3 Reasons Why Muji Can Achieve Price Reduction This Time.

Today,

A new round of "new pricing" activities will be launched in shops in the mainland of China.

This is the fifth price cut of Muji in the mainland of China.

MUJI's "new pricing" campaign began in October 2014.

It's a new price to cut your hand off.

"Not enough" - this may be the first reaction of mainland Chinese consumers to Muji's price notice every time.

You compare the price of Muji in Hongkong, China and Japan.

In Tokyo, there is a flagship store in MUJI, to Go travel series, which has been sold out by tourists.

The product is priced at 1900 yen (about 126 yuan) in Japan, but it costs 180 yuan in China.

In China, if the traditional trade channels are imported, tariffs, excise taxes and value-added tax are generally required, but the price of Muji is higher than that of Japan.

About 9 years ago, the Muji China region was "customers."

There is nothing else to complain about overpricing.

At that time, it mainly faced with global supply chain management and distribution, order quantity and tariff issues.

When the first Muji shop was opened in Xidan, Beijing in 2008, Kimi Masaki, the president of the good planning company, explained the problem of "overpriced".

"There are fewer stores in China and fewer orders. If there are hundreds of shops in the future, there will be new adjustments, when prices should be lowered.

In addition, due to some professional problems, our existing logistics processes and methods are not as common as people think. Chinese products are shipped from Chinese factories to shops, but need to be shipped from China's factories to Japan and then sent to China.

In the current situation, this is actually cheaper than direct pportation from factories to shops.

We hope this is temporary. If there are more stores in the future, we will improve the logistics and take an updated approach. "

There are 3 main reasons for this price reduction.

1, reduce import tariffs, behind it is the change of commodity origin.

MUJI is no longer the same as before.

Today, the goods produced in China will be directly distributed to Chinese stores.

This is the first way to reduce the cost of customs duties.

It also used the preferential tariff system to further reduce costs.

"China has signed preferential tariff contracts with some Southeast Asian countries with lower labor costs, and some Southeast Asian countries have become the ideal supply places. China and Southeast Asian countries have become new Muji bases."

MUJI (Shanghai) headquarters explained.

Coupled with lower labor costs, Muji is moving more and more products to Southeast Asian countries and gradually reducing the proportion of production in China.

In the 2013 fiscal year, the supply of products from ASEAN (ASEAN) accounted for 20% of Muji clothing and groceries, 12% of groceries, and the Muji plan extended to two times by the end of fiscal 2016.

2, expand production scale to allow multiple orders to dilute the cost.

Compared with the first entry into China in 2008, the Chinese market has been gaining an increasing proportion in Muji's revenue.

2015 fiscal year, Muji overseas

Revenue accounted for 35.5%, of which mainland China, Korea and China's Hongkong and Taiwan regions accounted for 27% of East Asia's revenue.

The increase in orders has prompted factories to produce at lower overall prices and ultimately reduce the cost of each single item.

In short, from the commercial point of view, there will be certain differences in the price of commodities in various markets. It is related not only to tariffs and other taxes, but also to the cost control ability of the company itself.

Although there is no Japanese price, at least 500 kinds of commodities, including them, depreciate.

3, supply chain and inventory management are particularly important for commodity cost.

This is one of the important reforms made by Muji in the past 10 years.

In the medium term business plan of Muji 2014 to 2016 fiscal year, its goal is to further improve the global supply chain management system and reduce global logistics costs to 1% of sales. In recent years, it has shown a 4% performance in this data.

In addition, it plans to improve global inventory efficiency to 20%.

But this is not so easy.

For multinational companies like MUJI products, efficiency improvement is often based on information system improvement.

Before 2005, Muji commodity sales information system was managed by various business departments, and these departments were responsible for system development and management separately to external companies.

Such a structure not only reduces the communication and reaction speed of various departments, but also has a low cost.

In the reform, Muji has put forward 3 principles of "speed up", "70% principles" and "taking risks", and gradually reclaimed the internal management of the merchandise sales information system.

A little puzzling is the "70% doctrine" in the middle. It refers to not pursuing one step in reform, but trying to improve it at the same time.

It first reclaims the core business, and those that require higher accuracy and specialization are temporarily held accountable by the outside world.

Because of this reform, it also won the special award of IT Japan Award 2009, on the grounds that it developed about 130 systems by itself, greatly reducing the cost of IT.

In 2011, based on the sales information system of MUJI products in the mainland of China, it was introduced into Singapore, Korea and the European market in succession. By 2013, the global sales information system was basically built.

When countries use their own information systems, although they can match local laws and environment, the global system can speed up the pace of commodity allocation and inventory management, and prevent business opportunities and overstock.

In order to manage the global supply chain more efficiently, Muji has been planning to build global distribution centers since 2009.

At present, it has 4 logistics centers in Japan, and 2 in China, respectively, in Shanghai and Shenzhen.

Since 2014, it has implemented the automatic replenishment system of shop supply in various countries. In 2015, it realized automatic supply between different distribution centers worldwide, and it is expected that it will enable production orders to be fully automated this year.

"Muji" uses the Assortment distribution system to reduce the waste of manpower, material resources, financial resources and time caused by repeated selection, packaging and distribution of clothes of different colors, sizes and quantities.

MUJI explains.

Today, Muji will package garments in production plants according to their matching ratio and distribute them directly according to the number of packages required by each store.

The size ratio in the package is the lowest ratio of Muji based on the market experience of many years, which ensures the flexibility and accuracy of the goods allocation, and according to the difference between the customers in North and South China, the size of the mobile distribution is determined.