By Shigeki Kurokawa / Yomiuri Shimbun Senior Writer Fast Retailing Co. is rapidly expanding Uniqlo overseas. How will the company compete in a fast-changing industry? For this edition of “The Leaders” column, which highlights corporate management and senior executives, The Yomiuri Shimbun spoke with Tadashi Yanai, chairman and president of the company.
Globalization enables us to do business anywhere in the world. Then there is digitization. Especially smartphones. Those products are actually computers. Anyone can send and receive things; every individual is connected to the whole world.
That changes everything. Anything can happen at this point.
The battle used to be between us and [other fashion retailers like] Zara, H&M and Gap. However, now Amazon, Google, Apple, Alibaba and Tencent [both from China] are on the scene as well. Are these companies in the business of manufacturing, logistics or retail? The boundaries between these industries have disappeared.
The company has projected consolidated sales for the business year that will end in August 2018 to be over ¥2 trillion. Its overseas business operations drive growth.
Japan seems like it is booming, but it’s only a bubble. It’s just speculative money flowing through world markets. Domestic consumption is certainly not doing well. That is blindingly obvious if you look at our performance. In Japan, a truly tremendous effort on our part resulted in a slight increase in revenue. Overseas, sales are booming and profits are shooting up.
The growth areas worldwide are Asian countries, from China to India. Asia accounts for half of the world’s population — over 3.5 billion people. We are now in an age in which the purchasing power of the Asian middle class determines what happens in the world economy.
That purchasing power has greatly increased in Shanghai, Beijing and Hong Kong. The same phenomenon is also occurring in Jakarta, Manila, Bangkok, Delhi and Mumbai. You only hear talk of how things get worse as globalization advances, but this stage of globalization is helping people around the world escape poverty. If you look at the world as a whole, we’re actually living in a great time.
Fast Retailing started a project to accelerate the speed of product development at its location in the Ariake district of Tokyo.The company aims to create a business that only makes the clothes customers want, with the help of artificial intelligence and electronic tags.
Japanese electronics manufacturers have failed to become global brands. The reason for that failure is they rested on their laurels. They failed to predict that we would soon live in an era where everyone carries around a smartphone that is a mobile computer. And the technologies in it are based on Japanese ones. However, in the end, they did not work for the sake of the customer, for the whole world.
We make 1.2 billion articles of clothing every year, maybe more, and deliver them to people all over the world. That means we rely greatly on the power of technology. Soon, every single person in the world will have a smartphone, connecting them to everywhere else. We will have to rebuild every aspect of our business from the ground up.
Never give up
We started out as a small business in the countryside.
My hometown of Ube [in Yamaguchi Prefecture] was a flourishing coal town. However, when the mines closed, some of my friends suddenly stopped showing up at school. Many shopkeepers who had businesses on the same downtown street as us had to close down, and the street became a wasteland of shuttered stores.
I think that experience was what inspired me to take on challenges the way I do. How can we do things quickly, in a different way from other people? Moreover, how can we do them on a global scale?
If you visit our head office [in Yamaguchi Prefecture], you will notice it is in a location where you still see foxes and raccoon dogs. A global fashion industry was born in that kind of place.
In 1984, Fast Retailing opened its first Uniqlo store in Hiroshima. Product quality was improved through a [business model known as] “specialty store retailer of private label apparel” (SPA), in which manufacturing of designed products is outsourced to factories in China.
I had the idea for this business in the 1980s when I saw the rapid growth [of casual clothing stores] such as Limited or Gap from the United States and Next from Britain. I thought, I could do this in Japan too.
I was incredibly lucky. This was just around the time when China’s open-door policy changed state-owned enterprises into private enterprises. Village chiefs and city assembly members became company presidents. They have modern equipment, the power of youth and excellent managers. I think the secret of our success is that we worked together with those kinds of factories for decades.
Yanai wrote a book in 2003 titled “One Win, Nine Losses.”
My career really has been a succession of defeats. I got maybe one win for every nine losses or more. Still, I kept trying, confident that I would win someday.
In Britain, where we had opened 21 stores [by 2003], we failed miserably. We had to close 16 stores and lost about ¥12 billion. We also tried to sell vegetables for about 1½ years and lost more than ¥2 billion doing that. Still, I refused to give up and did my utmost to do whatever I could. And here I am today.
I always say a company that seeks stability is a company that is finished. After all, the world, itself, is always changing.
We’re outsiders. We’re trying to create an industry by ourselves. From the outside, you can see the whole picture. Once you become an insider, it constrains you.
The older your industry is, the more chances you will have available to you.
People are always talking about nothing but high-tech industries, but the older industries are producing daily necessities. Food, clothing and shelter — the necessities of life. There is great latent demand there. That demand will be developed from now on.
Don’t work for sake of reports
Some subordinates work only for the sake of their boss. I think that’s foolish.
If you only listen to what your boss tells you, you will just end up repeating the same things. As a result, you will not grow.
No work will get done well if you don’t do it with the intent of becoming chief executive officer [CEO] one day. Anyone can do so, even an ordinary employee. If work ends up getting done just so it can be written about in a report, that company is done for, though our company also has such a tendency to some extent. It’s so important for a boss to give opportunities to subordinates and be able to appreciate their contributions.
In essence, all the work in the company is the job of the CEO. I really should be doing everything, from making sales to cleaning. However, that would be impossible, so we have a division of labor. It’s not about which jobs are more prestigious.
All the work has to be about re-engineering the company to fit the new era. We don’t do enough of that re-engineering.
We also have to change university education so that it cultivates the ability to think, and think deeply. We have to have students devote more time to studying the liberal arts [instruction in philosophy, history and so on]. People need to have the flexibility and the ability to think to respond to changes in society.
“Changing clothes. Changing conventional wisdom. Change the world.” That is the company’s corporate statement.
We live in the age of the information revolution. If you’re not trying to change the world with your work, you won’t be successful. For better or for worse, we’re aiming for the top [of the apparel industry]. We want to climb Mt. Everest. Climb only a 300-meter high hill, and the landscape around you will already look different. Once you feel that sense of accomplishment, you’ll be wanting to climb the next mountain.
Now that we’re in the world market, our version of the Olympics, I want to get that gold medal. Even if I don’t have the ability to get it, we can still succeed if our employees have the ability. After all, it’s a team competition.
Chairman and president of Fast Retailing Co.
Born in 1949 in Yamaguchi Prefecture. Graduated from Waseda University’s School of Political Science and Economics. In 1972, he joined Ogori Shoji [now Fast Retailing], the company that was founded by his father. In 1984, he became president of the company. He became chairman in 2002, then chairman and president in September 2005. He placed 60th on the U.S. magazine Forbes’ 2017 list of the richest people in the world, with assets of $15.9 billion.
Key Numbers ¥2 tril.
Fast Retailing’s yearly consolidated sales by August 2018 are projected to reach ¥2.05 trillion, surpassing the ¥2 trillion mark for the first time. The company has overtaken U.S. retailer Gap to become the third-largest fashion retailer in the world, behind Inditex — the company behind Zara — headquartered in Spain and H&M in Sweden. As of the end of August 2017, there are 831 Uniqlo stores in Japan and 1,089 overseas. Sales at Uniqlo’s overseas locations are expected to exceed sales in Japan in the year leading up to August 2018. There were about 44,000 employees on a consolidated basis, and about 1,200 of them on a non-consolidated one.Speech