the annual operating profit of overseas Uniqlo is 118.8 billion yen. It is basically flush with Japan’s UNIQLO’s 119 billion yen. From the second quarter of the 2018 fiscal year in March-May, overseas UNIQLO’s operating profit began to overtake the Japanese market.

Although MUJI recorded the same store sales decline for the first time in the Chinese market in the past quarter, it benefited from a net increase of 25 stores. In the second quarter, MUJI China sales still recorded a 10.4% increase in RMB, only in the first quarter. 14.8% has slowed significantly. As of the end of August, MUJI China operated a total of 235 stores, compared with 210 in the same period last year. In the first half of the year, the brand added 6 stores in China, including 8 new ones and 2 closed. At the end of the fiscal year, MUJI plans to have 264 stores in China and 35 new ones in the second half of the year.

Ryohin Keikaku Co. Ltd. (7453.T) Satoru Matsuzaki, President of Good Projects, Matsuzaka, said that because the population of the Japanese market is aging and the store is saturated, the company has to expand overseas. Good products will continue to invest in China and regard China as the most important market.