Japan'S Fast Fashion Loss: Labor Costs Skyrocketing And Stores Dragging On Each Other

Japan's cheap and fresh brand is fading away.

Honeys, a Japanese fashion group, recently reported that its sales have fallen for three years. In the three years from this year, Honeys will reduce about 270 stores in China, 30 of which have been closed before spring this year.

Beijing Business Daily reporter found that this is not the first Japanese clothing brand to show signs of decline.

But in the new situation of soaring labor costs, fierce competition in clothing brands and changing consumer preferences, the advantages of Japan's little fresh brands that have not changed have disappeared.

Store shrinkage

Japanese clothing brands, once favored by consumers, are shrinking in the mainland market.

Honeys reported that since 2013, group sales have been declining, and the number of stores in mainland China has decreased from nearly 600 to 495.

In the depressed environment of China's retail industry, Honeys, which is not competitive enough, plans to reduce about 270 stores in three years from 2017, and 30 of them have been closed before spring this year.

At the beginning of Honeys2006, when entering China, young consumers were attracted by the sweet Japanese style and low price.

Honeys, a Japanese brand that earlier expanded its market in China than UNIQLO, expanded its domestic market in 2013.

According to Japanese media statistics, in 2014, the brand owned 570 local outlets in many parts of the country, including local cities, and the number of clothing stores was much more than that of the casual wear brand UNIQLO.

In the 2012 fiscal year, Honeys sold more than 10 billion yen (about 600 million yuan) in China, accounting for about 17% of the company's sales.

By 2014, Honeys had been losing money.

In fact, in addition to Honeys, the Japanese clothing brand Yi Du Jin has quietly withdrawn from the mainland market.

The Beijing Business Daily reporter learned that the group has IIMK, MK, MKKLEIN+, OFUON, MICHELKLEIN and HIROKOBIS dozens of famous brands, and the audience from teenagers to forty or fifty year old middle-aged people.

In 1995, when he arrived in China, he had been committed to developing the mainland market, and had more than 300 stores at most, but sales in recent years were sluggish.

In February last year, the investment fund Integral acquired most of the shares of the group, but the revenue was slow to improve. Subsequently, Yi Du Jin completely withdrew from the mainland market at the end of 2016.

At present, many brands under ITO are located in stores such as Taiwan, Taipei, Taoyuan, Hsinchu and Kaohsiung.

In addition, the famous shoe factory, Asahi Asahi, also plans to pfer all production lines to Japan within five years due to the rapid increase in operating costs.

SUNCO, a Japanese suitcase manufacturer originally made in China, restarted its own factory in 2015 and closed the Chinese production line.

Drag on each other

In the mainstream shopping malls and shopping centers in Xidan, such as Beijing, such as the fashion brands and the new brands, it is hard to see the brand of Japanese parity clothing such as Honeys.

In recent years, closely linked to Honeys is the promotion information of brand 70 percent off goods rejection and season clearing.

Due to the drag from department stores, the stores are gradually disappearing in the view of consumers.

When Honeys and other first entered the Chinese market, department stores and retail industry are flourishing. The Japanese clothing brands also choose to put straight stores in department stores, and the foreign capital and Japanese department stores, such as Baisheng and Hua Tang, are more favored.

However, in recent years, with the rapid rise of shopping centers and the change of consumers' shopping concepts and shopping habits, the department store industry has entered the cold winter, and these brands have gradually left behind.

After being out of favor with consumers, sales of brands such as Honeys fell sharply, and were abandoned by shopping centers which were small and medium-sized. Although the stores such as Hua Tang were still willing to absorb these brands, the attraction of the two was not as good as before.

In the halls shopping center, Honeys and other brand goods are seriously stacked up, and there are few consumers in the clearance clearance up to 70 percent off.

Besides, the styles of clothing sold by brands are also rather old and over season.

Insiders told the Beijing Commercial Daily reporter that Honeys and Yi Du Jin and other Japanese brands in Japan have a wider and more extensive display area and display, compared with the lack of advantages in brand location and display in China's shopping malls.

Reporters learned that the average Japanese brands in Japanese shops are mostly over 200 square meters, but due to lack of popularity and reputation, these brands are only shops in the central stores in China.

The shop is small, but the clothing style is still high, leading to a full store layout and lack of design sense.

Lose competitiveness

With the rapid rise of fast fashion brands in Europe and America, Japanese fashion clothing brands gradually become "three no sticks" - not fashionable, unpleasant, and of poor quality.

Because Honeys and other Japanese clothing brands are mostly Chinese enterprises, the annual labor cost soaring has become the last straw to crush camels.

Clothing industry experts say Honeys suppliers are mainly Chinese and Korean enterprises, of which nearly 90% of garments are produced in China, and the development cycle is about 30-45 days.

By contrast, the development cycle of fast fashion brand ZARA dropped to 2 weeks from the first 3 weeks, while H&M and other brands stayed within 3 weeks.

The increase in labor costs also has a huge impact on Honeys and other brands.

In the 2008-2015 years, the minimum wage standard of Guangdong (Guangzhou) increased from 860 yuan / month to 1895 yuan / month, and the increase was 1.2 times.

The minimum wage standard of two cities such as Dongguan and Foshan also increased from 770 yuan / month to 1510 yuan / month.

Several factory executives said that in the past 2008-2015 years, the wages of workers doubled, and under this influence, Honeys and many other brands shifted factories to Southeast Asian countries.

At the beginning of Honeys2014, it was announced that the group decided to build second plants in the MIP industrial area of Burma subsidiary, and is scheduled to start production in April 2014.

According to reports, second factories mainly produce jackets, shirts and blouses, and sell them to Japan and China.

The estimated investment is about 600 million yen, covering an area of about 3 hectares, with a workforce of about 2000 people.

In the second tier cities in mainland China, the market share of Japanese brands, such as Honeys, has long been eaten up by fast fashion brands such as ZARA, H&M and UNIQLO. In the three or four tier cities, the sinking of fast fashion brands and the sudden emergence of domestic brands have also made the development of brands such as Honeys tied up.

In recent two years, Japanese brands such as Moussy, which are more fashionable and expensive, have gradually settled into shopping centers in the first tier cities in China, but sales are not ideal.

In December last year, BaroqueJapan group, the parent company of Moussy and other brands, announced business data for the first time. In the first three quarters of last year, BaroqueJapan sales increased by 102.7% to 49 billion 59 million yen, while operating profit and net profit dropped 87.3%, 83.6% to 3 billion 636 million yen and 2 billion 221 million yen respectively.

The group said profits declined due to backlog, listing costs and overseas expansion costs.