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Interview with Tadashi Yanai

  • Story Highlights
  • "We're not selling the American lifestyle, we're selling universal clothes in parts"
  • "Our strength is to sell cashmere in a 1 million unit"
  • "There are many people who have an illusion that clothes express individuality"
  • "Money is something that goes away if you just chase after it"
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(CNN) -- Billionaire founder of Japanese clothing giant UNIQLO, Tadashi Yanai is credited for introducing cheap chic to the designer-conscious Japanese youth. Starting off with a single store in Hiroshima in 1984, UNIQLO is now a worldwide operation with 750 stores. As the brand continues to go global, Yanai joins Talk Asia's Anjali Rao to discuss his clothing empire, the secret to providing high-quality basics with an affordable price tag, and his quintessentially Japanese work ethos.

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Tadashi Yanai, founder of UNIQLO brand clothing

BLOCK A

Jonathan Soble: He's aggressive, he's willing to take risks, you can see that in the 2001 expansion into UK, which it didn't work, they have to basically fold up shops in 2003. But now they're back, and because he's got control, he can realize that vision, no one is going to say no.

AR: Welcome to the show, it's wonderful to have you with us today. What kind of person do you have to be to be able to build an empire like this?

TY: One should have an ambition, an ideal. It can be applied to anything, but unless you have a strong will to make it happen, or a dream to create a company you wish to see, it is impossible to expand your company.

AR: People say that you're not like the typical Japanese CEO and that you're unapologetic. Do you think that those characteristics have perhaps helped to get you where you are today?

TY: I don't think the conventional management that Japanese companies had was effective, Japanese companies have to train themselves, starting from now. I hope we're the first one to realize this change.

AR: I guess the greatest criticism that people seem to have towards UNIQLO is that it's a Gap clone. Some people might take that as a huge complement, but do you get a bit sick and tired of hearing it?

TY: I think there aren't similarities between Gap and us. Gap is an American company, selling American clothes. We are a Japanese company selling Japanese clothes, we have a different origin. We're not selling the American lifestyle, we're selling universal clothes in parts that anyone can put together with their own style.

AR: As you see it, what are the pitfalls of the clothing retail industry?

TY: It's subjectivity versus objectivity, or feeling versus logic. It is very necessary to have a good balance between them. Clothes is a fashion which has a fluffy image but at the same time, they are the necessity of life. In Japan, we say there are three necessities for your life: clothes, food and housing. Of those three, clothes come first, and are seen as a necessity for life. So I think it's important to hit a good balance between fashion and basic necessity.

AR: Your aim is to reach 10 billion U.S. dollars worth of sales by 2010 -- That's sounds to me quite a pretty tall order. Exactly how are you going to get there?

TY: You must set a high hurdle for yourself. Anyone can overcome a low hurdle easily, that is not good enough for a goal. The best hurdle should be set high enough so that you may or may not be able to overcome it. Even with the best plan.

AR: So you're not going to give away any of your tactics or the strategy by which you were planning to accomplish that goal?

TY: Expanding UNIQLO around the globe, increasing the number of companies in our group, and putting back into venture businesses, so that they are activated all the time. Those are three strategies for us.

AR: So Mr. Yanai is going to show me a couple of the new collections, right?

TY: These are the new range of jeans. The wide jeans are, in particular, for this autumn and winter. Wide jeans like this are the main products.

AR: Back to the '70s.

TY: Yes.

AR: Because this time last year, everybody was wearing skinny skinny jeans, right. The real drain pipes, back to the '80s. Now it's taking back a decade further. Is this the way you see fashion going?

TY: The previous trend swung too far in the direction of skinny and slim, so I think the next trend will move toward wide jeans. And our mission is to move onto them as quickly as possible and to sell more of them than anyone else. That's our business.

AR: So how closely do you follow what's happening on, you know, the catwalks, of Paris and Milan? Do you care at all, about the way that the trends are going? Or does UNIQLO try to set the trends?

TY: Our research and development centers are located in Tokyo, New York, Paris and Milan. Staff from those R&D centers there watch out for what's in a trend and find out which direction the fashion is going. They are the ones who commercialize our products based on research.

AR: I'm a girl, so obviously this is tremendous fun for me. But the best thing about this store I think is the cashmere. Around here. So this is the new collection then for autumn, I guess.

TY: I think a one-piece in cashmere, like this, would be the most popular item for this autumn and winter. I hope you will buy one.

AR: Oh, trust me. Don't you worry about me buying one. It' so, so soft, isn't it? 100 percent cashmere, right? How come you can keep it at such a low price? Because you know there are plenty of other stores where anything 100% cashmere, even a scarf, it's gonna cost you a month's salary.

TY: Talking about cashmere, our strength is to sell cashmere in a 1 million unit, and I think as a retailer we sell the largest quantity in the world. We are for sure the biggest retailer in Japan. We have our own factories where we directly control the production system. That's why we can offer very cheap price and sell high-quality products. In terms of designing, up-and-coming designers from all over the world and our staff from the R&D center work together. I think we have been able to make a satisfactory product in terms of its quality and design.

AR: So over here you've got all the merino collection for autumn. But I think one of the things that really stands out as far as UNIQLO is concerned is your lack of branding. What's that about? Don't you want to, sort of, shout out from the rooftops that these pieces of clothing are from UNIQLO?

TY: Actually, people thought a cheap price equals a poor product, and this concept still can be applied in today's world. I think this is the same in the market as well, since not many low-cost products are good quality. We have been offering the cheap products but, at the same time, we wanted to make fine products. So we've been making an effort by focusing on the production, quality, cutting, the sewing, the silhouette. I think people have valued those elements. For example, people can wear this sweater with a pair of Gucci trousers. Our clothes are cheap, but we wanted to make them high quality so that people can wear them with other brands.

AR: When you look at UNIQLO customers all the way around the world, what do you think it embodies the typical client?

TY: In our case, there isn't any models for typical clients. Selling to all kinds of people is our motto. There are many people who have an illusion that clothes express individuality. But, in fact, the individuality belongs to each individual, not to the clothes. Clothes are just constituent parts for dressing. Individuality comes from a combination of those parts. Therefore, we offer parts, parts in high quality, which allow people to express their individuality.

AR: Looking around this office, there are no actual sort of fixed computers. No partitions. You'll really have to like each other, wouldn't you, to have to work in this office? What kind of boss would you say that you were?

BLOCK B

AR: So look at this place. The real hive of industry. Tell me what happens in this huge office?

TY: It's something like headquarters of Fast Retailing. This is a space for people working at the accounts department, legal section, human resource management and CSR.

AR: You've got hundreds of stores, haven't you, all over the world. How many staff members do you employ?

TY: I think it's about 30,000 working in total for our group. For this Tokyo headquarter, it's about 900. I don't know the exact number.

AR: 30,000 people. That's an enormous number to think of. Do you feel a sense of responsibility for all of those you employ?

TY: I think I have a responsibility to the staff. They have their own lives and, if you include their families, the number will go up. So I want to do an interesting job with them together.

AR: So just looking around this office, there is no actual sort of fixed computers. There are no partitions. You'll really have to like each other, wouldn't you, to have to work in this office?

TY: Sure. It's been a year and a half since we've been working like this. I think moving freely and working wherever they want to do is best.

AR: Mr. Yanai, what kind of boss would you say that you were?

TY: I'm a very strict boss. On the other hand, I'm also an ideal boss for young people who want to be independent and ready to work hard starting now.

AR: How do you motivate your staff members?

TY: Our business is expanding to the world. We are not only working in the fashion industry, but we also forge ahead with various categories of business. Our motivation comes from the staff who wants to challenge their own limits, or to try out business in a new environment or in different areas of the same industry.

AR: As far as being your own boss, is there a set of ethics or principles by which you operate in this business?

TY: In my opinion, there isn't any special principle for successful corporate management. The standard for corporate management is the same everywhere in the world. I would like to run the business by valuing very basic principle and philosophy. So I would not want to go for a specifically Japanese style of management, or Chinese style or U.S. style of management, but I would like to operate my business to a global standard.

AR: Your business these days is absolutely enormous, isn't it? You've got hundreds of stores not only in Japan but around the world, and you rake in billions of dollars. But just rewind things for us, if you were back to 1984, when you started out with one single shop?

TY: At that time, we opened the first shop in Hiroshima. Hiroshima is a city famous for its experience with the atomic bomb, and it's a relatively large city, even though it's a local city. We were still a very minor company, so we were dreaming of opening a shop in a big city. For us it was a big deal, a make-or-break project for the company. There were so many customers that rushed to our shop, that the shop almost fell down. Then I thought, I found the gold mine. It was my honest feeling, so I said from the very first shop, this was a great success.

AR: So how did you view it when you noticed one day, hey, this thing I started to built, seemed to really be taking off?

TY: It was when I opened the first shop, which made enormous sales. Also seven years later, we added 33 shops a year to our then existing 22 shops, doubling the sales. This was when I realized that I might make an enormous business success.

AR: Was it difficult to start form scratch like that? Well, you know, an individual shop and then expand in the way that you have? It's difficult to sort of grasp the concept of how you started off so little, but yet you now have this massive empire.

TY: It is difficult but it's possible, because we're not doing different businesses in each shop, we're running the same business in each shop. So if we have an archetypal shop and a truly great concept, I think it's possible to expand massively.

AR: During the 1990s, we of course remember the economic meltdown, and almost nowhere was as badly affected as Japan. Was UNIQLO able to use that situation to its own advantage? And that people didn't have the money to spend, but that didn't mean that I didn't still want to look good.

TY: That influenced our business too, but there is another factor. Japanese were spending too much money for clothes, and they thought that expensive clothes was synonymous with good clothes. We wanted to provide good-quality clothes at a reasonable price. I think it was sort of a normalization process, where the price of clothes met with the real value.

AR: You've recently taken on the American consumers as well, but there are real wealthy and inexpensive shops already there like H&M and Zara and Banana Republic -- isn't the market saturated?

BLOCK C

AR: You've recently taken on the American consumers as well, opening up your flagship New York store, in the Soho area. But there are real wealthy and inexpensive shops already there like H&M and Zara and Banana Republic -- isn't the market saturated? Why do you feel that you need to go up again when they share the same stretch of rope?

TY: New York is the showcase of the world, we must make a stand there. There are H&M, Zara and Gap there. Where should we position ourselves among them? We are aggressively seeking a good position.

AR: You're recently trying to break more into New York... Bonnies, that was a brand which ultimately failed -- How great a setback was that for you?

TY: No, not at all. There are many companies as good as Bonnies in the United States. There are many candidates for takeover, so that did not make me change my plan.

AR: Still as investors, are you... You seem to be a little worried, as I suppose, your aggressive acquisition expansion strategy, primarily because of the troubles that we're seeing in the U.S. credit market... Is that not a concern that you share?

TY: The United States is now facing a credit crunch, and difficulties, but it is a fact that the U.S. market is huge, and its economy is firmer than Japan's. We have almost no business presents in the U.S., so we would like to launch mergers and acquisitions activity in the U.S., to build our base there.

AR: And I know that you've also set your sights in Beijing, as well. What do you hope to get out of that particular market?

TY: Beijing is the capital of China and will host the Olympic games. We have shops in Shanghai and Hong Kong, we would like to include Beijing on our list, we will continue to expand in those three cities.

AR: You're a really, really busy guy, aren't you? When on earth do you get time to play with the billions that you've made?

TY: I probably cannot spend it all, so I guess the Japanese finance minister will take it away as tax.

AR: That doesn't sound like much... Spend your money, I have to say. But because of the success that you've had in business, you are now ranked as one of the wealthiest people in the world. As such, have you got any words of wisdom for people who are watching this and saying, I want to do what he does?

TY: The money is just a result, so most successful people do not work just to make money, they want to do business in a certain way, and then money follows after it. Money is something that goes away if you just chase after it.

AR: Have you made mistakes along the way?

TY: I made mistakes all the time. I believe you cannot avoid making mistakes when you try something new. I think a mistake is a lesson for success, it's all right if you learn a lesson from mistakes.

AR: What do you think has been the single mistake that you've made in this business?

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TY: I hope I haven't made the biggest mistake in my business yet. For me, the biggest mistake should be something as catastrophic as pulling down the company. So I would say I have not made the biggest yet. It might happen after this, though.

AR: Mr. Yanai, thank you so much. It's been a real pleasure meeting you. E-mail to a friend E-mail to a friend

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