business

Clothing giant Uniqlo: Again the face of Japan's deflating economy

29 Comments
By Ritsuko Ando

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29 Comments
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I love Uniqlo products, but I'm not sympathetic. Big powerful corporations blaming the central bank or the prime minister for their woes is, like, gag me with a spoon.

THEY complain about workers' wages?! Well, that's THEIR fault. THEY are the ones who decide the friggin wages. Are we missing something here?

Pay on a national scale is not rising because these companies have deliberately decided to give a larger and larger share of their revenues to their shareholders and executives, leaving less and less to the lower-ranked people who make their business happen.

The result is consumers with less money, and thus lower private demand throughout the economy, which is THE core factor behind the low growth, ie the problem in the first place.

8 ( +17 / -10 )

Uniqlo is a rare success story in Japan recently, and here we have someone criticizing it after all the jobs it, at least, has newly created.

The power lies not with an individual success story but with the politicians who have the ability to make the rules and regulations if the land. In the Doing Business survey Japan has actually gone down the ranks recently, after Abenomics previously had made it a goal getting Japan up to 15th in ease of doing business. Japan needs a more liquid labour market and hundreds more Uniqlos before wages will go up. It's on the politicians to make for this.

4 ( +7 / -3 )

JeffLee,

Understand what you are saying, Uniqlo has no one to blame but themselves. But at the same time, I wonder why they just didn't ignore Abe's bleating. He has no business sense or experience. Surely Yanai who has both could have seen that.

1 ( +7 / -6 )

even uniqlo price is low, their workmanship and fabric way better than gap, h&m, zara. sorry to say that.

5 ( +11 / -6 )

When Japan’s cheap-and-cheerful clothing brand Uniqlo raised its prices in 2014, it was an endorsement of Prime Minister Shinzo Abe’s efforts to stimulate a lackluster economy: with confidence high, even purveyors of affordable jumpers became price setters.

The least they could have done was include the tax in the shelf price. Having to recalculate when I reach the cashier is a small peeve

3 ( +6 / -3 )

"The power lies not with an individual success story but with the politicians who have the ability to make the rules and regulations if the land."

By your logic, the politicians have done a magnificent job. Uniqlo was nothing 15 years ago. Now it's one of Japan's - and the world's top retailers. Those "rules and regulations" were clearly in the firm's favor.

"I wonder why they just didn't ignore Abe's bleating."

I guess they need an excuse. When business is great, it's all their doing. When business turns bad, it's all the government's fault. Naturally.

0 ( +4 / -4 )

So the three month operating profit to Feb was a measly 23.4 billion yen - how terrible that must be.

8 ( +8 / -0 )

It says something when even successful firms are struggling.

The two big success stories for Uniqlo were the 1000 yen fleeces and then Heat-Tech. Maybe the bra tops for ladies too. The rest are fairly standard clothes, with the odd find in there. The 1.5 times thickness Heat-Tech is actually getting close to outdoor brands who sell the same thing as "base layers" for 5000 yen upwards for their thinnest ones. For sports, actual sportswear is much better than the mock sportswear Uniqlo produces, and doesn't cost much more when on sale.

4 ( +6 / -2 )

"The rest are fairly standard clothes..."

I dunno. I found a pair of summer-weight jeans last year that are cotton-linen blend, and they look like regular jeans but way, way, way cooler and more comfortable. 3,000 yen. Brilliant!

I'm right now about to go play tennis in Uniqlo shorts and shirt. Total price under 2,000 yen, and just as good as the stuff in sports shops at triple the price. The shirt's nearly 10 years old and looks not much different from new despite the buckets of sweat that have leeched thru it Gross but true..

0 ( +4 / -4 )

Blaming big corporations like Uniqlo for the Japanese economic problems is 'off the mark'. Bad things happen when a person, corporation or country, like Japan, continues to spend more than it receives. It appears like a race to the bottom via negative interest rates, i.e. government theft, with the USA, Europe and Japan leading the way. The governments (treasuries) are Much more powerful than the corporations in influencing the direction of the economies. Just look at the price of gold recently if you want to understand the sentiment of the people. The nail in the coffin will be when and or if the debt rating of the country (Japan) is lowered (again) by Moodys. Most people know that when economies fall, they fall fast. I can only hope for the best, for all parties concerned.

2 ( +4 / -2 )

THEY complain about workers' wages?! Well, that's THEIR fault. THEY are the ones who decide the friggin wages. Are we missing something here?

No, THEY do not decide the wages, the market decides the friggin wages. This is the most fundamental concept of entry level economics.

The result is consumers with less money, and thus lower private demand throughout the economy, which is THE core factor behind the low growth, ie the problem in the first place.

I guess tariffs on goods ranging to over 700%, an incredible regulatory and tax burden on businesses and individuals, price fixing, and other problems have nothing to do with consumers having less money? Yesterday I bought one liter of milk, it cost three times what it would have cost in any other industrialized country. Last week I bought new pair of Prada shoes, the Tokyo price was 74000 yen, the New York price would have been $379. I also got a couple pairs of jeans. In Omotesando, the cost was 20,000 yen per pair, they would cost half as much in America. Even Japanese goods are more expensive in Japan than they are in America or Europe.

The problem in Japan is not that people are not paid enough, but that things are too expensive.

.

1 ( +7 / -6 )

Even Japanese goods are more expensive in Japan than they are in America or Europe.

That fact surprised, shocked me decades ago.

3 ( +4 / -1 )

The government needs to stop meddling in and distorting markets. Multiple levels of regulation (kisei) overkill is the order of the day. The vocabulary of regulation provides a glimpse of how markets are totally governed by a web of regulatory controls and procedures designed to curtail their free operation. Horitsu, Seirei, Shorei, Tsutatsu and Kisei, then under Kisei there's Kyoka, Ninka, Menkyo, Shonin, Shitei, Shodaku, Nintei, Kakunin, Shomei, Ninsho, Shiken, Kensa, Kentei, Toroku, Shinsa, Todokede, Teishutsu, Hokoku, Kofu, Shinkoku. Plus there's Naiki, and Gyosei Shido and Jorei. So many, many, many varieties of regulations and restrictions, that attaching English equivalents becomes problematical. This fundamental binary reality which once served to help Japan, is now a millstone around its neck.

3 ( +6 / -3 )

"the market decides the friggin wages..."

If that were true (it's not), real wages in japan and the US would have been rising for quite a few years, since employers in both countries cry about a "labor shortage," or a "skills shortage," etc. The supply-dynamic just ain't there, thanks to things like globalization, which allows multinational corporations to offshore to cheaper labor markets, undercutting wages on the home front.

In the spring labor negotiations, Japan's corporations cited "global uncertainty" and "China's slowdown" when announcing their wage offers, which undershot labor's demands, not to mention govt's expectations. "The market" here had very little to do with it.

"The problem in Japan is not that people are not paid enough, but that things are too expensive."

I visited a Uniglo in HOng Kong in November. Prices were around 30% higher for the same items in Tokyo. It was packed with local shoppers. Hong Kong is a bastion of free-trade capitalism.

"This is the most fundamental concept of entry level economics.

Yes, economics 101. What I'm talking about is 301 or 401 and beyond.

1 ( +4 / -3 )

Because the economy is really tanking and with no way out, the Yen gets stronger. WTF is with that???? Seriously

0 ( +1 / -2 )

mtuffiziAPR. 09, 2016 - 08:18AM JST even uniqlo price is low, their workmanship and fabric way better than gap, h&m, zara. sorry to say that.

What is there to be sorry about?! You're entitled to your opinion. I happen to think GAP have greater quality in fabrics while Zara are more fashionable than UNIQLO. To me UNIQLO is just a rip off of these other brands with much tidier display.

1 ( +2 / -1 )

This seems to be going as expected. No? What's the strategy here as this place becomes more and more white-haired? Do Uniqlo strategizers hope to profit abroad? What do they know about foreign markets?

2 ( +3 / -1 )

Because the economy is really tanking and with no way out, the Yen gets stronger. WTF is with that???? Seriously

People obviously have confidence in the Japanese economy, or they wouldn't be parking their money in yen. I guess they must disagree that the economy is tanking, or at least they think it's stable enough for now that it's safe to put their money into yen.

-5 ( +1 / -6 )

@sangetsu

Yesterday I bought one liter of milk, it cost three times what it would have cost in any other industrialized country

I trust you've run a check on all the industrialized countries, and used the correct exchange rates.

Unsurprisingly (I've read your exaggerations before), when I tried a couple of countries, the Japan price wasn't 3 times as much. E.g., Sweden 136 yen vs. 182 yen in Japan.

0 ( +1 / -1 )

Strangerland: Do you really believe 'people' have confidence in the Japanese economy? I'm sure you know the Japanese debt ratio is the highest of major economies in the world. Weakening the yen + abenomics has not yielded the desired results. Negative interest rates ditto. It appears the treasuries of the world are running out of ammunition. I hope for the best but debt is a Very bad thing, and Japan has way too much of it.

2 ( +3 / -1 )

Strangerland: Do you really believe 'people' have confidence in the Japanese economy? I'm sure you know the Japanese debt ratio is the highest of major economies in the world. Weakening the yen + abenomics has not yielded the desired results.

You give reasons why people maybe shouldn't have confidence, but confidence is based on the perceptions of the investors.

I don't know for sure people are parking their money in yen because they have confidence in the Japanese economy, but I don't see people parking their money in yen if they didn't have confidence in it. Do you some reasons why people would park their money in a currency for an economy they thought was going to collapse?

-2 ( +0 / -2 )

shonanbb

Because the economy is really tanking and with no way out, the Yen gets stronger. WTF is with that???? Seriously

oversimplified answer...investors buy yen when they have lower confidence in the markets [nikkei, etc] and the yen is considered "safe' relative to most other country's currencies...

2 ( +2 / -0 )

"I'm sure you know the Japanese debt ratio is the highest of major economies in the world."

Japan is also the world's largest creditor nation, and has just turned in the 20th straight surplus on its capital account.

The debt metric you cited isn't very helpful or important, It's about how much Japan owes its own institutions, It also underscores a huge surplus in Japan's own private sector, since every deficit in one area must equal surpluses in another.

4 ( +4 / -0 )

JeffLee, Government rules and regulations act as a break on businesses, not as an accelerator. Any business that still manages to grow is close to a miracle.

Oyatoi's comment provided an excellent run-down.

0 ( +1 / -1 )

The prices are still super high for a low cost store

1 ( +1 / -0 )

The economy is stuffed largely due to the government idiots meddling. When even UNIQLO is struggling, you know it's bad.

1 ( +1 / -0 )

"The economy is stuffed largely due to the government idiots meddling."

Whereas unregulated subprime lenders giving bogus loans that are bought by Wall st. and securitized behind closed doors and distributed through the shadow banking system is just great for the economy. Well, if you don't count the worst financial-economic disaster in living memory.

0 ( +1 / -1 )

most of my shirts are uniqlo and I work as a lawyer. very nice quality and good fit for an athletic build.

I have had a few occasions where I met a lawyer friend and commented on his pants, or shirt thinking it was brooks brothers, and he said "no, it is 1500 yen on sale at uniqlo"... can't beat that.

2 ( +3 / -1 )

Uniqlo shouldnt blame about wages. The reason behind all of these deflation in Japan is because of their reluctance to increase wages at the first place. Inflation would not accelerate if wages are stagnant. Big corporations need to realize this, and so does SME's as well. I came from Malaysia and I recently went through an interview at a small company as a fresh graduate. When she ask me my expected salary I said MYR 2300. Her reply is that " dont be too demanding, freshie with no experience like you should be happy to make a salary of MYR 1500". Im in an interview in Kuala Lumpur, the biggest city in Malaysia, where the rent is unbelievable, public transport sucks, meaning we have to used cars (which would add more expenses), food prices are high and so on. It is just unrealistic to live on a 1500 salary. My reply to her " I need 2300 to survive because I live here alone, if u want to offer me that kind of salary just keep it. I would rather live in Ipoh( my hometown, and much smaller city compared to KL) and make minimum wage, but living with my family". Shut the hell out of her mouth. 3 month later she called me and said she wanted to offer me the job with 2300 salary. I guess nobody wants to work at her place with that kind of salary and she finally realize being a greedy bitch have their consequences. My reply to her, " No thanks, I had a better job offer". And Im not lying about that. LOL.

1 ( +1 / -0 )

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