The Result Of Repeated Price Cuts Is Gradually Expanding The Ambitions Of Muji In China.

After repeated price cuts, the ambitions of Muji in China are gradually expanding.

The Muji company's good quality plan announced last week's fiscal year ended February 2018, with an increase of 13% to 3795 billion yen (about 22 billion 200 million yuan) during the period. Net sales increased by 17.4% to 378 billion 800 million yen (22 billion 100 million yuan), and net profit increased 16.6% to 30 billion 100 million yen (about 1 billion 700 million yuan).

By Region:

Japan's revenue grew by 8% to 234 billion 700 million yen, thanks to the rapid growth of men's wear and health beauty products.

East Asia's revenue rose 22.4% to 109 billion 800 million yen, of which China's market revenue rose the highest, soaring 25.3% to 68 billion 890 million yen, or about 4 billion 30 million yuan, has become the brand's second largest market in the world;

Europe's revenue grew by 20.5% to 212 billion 200 million yen; other regional revenues rose by 33.8% to 137 billion 200 million yen.

By category:

The sector grew by 13.6% to 100 billion 300 million yen, and its contribution to income reached a maximum of 36.2%.

Household products increased by 9.6% to 151 billion 700 million yen;

Food grew by 7.2% to 20 billion 700 million yen;

Other categories rose by 32% to 4 billion 500 million yen.

By the end of the reporting period, Muji had 876 stores in 25 countries, including 54 overseas markets, reaching 457 last year.

It is noteworthy that China

29 new homes, the largest number of stores in the world.

In a media interview at the beginning of the year, Muji leader said he plans to expand the number of global flagship stores in China by three times by 2019.

Since 2015, Muji has opened two global flagship stores in Shanghai and Chengdu. Apart from its advantage of sitting on a three storey building in a thriving commercial center, the world flagship store also includes MUJI BOOKS bookstore, AROMA Labo aromatherapy workshop and Caf &Meal MUJI restaurant, covering many lifestyle items. It is a one-stop experiential store from the commodity consumption to the shopping experience. The shop has only one shop in the Japanese market.

According to Matsuzaki Kyo, President of Muji printing, apart from increasing the number of China's flagship stores by 4 to 5, it will also add new areas to display health beauty products.

The original 30 new stores expansion plan will speed up to 50 to 60 per year, with three line cities as the focus of layout.

Insiders pointed out that the Chinese expansion of Muji has reflected anxiety about the weak growth in Japan's performance in recent years.

Founded in the depression of Japan, in 1983, Muji finished its first independent flagship store in Qingshan, Tokyo. In 1990, it established the good quality planning company.

MUJI is intended to be a "good quality product without trademarks". After reducing unnecessary packaging advertisements and middle retail links, it has launched a series of daily necessities from stationery to kitchenware and household.

In 2005, Muji first store entered Shanghai, China. Because of its simple and environmentally friendly design aesthetics, it attracted a large number of Chinese consumers and rapidly developed in the first tier cities.

However, with the increasing penetration of brands in China, many hidden problems are also exposed.

At the beginning of the market, Mr Song said that Chinese consumers believed MUJI products were redesigned for their daily necessities and had excellent quality labels, which were priced higher than those of local stores in Japan.

According to people familiar with the matter, the price gap between the Chinese and Japanese markets can be as high as 2 times, and more importantly, MUJI products are made in China. Consumers are largely buying the rent for the prosperous brand.

This quality concept began to disappear as Muji's "price cut tide" soon began.

In September last year, Muji was officially announced by the official WeChat public number, and its fifth round of price cuts in China was officially launched.

The price reduction is mainly concentrated in daily life products, mainly covering three categories: furniture, electronics and health beauty.

Among them, furniture prices dropped to 67%, 21% for electronics and 24% for health.

In fact, MUJI MUJI has lowered the price of products from the mainland market since October 2014, and is expected to achieve the same basic price between China and Japan this year.

In January of last year, MUJI MUJI announced that it would implement some new pricing for some products. Most of the products were domestic products such as storage. The reduction ranges from 5% to 22%. The price adjustment is less than a year after the latest round of price cuts.

Obviously, the group has noticed that its performance is further slowing down.

In 2016, the growth rate of the good quality plan was the lowest in three years.

The annual revenue of the good plan is 3333.81 yen billion yen (about 19 billion 500 million yuan), an increase of 8.4% compared with the same period last year, with a profit of 38 billion 278 million yen (about 2 billion 200 million yuan), an increase of 11.1% compared with the previous fiscal year.

But the growth rate of revenue and profit has slowed down. The growth rate of revenue and profit in the 2015 fiscal year has reached 18.2% and 44.4% respectively.

Behind the slowdown is the gradual decline of brand competitiveness.

Where Muji wanted to focus.

In the market, NetEase's strict election was regarded as the strong enemy of Muji.

Although it has been established for less than two years, the platform has made a direct threat to MUJI products by playing "MUJI manufacturers direct supply" advertising.

Cai Ying, vice president of the sinemi group, Amy's parent company, said that the goal of its "offline store" was "surpassing Muji" when it launched the "thousand city million stores" plan.

Even grocery stores, which rely on imitation of Muji's design and business models, have created more than 12 billion revenue and over 2600 stores last year.

With the gradual increase of consumption level, the number of competitors who want to enter China's quality life consumption field is increasing.

The view is that, for MUJI products, the price reduction may be forced by the situation, and more importantly, it is to find a sustainable growth mode that can attract consumers.

As of today's close, the stock price rose 4.02% to 37 thousand and 550 yen, and the market value was 1 trillion and 50 billion yen, or 61 billion 500 million yuan.