Turning Japanese

Now has over 1,000 stores in China

Japanese retailer Muji got its start as the own-label brand for the supermarket chain Seiyu. Initially it offered grocery items along with a handful of household goods. With its minimalist product design and affordable prices, Muji, which means “without brand”, ironically became a well-known global brand.

Shoppers in China are also smitten with the Japanese label. When Muji unveiled a flagship store in Shanghai last December, people were queuing round the block.

So it shouldn’t come as a surprise that a Muji-lookalike is now taking the country by storm as well.

Meet Miniso. Founded in 2013 by Japanese designer Miyake Junya and Chinese entrepreneur Ye Guofu, Miniso prides itself on offering well-designed quality goods that are reasonably priced. In other words, the same things shoppers can find at Muji but even cheaper.

“Our goal is to appeal to the masses so our products must be affordable for young shoppers – more than 70% of our merchandise is priced at under Rmb15 (around $2),” Ye boasted.

Having opened more than 1,000 (franchised) stores in China (plus 25 in Hong Kong and four in Macau) in less than three years, it’s clear that Miniso is onto something. The company now expects to double sales from Rmb5 billion in 2015 to Rmb10 billion by the end of this year.

So what makes the retailer so successful? For a start, Miniso is quick to release new products. “We want to give our customers newness every time they come here to shop. Maybe they will think: ‘I haven’t seen this before. It is cheap and very affordable’. Next week, they come again and discover something new,” one store manager told China Entrepreneur.

Miniso is also devoted to keeping its prices low.

“My philosophy is the same as Lei Jun [the founder of handset maker Xiaomi]: our products need to be only a third of the prices people find at supermarkets and a tenth of what they see at the mall. We are not going to have any impact without this huge price discrepancy,” Ye told the magazine.

But perhaps the genius of Miniso is presenting itself as a Japanese firm. Most of the signage in the stores and the product packaging are written in Japanese script. Even the logo bears a striking resemblance to Uniqlo, a Japanese apparel retailer. But Miniso denies copying Uniqlo, saying that the red and white logo is merely to “simple and modern, in line with the brand’s philosophy”.

Despite the historical tensions between the two countries, Chinese consumers have long been obsessed with Japanese household goods, which are reckoned to be of higher quality (see WiC272 for more on Chinese tourists buying toilet seats and much else in Japan).

In a recent interview with China Entrepreneur, Ye admits that being viewed as a Japanese firm also gives Miniso a leg-up when it comes to sourcing. When he founded the company, Ye discovered that the same manufacturers that sell to Japanese and South Korean retailers weren’t so keen to work with Chinese enterprises. “We found out that for the same product, foreign firms would be quoted Rmb5 while Chinese firms have to pay Rmb15,” Ye told China Entrepreneur. “Many suppliers are reluctant to deal with domestic firms because they are late in settling their bills.”

Nevertheless, as Miniso continues to expand, some are now questioning whether the company may be overplaying its Japanese roots. Even though it advertises itself as a Japanese firm Miniso only has four outlets in the country. Some also picked up on the Japanese descriptions on the packaging, saying that they are disjointed and incoherent. Moreover, there is little information about cofounder Miyake even in the Japanese press (WiC can’t help but notice that his name overlaps with two famous Japanese designers: Issey Miyake and Junya Watanabe).

In response to the criticism, the Chinese newspaper Lianhe Zaobao quoted the Japanese co-founder as saying: “Miniso is undoubtedly a Japanese brand. I’m in charge of the team of designers and all Japanese affairs while Ye is responsible for the supply chain management and store operations.”

Ye, meanwhile, says the reason Miniso has so little presence in Japan is because the market is already saturated with retailers using similar concepts. And in response to the confusing product labelling, he explains that his team uses Baidu Translate (similar software to Google Translate) and thus, the translation may not always come across accurately.

Hong Kong’s Ming Pao, a newspaper, also questions just how Japanese the firm is. That’s because even though the company says that its products are “100% Japanese-quality,” they are “90% Made in China”.

Confused? Some classify Miniso as a shanzhai firm, though clearly one that’s found a successful formula (see our Brush Stroke column in WiC326, for a broader discussion of what shanzhai means).

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.