MUJI'S Chinese Style Retreat: Church Apprentice, Starving Master

Until now, Japanese home chain brand Muji has still had a strong brand mentality in China, and is deeply loved by Chinese young people.

A lot of people will even express themselves on the online community platform such as knowing how to go to Muji. There will be a happy feeling of "arranging good families".

Chinese counterparts in home manufacturing and retailing, including Chinese business chiefs, including Lei Jun, founder of millet, all have high praise for Muji.

Similar to the "craftsman craft" commodity strategy, inspired many Chinese enterprises.

In 2005, Muji opened its first store in Shanghai and officially entered China.

Since the beginning, Muji has been closely linked with the middle class and refined life in China.

Despite being criticized for being much more expensive in the Chinese market than in the Japanese market, with the "cool" design style and simple and simple product concept, the Muji, which is "good brand without logo" in Japanese, has established its own brand recognition in the Chinese market.

In 2012, it was generally considered to be the starting point for Muji in China to enter the period of rapid growth. With the development crisis of the luxury industry, fast fashion rose, and the MUJI products, which were positioned as high-end brand, expanded to 30-50 new stores a year, and revenues increased sharply.

As of December 31, 2014, Muji has expanded to 38 cities in China, and the number of stores has risen from 12 to three 121 years ago.

Data show that its sales from overseas markets accounted for 26% compared with that of the year, of which China's sales accounted for 10%.

But Muji has not been developing well in the Chinese market in recent years.

Since 2016, the comparable sales growth of Muji has slowed down in the Chinese market.

By 2017, Muji's sales in the same store began to slow down, and the first negative growth occurred in 2018 Q2.

Although Muji has become a bottleneck in the Chinese market itself, its product concept is still highly recognized by Chinese consumers. In recent years, the brand of new retail grocery stores has been emerging in China.

As the saying goes, "church apprentice, starving master", facing a competition of "Chinese apprentices", can Muji be saved?

- 1 -

MUJI has lost its way in the Chinese market.

According to the latest data, in the 2019 fiscal year Q4 (1-3 months), Muji in the Chinese mainland market could decline by 3.9% compared with sales, slightly improved compared with Q3, but overall continued to decline.

According to the "no fashion Chinese net" report, China's mainland market downturn dragged the Muji parent company in the East Asian market, the fourth quarter sales decreased by 3.2%. In comparable sales decline, the East Asian market operating profit in the fourth quarter increased by only 1.1% to 6 billion 477 million yen, after three quarter growth of 36.6%, 23.8% and 23.3% respectively.

It seems that the development of Muji in the Chinese market is hard to reverse in a short period of time. Since October 2014, when Muji has introduced the "new pricing strategy" in China, up to now, the price fixing of China's market has come down in the 10 round.

Mui Yin Liang, Matsuzaki, President of MUJI products company, revealed that Muji China is committed to achieving the selling price of the Chinese market by 2020, falling to the same level as the commodity prices in the Japanese market.

The controversy over pricing is not the only factor that dragged down Muji's business in China. There is also a nameless trademark dispute.

In 2001, Muji was deeply involved in trademark disputes in China.

A company called "Beijing Muji Investment Co., Ltd." has the right to use the "mainland of China", which has twenty-fourth categories of fabrics, cloth, towels, bedspreads and other trademarks. The Japanese MUJI Muji can not use the "Muji" brand in these commodities.

According to public information, Beijing Muji Investment Co., Ltd. currently has online and offline businesses, and is highly similar to Japanese MUJI Muji in products and store appearance, LOGO and so on, resulting in a considerable "closure" effect.

In addition, the food safety and quality problems of Muji in recent years have greatly reduced its reputation in the Chinese market.

The quality of biscuits, drinking water and clothing samples exposed to carcinogens is not up to standard, and the 3.15 party exposure "imported food from Japan's nuclear pollution area" and so on, all caused a great stir in the social and public opinion level.

On the one hand, the price is too high to be criticized. On the one hand, the product quality problem is frequent. In the new retail era with diversified shopping channels, the MUJI products with offline stores as the main channel face a large number of competitors, and the advantages in consumer mental acquisition are far behind.

- 2 -

MUJI's Chinese apprentices step by step.

When it comes to the development of Muji, we have to mention those "Chinese apprentices".

A number of them are brand names represented by "famous brand and superior products", which are mainly price tag, and have a certain sense of design. The other group is a new retail brand based on the supply chain construction, which is based on the "NetEase strict selection", which is the main product quality, but the price performance ratio is higher than that of Muji.

The two parties attack each other, will be occupied by the quality of life represented by Muji, but the consumers who can not be matched with the economic ability can be harvested cleanly. At the same time, they will also take away a batch of native users who have "domestic thinking" and relatively sensitive MUJI products.

This is not surprising.

MUJI products still have a lot of customers coming to the shops. Actually, they are from the beginning.

"I just came to see that it can't be bought."

It is far higher than the price of ordinary household channels, and indeed has increased the mutilate layoff of Muji.

But the design, material, technology and quality of household products have made MUJI products praised and recognized by consumers and Chinese counterparts.

This can be said to be the high-end positioning of Muji in China, and the golden opportunity left for the pformation of "made in China".

Founded in the Great Depression of Japan, MUJI products are cheap and cheap. By simplifying the packaging, eliminating the brand and other products, they return to the essence and get the recognition of the market and consumers.

But in the Chinese market, Muji as an imported home brand has more Japanese simple life philosophy.

In terms of brand building, Muji is basically equal to middle class and quality, but price factor is not very important.

This is the fundamental reason for the development of Muji in the Chinese market. That is to say, in addition to just looking at people who do not buy, consumers who really spend money in Muji shops are not due to products or brands themselves, but rather to get the lifestyle and ideas behind them by this brand.

As a result, when the Internet and new retailers are involved in the same way of life in China and have the choice of higher cost performance, the competition threshold of the whole industry is pulled down, and the degree of competition has increased unprecedentedly, so the pfer of consumers between brands has become reasonable.

At present, Muji is more of a universal value symbol than a competitor, rather than a consumer brand itself.

That is, the four elements of household goods: price, design, quality, compatibility, Muji and cost performance is very difficult to hang on.

This is the decision from the very beginning, and it can not be achieved simply by reducing the price.

- 3 -

Can it be brought back to life after frequent adjustment?

It is precisely because of the location of Muji itself, resulting in its symbol greater than consumption. Therefore, in the face of the inevitable price adjustment in the Chinese market, the attitude of Muji is relatively cautious. Through the "new pricing" strategy, with a frequency ladder price reduction of an average of two times a year, the intention is to achieve a more competitive price system in the long run.

However, such a price reduction strategy is too euphemistic for Chinese consumers who are accustomed to a big boost.

The fact is that from 2014 to now, there have been 5 years and 10 price adjustments, but Muji has not changed much in the minds of most consumers in high-end consumer goods.

The attractiveness of NetEase's "strict choice" consumers, which we mentioned before and the price sensitivity, is not obvious.

For consumers with high price sensitivity and low quality, the consumers of "name creation and superior products" are completely independent.

Therefore, the main role of this price reduction strategy is still the existing consumer groups.

In addition to price adjustment, Muji has also done many other attempts, especially the way in which Chinese retailing is now popular, pforming the layout and experience of stores.

These means, including the layout of coffee, hotels and restaurants, use specific scenes to stimulate consumption desire, and at the same time can further shape the life style represented by Muji.

In addition, in response to the Chinese market, Muji's "China needs" series of products launched in March 2019 also revealed a clear "please" intention.

Through the customized adjustment of the product size in China, Muji hopes to make a clear idea of product strength.

Despite sluggish growth, the Chinese market has been one of the fastest growing regions of Muji stores.

Although there are online e-commerce channels, offline stores are still the most important channels for MUJI products to consumers, which means that the expansion of sales scale is closely related to the number of stores. In the same store sales growth is not up or down, the problem of such a single consumer channel is very prominent.

Similar to this problem, but has been actively changing themselves, it can be said that Sweden's IKEA.

In recent years, this world-famous home shopping mall has been struggling to find a way out for its growth and even decline.

Today, IKEA, which has been insulated from China's electricity supplier, has become one of the most active brands of foreign retail brands embracing electricity providers in China.

Turn to see Muji.

Concentrating on the open shop strategy and high labor cost of category a business area, the cost of MUJI products stores is very high.

At the same time of the adjustment of the price system, the problem of high cost is still not properly solved, which is another reason for poor management.

For Muji, the problem to be solved is not only one price system, but for the current comprehensive predicament, the current business adjustment is obviously insufficient and out of the rhythm of the market.

The only gratifying thing is that Muji is still highly recognised on the consumer side.

The fact that NetEase's new retail brands such as Yan Xuan, Xiaomi and other products are rising according to their routines can prove this point.

In the future, can it find its place in the Chinese market? At least, it is not very good from the frequent changes but the limited effect of Muji.