Global fashion chain Uniqlo’s boss accepted that the Japanese firm does not use cotton from China’s Xinjiang region in its products. This has been a contentious issue for the fast-retailing company and this is the first time that the chain’s chief executive Tadashi Yanai has directly addressed it. The Chinese market is crucial for the company, not just for the customers, but it is also an important manufacturing hub.
While Xinjiang cotton was once known as some of the best fabrics in the world, it has fallen behind in recent times. Especially, after it was revealed that the cotton is produced by using forced labor from the people of the Muslim Uyghur minority. This led to the US regulations on the import of goods from Xinjiang in 2022. Following this, many global brands stopped using Xinjiang cotton in their products, getting major backlash from China. Brands like H&M, Nike, Burberry, Esprit, and Adidas faced boycotts. Sweden’s H&M had its clothing removed from major online stores in China.
At the time, Mr. Yanai, Japan’s wealthiest man, chose not to confirm or deny whether Uniqlo used Xinjiang cotton in its clothing, stating he wanted to stay neutral between the U.S. and China. This neutral stance helped Uniqlo maintain its popularity in China’s massive retail market. However, in an interview with the BBC in Tokyo, when discussing the company’s efforts to be more transparent about the origins and production of its materials, he said, “We’re not using cotton from Xinjiang.” He added, “By mentioning which cotton we’re using…” then paused before concluding, “Actually, it gets too political if I say anymore, so let’s stop here.”
Isaac Stone Fish, CEO and founder of Strategy Risks, a business intelligence firm focused on China, emphasizes the pressure companies face from both China and the U.S. “Today, no large company can stay politically neutral,” he states. “Both Beijing and Washington want businesses to pick a side, and Japan is likely to align more with the United States on this issue.”
Despite Uniqlo’s aggressive expansion in Europe and the U.S., Mr. Yanai admits, “We are not a globally recognized brand,” and Asia remains its largest market. The company has more stores in China than in Japan, and Mr. Yanai has no plans to change this approach, even with the challenges posed by China’s economy. “There are 1.4 billion people in China, and we only have 900 to 1,000 stores,” he says. “We believe we can grow that number to 3,000.”
China is also Uniqlo’s biggest manufacturing base, though the company also produces in countries like Vietnam, Bangladesh, Indonesia, and India.
Back in 2009, when 80% of its products were made in China, Mr. Yanai told the BBC that China was becoming too costly, prompting the company to shift production to lower-wage Cambodia to keep prices down. He now acknowledges that replicating China’s success as the world’s manufacturing hub in other countries has been difficult, as transferring years of expertise is challenging.
Retailers like Uniqlo are also struggling with fierce competition from ultra-fast fashion brands such as China’s Shein and Temu, which are attracting price-sensitive shoppers. But Mr Yanai says “I don’t think there’s a future for fast fashion”. “They’re producing clothes without any careful consideration which you only wear for one season. That is a waste of the planet’s resources.”
