ZARA Has So Many Chinese Apprentices, Why Is There No Chinese-style Uniqlo

There are very few imitators of Uniqlo

Different from Zara's model, the most typical features of Uniqlo are parity and basic models. Similarly, few Chinese garment companies learn from Uniqlo's business model and achieve success.

The earliest known as "Chinese version of Uniqlo" The main target of the trend is Hallyu clothing; Uniqlo's foundry Shenzhou International has launched the Mawei brand, which has launched the Mawei brand. In the past two years, the local fast fashion brand Urban Revivo has launched a new brand "Benlai", which is positioned as "a basic model of the new generation", but so far, the influence of the brand is still relatively small. It stands to reason that there are no technical barriers to basic clothing itself. With China's strong supply chain system, it can completely achieve products of the same or lower price than Uniqlo. But why haven't you been able to run out of fast fashion bull stocks like Uniqlo?

Uniqlo's business is not so good

In the business world, there is no benefit early. If there is an industry with high profits and low barriers, then there will inevitably be countless competitors.

And Uniqlo has been in China for 20 years, but there are not many imitators. The biggest reason is that Uniqlo's business may not be so sexy. Traditional clothing industries such as Nike and Peacebird, the price increase rate (selling price/cost) is generally 4-5 times, ZARA, GAP, Heilan Home, etc. are generally 3 times the price increase rate, and Uniqlo is controlled at 2.5 times all year round.

Compared with Chinese companies, Uniqlo's profitability is not good.

At a lower price increase rate, Uniqlo's gross profit margin level is not high. Except for the gross profit margin of 2010-2012, the gross profit margin of Uniqlo for other annual Uniqlo is basically around 50%. Especially considering that Uniqlo is basically a direct sales model, this gross profit margin level is even lower.

Among Chinese garment companies, the gross profit margin of direct-operated business is generally higher than 60%, and the franchise business is very different, and the gross profit margin is generally between 30%-70%.

For example, in 2019, the gross profit margin of the direct-operated business of Heilan Home, which mainly joined the franchise, was as high as 58.95%. Smith Barney, which is positioned as a cost-effective clothing in China, has also reached 52.31% of the gross profit margin of its direct business in 2022, which is basically the same as Uniqlo's gross profit margin.

In terms of net profit margin, among the 44 garment companies listed on A-shares, 22 net profit margins in 2019 were higher than that of Uniqlo. Among them, Youngor, Disu Fashion, and Biyin Lefen's net profit margin even exceeded 20%. It can be said that it is Uniqlo's low profit that greatly limits the emergence of China Uniqlo. The broad development space of the Chinese market has given Chinese garment companies the opportunity to seize a higher-end market, and there is no need to fight with Uniqlo in this "hard business".

Uniqlo dug out the unsurpassed moat

Generally speaking, the competition barriers of industries with low gross profit margins will not be very deep. But Uniqlo is different. Even if the gross profit margin is not high, it still tries to dig out the insurmountable moat.

The first is the product. Uniqlo mainly focuses on basic clothing, but has a deep accumulation in design and fabrics. At the same time, there are few types of basic clothing, long life cycle, and low inventory pressure. Secondly, in the supply chain, Uniqlo's strict standards make the product quality and size errors extremely small, the defective quality rate is extremely low, and the quality is strongly guaranteed.

In terms of channels, Uniqlo uses precious direct sales channels to sell cost-effective basic clothing, which brings strong control over the channel. More importantly, Uniqlo has a strong brand power. Uniqlo has become a Japanese national brand as early as the 1990s. After entering China, Uniqlo did not follow the "low price" positioning in Japan, but moved upwards and became a "cost-effective" brand aimed at the middle-class group. This also caters to the consumer psychology of the middle class and gathers a large number of loyal consumers.

At the same time, the strong brand of Uniqlo has also reduced the rental cost of Uniqlo, especially during the epidemic, Uniqlo has obtained rich profits from offline properties. The data shows that Uniqlo's rental and sales ratios are 2.7%, 2.9% and 3.4%, respectively, during the 2020-2022 epidemic, which is far lower than the 9%-10% level before the epidemic. For Chinese companies, the price of Uniqlo can be learned. After all, it can even be lowered by the Chinese supply chain; the basic money can be learned, and there are no barriers in itself; direct sales can be learned, although the development may be slower. However, brands can't learn. Without a brand, the only way to learn Uniqlo can only be learned. Ma Wei from Shenzhou, Chengyi in Taiwan, and the "original" of UR, that is, lacks the gain of strong brands.