What Happens To Fast Fashion Companies Who Are Pulling Out Of The Japanese Market?

When China's consumer goods market is in the doldrums, the situation in Japan is not much better.

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European and American garment companies are closing their stores in Japan.

Recently, H&M officially closed its brand MONKI store in Tokyo, Japan, and so on. This also marks the complete closure of the brand in Japan.

GAP, the largest clothing brand in the United States, has shut down its Old Navy brand in 53 stores in the Japanese market.

What has happened behind the withdrawal of Japanese companies?

The economy is in a big slide and residents' consumption intention is not strong.

According to world bank data, Japan's GDP dropped from 5 trillion and 957 billion US dollars at the peak of 2012 to 4 trillion and 123 billion US dollars in 2015, and GDP evaporation in US dollar was 30%.

If the GDP figures are not accurate enough because of the devaluation of the yen, the data released by the Japanese cabinet recently showed that the GDP price in Japan in the second quarter was 0.2% higher than nominal growth, an increase of 0.8% over the same period last year, and the growth rate was lower than expected. The Japanese economy is still not out of the woods.

European and American fast selling brands are having a hard time. Meanwhile, the fast selling brand of Japan's local fast fashion brand UNIQLO is also under the pressure of profit decline. Net profit has shrunk by nearly half in the first three quarters of 2016.

Trapped in the domestic consumer market, UNIQLO turned to overseas markets.

During the reporting period, UNIQLO opened only 2 stores in Japan, while 161 new stores in overseas markets, totaling 928, and 82 overseas market stores.

Labor costs rise, foreign companies are having a bad time.

In recent years, the Japanese government has pursued the "Andouble economics", hoping to ease the depreciation of the yen and improve the Japanese economy by implementing loose monetary policy.

From September 2012 to June 2015, the yen continued to depreciate by more than 1/3.

While stimulating exports, the depreciation of the Japanese yen has led to a continuous rise in the cost of the service industry and the pressure on the clothing retailing industry.

This judgment was supported by the official report of Japan.

The "economic and financial report for 2016" released by the Japanese Cabinet Office in August (referred to as the financial report) was searched, which said: "in 2015, staff salaries continued to grow at a high level for third consecutive years, and some employees paid by the hour were at a record high.

The depreciation of the yen is considered to be the cause of rising wages in the service sector. "

Many European and American brands sell clothes in Japan, and many of them need to be processed in China or Southeast Asian countries.

The depreciation of the Japanese yen means that the cost of imports continues to rise.

"Cost performance" is a competitive weapon for fast selling of parity products. After the cost has gone up, the brand of European and American brands has been very difficult to achieve.

But while the cost is rising, the consumption intention of young people has not increased.

Fast fashion brands are mainly targeted at young people, but the financial report shows that, even with the increase in income, young people under 39 years of age do not grow in spending for four years.

Costs are rising while young people are spending less.

It is not difficult to understand that the sale of parity products is tough.

Since the second half of last year, the yen has entered the appreciation channel, and has appreciated by more than 20% against the US dollar.

However, the official report shows that the sharp rise in the yen has led to a decline in income.

This undoubtedly further combating consumption.

The currency drain under Andouble economics did not solve the problem of Japan's growth stagnation, but it really pushed up housing prices and rents.

According to the statistics of Japan's general Ministry of statistics, after entering the second half of 2010, Tokyo's commercial open land rents rose month by month, and the growth rate was more frequent since 2013.

In May of this year, the "Tokyo's heart" said that the price of the 4 Ding Mu commercial real estate project in Tokyo, Japan, was 40 million 100 thousand yen (2 million 651 thousand and 800 yuan) per square metre, up 18.6% from last year's.

It surpassed the 38 million 500 thousand yen in the bubble economy in 1991 and 39 million yen before the US subprime crisis in 2008.

When encountering setbacks in the Japanese market, fast fashion brands will aim at China.

In closing the Tokyo store, H&M said: "we need to make a regular re evaluation of the brand's business, and then place the market center in the mainland, Hongkong, Malaysia, Russia and Europe."

When the US GAP closed the Old Navy store in Japan, it also suggested that "Old Navy will mainly focus on the North American market as well as the Mexico and China market".

China has become the main target of UNIQLO, which has been proposed by UNIQLO management before opening new stores in China at the rate of 100 per year.

The question is whether the Chinese market, which is also experiencing economic slowdown, rising costs, fierce competition and rising prices, will really be better?