Chairman, President & CEO, Fast Retailing Co., Ltd.
Tadashi Yanai - Billionaire Documentry - Entrepreneur, Retail, Innovation, Persistence
Billionaire Tadashi Yanai talks about being a billionaire, Startup, Advice, Uniqlo, Fast Retailing, Failure, Business, Mistakes
Billionaire Documentary - Documentaries on billionaires; wealth, power, innovation, entrepreneurship, motivation, mindset, inspiration
About Tadashi Yanai
Tadashi Yanai, chairman, president and CEO of Fast Retailing, discussed the company's global strategy and economic challenges in a 2015 interview. He stated that globalization and digitalization are the two key trends that companies must adapt to in order to succeed. Yanai described China's population of 1.3 billion as "an incredible opportunity" and said that if China's economy were to collapse, it "may trigger a global great depression," though he expressed confidence that the world would cooperate to prevent that. He noted that sales in China were improving at the time, while group sales in Japan had declined 11.7% in June of that year. Yanai also addressed the impact of the yuan devaluation on his business, explaining that since Fast Retailing pays suppliers in U.S. dollars, they were benefiting from the devaluation. He said the company would begin negotiations with suppliers about returning some of those gains. Yanai outlined plans to replicate the company's success in China across neighboring countries, Europe, and the United States, aiming to achieve a sales target of 5 trillion yen within five years.
Transcript (37 segments)
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Interviewer0:00
Today we meet the winner of CNBC's ABLA Lifetime Achievement Award, Tadashi Yanai of Fast Retailing. For Tadashi Yanai, this is the culmination of his life's work.
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Tadashi Yanai0:16
Thank you very much.
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Interviewer0:18
He turned Fast Retailing into a household name in Japan, took the affordable apparel market in Asia by storm, and is now out to conquer the world.
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Tadashi Yanai0:26
Globalization is a destiny. If you want to succeed in your business.
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Interviewer0:34
Yeah, thank you. I met Yanai in his office for insights driving Japan's richest man.
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Tadashi Yanai0:43
For real ones.
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Interviewer0:43
Wow. From pop stars to athletes, the signatures that adorn his walls show the breadth of Yanai's influence and how far he's come from starting out at his father's business in Yamaguchi Prefecture. Humble roots, but he dreamed big. In 1984, he opened his own shop called Unique Clothing Warehouse, the origin of Uniqlo today. He found his niche in affordable apparel. The mantra back then was go west to America, the land of riches many of his generation aspired to as Japan emerged from the ashes of war. Is this a very famous, maybe a Chrysler building?
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Tadashi Yanai1:34
Chrysler building? Yeah. Yeah, yeah. And also, I look at this one. 3D, old time. 3D movie.
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Interviewer1:38
Oh, I see. They're watching a movie.
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Tadashi Yanai1:42
Yeah, 1950. Because our generation was born in occupied Japan by USA, and American culture rushed into Japan. So many TV programs — Doraemon, Disney, or Looney Tunes. So I have some American dream.
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Interviewer2:12
A dream that has pushed him to the big leagues since the last time we spoke on Managing Asia six years ago.
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Tadashi Yanai2:19
The difference is that back then we were focused solely on Asia. Today, the buzzword is globalization.
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Interviewer2:27
Barely a week goes by without a new overseas store opening. In a few months, Fast Retailing will have more stores outside than in its home market. To accelerate the drive, he's partnering beyond the traditional fashion sphere, like in Shanghai with Disney, all in an effort to triple sales to 5 trillion yen by 2020 and become the biggest apparel empire on Earth.
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Tadashi Yanai2:56
Like any company in the world today, I think the challenge is to deal with the following two trends. First, the fact that globalization has entered the real world, and the other is digitalization. I believe whoever manages to adapt to these two things will become the winner. This is the biggest challenge.
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Interviewer3:12
Until recently, Fast Retailing sales were on a straight path up, with revenues exceeding 13 billion US dollars last fiscal year fueled by strong demand in China, Hong Kong, and Taiwan. While competitors struggle to remain profitable, Fast Retailing, which owns Uniqlo, has been bucking the trend. But it missed its last annual profit target, raising questions about the pace of its growth. With so much vested in China, the recent economic slowdown adds to the uncertainty. You were recently in Shanghai for the opening of a store within a store with Walt Disney. Everybody is concerned about the slowdown in China. What are your impressions?
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Tadashi Yanai4:11
I'm not at all concerned whether it's short-term, mid-term, or long-term. However, I think there are economic challenges. But if they are to transform themselves from an export-led, manufacturing-based economy to a consumer-led economy, if they are to elevate the standard of living, if the middle class is to expand, I believe these are the necessary changes that come with these things. The fact that they have a population of 1.3 billion — that's US and Europe combined. This is an incredible opportunity.
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Interviewer4:39
How long do you think this rebalancing in China is going to take?
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Tadashi Yanai4:45
That I don't know. But if China's economy were to collapse today, it would be a major problem. It may trigger a global great depression, but the world is going to come together and cooperate in order to prevent that from happening.
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Interviewer4:57
So, you see no impact on your sales in China in recent weeks?
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Tadashi Yanai5:03
Not at all. In fact, it's getting better.
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Interviewer5:08
But sales at home have skidded lower. Group sales in Japan tumbled 11.7% in June, its biggest drop in the last two years. Can I ask about your overall business performance over the last three months? Some people are worried. Are you worried?
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Tadashi Yanai5:28
These past three months haven't fared so well. Part of it had to do with us and partly the weather. There were many factors, but we now understand very clearly what caused this. So, things will begin to improve.
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Interviewer5:39
What was the main reason?
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Tadashi Yanai5:42
Well, the main cause was that the performance of the first three months of this semi-annual period was too good, and the SKU management of our products or the introduction of new products were insufficient.
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Interviewer5:53
So, this is a logistics thing?
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Tadashi Yanai5:54
Logistics, planning for new products, and SKU management. I think these three were the main factors.
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Interviewer6:02
How do you improve that?
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Tadashi Yanai6:04
For instance, this is something that only applies to Japan domestically, but we are rebuilding all of our distribution centers. And this will be completed soon. Also, our transportation from abroad and distribution centers will all be revamped. We will also make our SKU management much more clear to keep track of each individual stock keeping unit. We will also introduce new ideas towards the end of the season.
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Interviewer6:30
Rising prices could also be putting a dampener on sales in Japan. Uniqlo has raised prices again this year, following about a 5% across-the-board increase in retail prices a year ago. You're raising prices at your stores again this year. They've been gradually going up. Is this in response to a weaker yen? Or is it a bigger branding change for Fast Retailing?
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Tadashi Yanai7:01
This is solely due to the exchange rate. The fact that it went up from 80 yen to 120 yen, that means the yen has devalued by 66%. And this is true for anyone. No matter how hard you try selling the same product, you can't sell at the same price. If we try to sell at the same price, the quality would be reduced. So, to avoid that, we raise the price just a little. We do want to do our best and try and suppress the price hike, but a 34% increase means most likely a 10 to 15% price hike. We believe the prices were raised to an absolute minimum required level.
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Interviewer7:35
Are you asking suppliers, for example, in China who manufacture your products, because of the devaluation of the yuan, to lower prices to offset some of this price increase?
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Tadashi Yanai7:48
It was just devalued very recently. So, this is something we will start negotiating. We haven't been negotiating based on the yuan. It's all been based on a dollar settlement. So, I don't think there will hardly be any effect.
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Interviewer8:00
So, there will be no pressure on the suppliers to reduce prices as a result of the yuan devaluation?
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Tadashi Yanai8:08
Because we are paying them in US dollars, they are benefiting from this. Maybe you can say we were asking them to return some of what they have gained.
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Interviewer8:18
In spite of the weak yen and rising import costs, overseas sales is expected to keep boosting its bottom line and help Yanai achieve his goal of 5 trillion in the next five years. So, in terms of location, is it still China, China, and China?
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Tadashi Yanai8:38
No, no, no. We will replicate the success we had in China in neighboring countries, in Europe, and in the United States. And we will also implement what was successful in Japan in China, Europe, the United States, and in Asia.
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Interviewer8:53
Stay with us. Uniqlo may be upping its fashion game, but is it going upmarket? More with Tadashi Yanai, the CEO of Fast Retailing, after this break.