Why Is UNIQLO Getting Mad, But Muji Is Getting Cooler?

China is a country with strong spending power, so many foreign brands aimed at this huge market in early twenty-first Century.

More than 10 years ago, two Japanese brands came into China. One was UNIQLO and the other was Muji.

More than 10 years later, the fate of the two brands in the Chinese market has been dramatically different.

01

UNIQLO entered China in 2002 and opened its first store in Huaihailu Road, Shanghai. By 2005, however, all 9 stores in China were losing money.

This made the founder Ryui Masa very worried. He had come to China for many times to investigate, and finally determined the "fast fashion" strategy.

The "fast fashion" strategy, in brief, is to use the advantages of the supply chain to keep the product's rapid iteration. At the same time, under the premise of ensuring the quality, the price will be kept at a moderate level so that ordinary urban youth can afford it.

At the same time, UNIQLO takes advantage of big companies and conducts cross-border cooperation.

Starting in 2006, UNIQLO will conduct various cross-border cooperation on T-shirts in the spring every year, so that an ordinary T-shirt can express its unique aesthetic value proposition.

For example, last year, it worked with Blizzard Entertainment to print the popular game elements of World of Warcraft, the watchtower, the legend of the hearth and StarCraft.

This year, UNIQLO and the artist KAWS jointly issued a T-shirt, and several seconds after being put on the shelves, they were robbed by Chinese consumers.

It can be said that UNIQLO's "fast fashion" proposition and cross-border cooperation have achieved good results. According to incomplete statistics, UNIQLO has opened 660 stores in China, and the Chinese market is the fastest growing overseas market in addition to the local market in Japan.

02

MUJI was first opened in China in 2005 and also in Shanghai.

Unlike UNIQLO, Muji has been greatly welcomed by young writers and artists since its first year in China. By 2016, Muji had more than 200 stores in China, with a revenue of 307 billion 500 million yen.

However, after 2016, MUJI products suddenly fell into a quagmire in China, and the growth rate slowed down significantly. Even in the second quarter of 2018, negative growth occurred.

Why is there such a situation?

The main reason is that in the past few years of consumption upgrading, China has appeared a number of highly selective brands with internet attributes, such as NetEase's strict selection, Taobao's core election, rice products and Beijing Tokyo manufacturing.

These brands are directly marked on the design and packaging of products, but their cost performance is much higher. As a result, consumers belonging to MUJI products were shunted out.

From the perspective of cost performance, Muji has obviously appeared the wrong product pricing strategy in the Chinese market.

For example, the same box is sold in Japan for 53 yuan, but in China it sells for 90 yuan, while the same oak table bench sells for 2288 yuan in Japan, but in China it has to sell 3900 yuan. Generally speaking, Japan's pricing of MUJI products is 5-6 discount from China's pricing.

Among the three brands, quality and price, today's young consumers in China will make a very rational choice.

Therefore, since 2016, the development of Muji has been stagnant in the wave of consumption upgrading in China.

In order to get rid of such a dilemma, Muji has taken the simplest measure - price reduction. Since the end of 2015, Muji has cut prices for different categories, and has reduced 11 times, with an average price reduction of 20% per time.

Unfortunately, the 11 price cuts did not save Muji sales, but undermined its high-end image in the minds of consumers. This makes the new middle class unwilling to pay for it, and the low-end consumers are hesitant.

According to the results of Muji's first quarter earnings this year, its sales in the Chinese market decreased by 9% compared with the same period last year.

03

Not long ago, I met a Japanese department store expert, who had more than 30 years of experience, and told me with emotion that some Japanese companies made two mistakes in China.

The first mistake is to mistake China for the three tier market. The best products are sold in Japan, and then sold to Europe and the United States, and then to China. This strategy is undoubtedly foolish today.

The second mistake is to copy the successful marketing strategy in Japan to the Chinese market. Today, however, China's new middle class consumers have formed their own brands and aesthetic claims.

The two destinies of UNIQLO and Muji in the Chinese market are of great value to Chinese local furniture manufacturers.