What does China mean to Uniqlo?



When the wind direction changes, how the helmsman chooses is particularly important. On the afternoon of March 25, artists Ni Ni and Jing Boran issued statements to terminate all cooperation with Uniqlo. The co…

When the wind direction changes, how the helmsman chooses is particularly important.

On the afternoon of March 25, artists Ni Ni and Jing Boran issued statements to terminate all cooperation with Uniqlo. The cooperation between Ni Ni and Uniqlo has a high reputation in the market.

The reason for this change is that the cotton storm continues. After H&M’s Xinjiang-related remarks sparked public outrage, Uniqlo, Nike, Adidas, ZARA, etc. also triggered hot searches on Weibo. In August last year, Fast Retailing, the parent company of Uniqlo, issued a press release on its official website stating that no Uniqlo products were produced in Xinjiang and that none of Uniqlo’s production partners had subcontracted to fabric or spinning mills in Xinjiang. . In addition, Fast Retailing also claimed that the company was seriously concerned about the situation of Uyghurs in Xinjiang reported in some reports. On March 26, Fast Retailing’s Hong Kong stock closed at HK$60.80, a decrease of 0.41%.

21st Century Business Herald reporter noticed that at the same time that Uniqlo released remarks related to Xinjiang, its dependence on the Chinese market was intensifying. Fast Retailing’s annual report shows that in the annual results as of August 31, 2020, the Chinese market revenue reached 380.998 billion yen (approximately RMB 22.81 billion at today’s exchange rate), accounting for 18.996% of the total revenue, making it the largest single overseas market. , and last year, China’s market share was 17.97%. In fiscal year 2020, Fast Retailing’s total comprehensive revenue was 2,008.8 billion yen (approximately RMB 120.26686 billion, a decrease of 12.3% from the previous year), and total comprehensive operating profit was 149.3 billion yen (approximately RMB 8.93859 billion, a year-on-year decrease) 42.0%), recording a decrease in both revenue and profit.

The trend continued in the first quarter report. The financial report shows that in the first quarter of fiscal year 2021 (September 1, 2020 – November 30, 2020), Fast Retailing’s total comprehensive income was 619.7 billion yen (approximately RMB 37.101 billion, a decrease of 0.6% from the same period last year) , the total consolidated operating profit was 113 billion yen (approximately RMB 6.765 billion, a year-on-year increase of 23.3%), recording a decrease in revenue and a substantial increase in profit. This is mainly attributable to the substantial growth in operating profits recorded by UNIQLO’s business in Japan and Greater China, coupled with the growth in GU (Excellent) profits.

Among them, the mainland China market recorded revenue growth and substantial profit growth. “Sales of cold-proof clothing and products that meet home needs were strong, and same-store net sales recorded growth. Due to the strategic promotion of controlling discount promotions and strengthening the appeal for product value and the dissemination of brand value, gross profit margins improved; with the addition of door-to-door Store operating efficiency has improved, and the ratio of sales, general and administrative expenses to revenue has also improved. In addition, net sales of online stores in mainland China have increased, and profit margins have also improved significantly.” Fast Retailing said.

In addition, the Chinese market is also the most critical link in UNIQLO’s supply chain. “Most of the products sold by the group’s business segments are produced in Asian countries, mainly China.” Fast Retailing said in its annual report.

According to Fast Retailing Yanai’s autobiography, he admitted that in 1998, Uniqlo’s key battle to open the Japanese market was in polar fleece sales, and China was a key part. “The person in charge of UNIQLO’s production management and the operators of Chinese processing companies jointly studied the (polar fleece) topic. They bought raw materials from Japan’s Toray Company, spun them into silk in Indonesia, and carried out weaving, dyeing and sewing in China. This process greatly improves the product quality. Quality also improves cost-effectiveness.”

The annual report also shows that Fast Retailing has 4 directly affiliated companies in China, all registered in Shanghai, with a total of 14,924 employees.

In fact, Uniqlo has become dependent on the Chinese market and is difficult to give up. Yanai Masaru once said that in life, “one win and nine defeats”, he is not afraid of failure, the key is persistence.

I believe he will have a suitable choice.

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Author: clsrich

 
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