Uniqlo owner goes against global trends, insists on not leaving China, insists it is the most important location

CEO of Uniqlo's parent company Fast Retailing confirms no plans to move out of China, calling it the most important manufacturing source, with no other comparable source, and a market second only to Japan.

On November 25, 2567, Nikkei Asia reported that Tadashi Yanai, CEO of Japanese retail giant Fast Retailing, parent company of Uniqlo. It said China remains a key part of the company's manufacturing strategy, even as businesses around the world increasingly diversify operations outside of China due to the economic downturn and geopolitical tensions.

In an interview with Nikkei Asia, Yanai said: Fast Retailing has grown alongside China's textile industry, highlighting the deep-rooted relationships and advanced capabilities of its factories there. He points to the scale of its operations in China, where factories employ tens of thousands of young workers, as opposed to factories in Japan, which employ only a few hundred workers.

While global companies, including US tech giants, are moving towards a “China Plus One” strategy, shifting investment to countries like Vietnam or India to reduce their reliance on China, Yanai has rejected this approach.

Yanai said China's manufacturing scale and expertise were being substituted elsewhere. It is not an easy task, and the company has a long history of trial and error for many years. He said that factories in Vietnam could not be compared to the level of factories in China unless a large number of Japanese personnel were sent there.

Although China's exports to Japan, the United States and the European Union (EU) have declined over the past decade due to rising labor costs, Yanai believes Chinese manufacturers can still succeed in combining high quality with mass production.

As of Sept. 2, Fast Retailing has partnered with 397 garment factories worldwide, with 211 of them located in China, followed by 61 in Vietnam and 26 in Bangladesh. The company also has partnered with 155 textile factories worldwide, 75 of which are in China.

Fast Retailing reportedly dispatched a team of Takumi craftsmen, who specialize in textile techniques such as dyeing and sewing, to provide technical and occupational safety advice to partner factories in China, Vietnam and other locations to maintain high standards.

This year, Uniqlo celebrates its 40th anniversary, marking a significant milestone since opening its first store in Hiroshima in 2527. Uniqlo and its sister brand GU have helped Fast Retailing surpass 3 trillion yen ($2 billion) in combined sales for the fiscal year ending August 2566.

Yanai has set a sales target of 10 trillion yen, but the company will not be able to achieve this as it did with its previous 3 trillion yen, so it will need a new strategy to achieve this goal, part of which involves aggressive global expansion and fostering a diverse talent pool.

The company is accelerating growth in Europe and North America, where revenues rose 45% and 33% respectively in the last fiscal year, and plans to open 15 new stores in Europe by August 2568, taking on local giants H&M and Zara's parent company Inditex.

China remains a key market for Fast Retailing, generating 22% of revenue in the year to August, second only to Japan, which generated 30%.

refer : asia.nikkei.com

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