Chinese hipsters help Uniqlo thrive despite anti-Japanese xenophobia

Chinese hipsters help Uniqlo thrive despite anti-Japanese xenophobia

By Naomi Rovnick — 6 hours ago

Japanese brands have had a difficult time in China since the two Asian nations began rowing furiously over a set of uninhabited islands in the East China Sea. But one business has been spared: Uniqlo, the skinny jeans giant that is about to open a new, 6600 square meter flagship store in Shanghai that will be its largest worldwide.

Uniqlo parent Fast Retailing said the fashion brand’s China sales for the three months to last November exceeded its conservative expectations. (Fast didn’t break out actual numbers but did raise earnings estimates for its non-Japan business on the back of strong performance in Asia.) And this success came at a time when China’s anti-Japan propaganda and rioting were at fever pitch.

How is Uniqlo escaping anti-Japan sentiments? It basically comes down to Chinese hipsters. Uniqlo is positioned as a low-cost, affordably chic brand in the West, but lower average incomes mean that its Chinese customers there are middle or upper-middle class—a group whose outlook is more global than nationalist and who do not blindly follow anti-Japanese rhetoric. This is the type of Chinese person who would own or aspire to own an iPhone, and who might have used the Weibo microblog service to mock the Beijing government’s ongoing PR campaign against Apple.A Mintel study of China’s middle-class consumers produced last June said this group, who it defines as people earning $8000 to $30,000 annually, predominantly live in urban centers where traditional Chinese architecture has been replaced with faceless malls full of international brands. They do not have a strong sense of national history or pride—and may have more in common with the 20-something fashion consumers in New York’s Soho district than with a chanting anti-Japanese mob.

Another reason for Uniqlo’s success in China is that shoppers may not realise it is Japanese at all, simply viewing it as a global retailer along the lines of H&M or Zara. While Fast’s rival Ryohin Keikaku strongly plays up  the Japanese credentials of its Muji retail chain, Uniqlo’s Chinese stores are devoid of any national identity, featuring  tall, faceless mannequins with Western body types.

And last September, staff at one Uniqlo Shanghai outlet also went so far as to hoist a banner claiming the disputed Senkaku/Diaoyu islands were “Chinese territory”. Fast later insisted this had not been sanctioned by head office.

The recipe for Japanese retailers to do well in China then: sell great skinny jeans to urban professionals who care more about the cut of their clothes and the brand of their smartphone than national identity. And be quiet about where you come from.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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