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Fast Growing Firms Hail from Outside Nation's Capital

November 9, 2000
One of Daiso's stores, where everything costs 100 yen.

A number of companies that began as small, local shops far from the nation's business centers have recently catapulted to prominence with sizable shares of the nationwide market. These Davids in a crowded field of Goliaths have done what had seemed impossible by offering low-priced, quality products that consumers throughout the Japanese archipelago have rushed to purchase.

Unique Approach
Perhaps the most dramatic of these success stories has been appearance of Fast Retailing Co., operator of the Uniqlo (Unique Clothing Warehouse) outlets of low-priced casual wear. It overwhelmed the establishment by offering an independent line of jeans, fleece jackets, and other items, ringing up 229 billion yen (2.1 billion U.S. dollars at 110 yen to the dollar) in sales in the year ending August 2000, a twofold jump from the 111 billion yen (1.0 billion dollars) registered the previous year.

What has appeared to be a meteoric rise, though, has actually been one of meticulous planning. Fast Retailing traces its roots back to 1949, when a small men's shop opened in the city of Ube in Yamaguchi Prefecture at the western tip of Japan's main island, Honshu. It was around 1984 when it started focusing on casual wear and launched a multiple-outlet strategy. In 1996 it built factories in China to supply massive volumes of casual clothes tailored to Fast Retailing's strict standards.

In the winter of 1999/2000 it sold out some 8 million fleece jackets for 1,900 yen (17 dollars) each. Because other shops were selling comparable jackets for around 6,000 yen (55 dollars), it was no wonder that consumers snapped them up. In spring 2000, moreover, it sold out 5 million denim jackets.

What makes Uniqlo so special? For one thing, it does everything in-house, from planning and design to manufacturing and sales, linking the producer directly with the customer. It maintains high quality, moreover, by requiring its factories in China and other Asian countries to conform to a check list of standards containing over 50 items.

Practically a Giveaway
When it comes to price, though, not even Uniqlo can beat a nationwide chain of stores operated by Daiso Industries, where everything on sale is just 100 yen (90 cents). There is no skimping on variety, however; the larger outlets carry 1,500 types of cosmetics, 500 varieties of neckties, 500 kinds of folders, and 85 different scissors. There are also items that would normally cost 10 or 20 times more, including collapsible umbrellas, leather gloves, dictionaries, personal digital assistants, and watches. The eye-opening bargains at these shops have attracted hordes of buyers, enabling Daiso to grow from 48.5 billion yen in sales in 1997 to 81.8 billion yen (743.6 million dollars) in 1998 and 143.4 billion yen (1.3 billion dollars) in 1999.

Daiso was launched in Hiroshima Prefecture in 1972, but at the time it did not even have a store. Household items were piled into a 2-ton truck and sold at various locations around town. The business began taking off, and soon placing price tags on each little item became meddlesome. So the owner came up with the idea of selling everything for 100 yen. This became a hit with penny-wise consumers, and in the early 1990s the roving format was replaced with physical outlets. By 1998 the number of shops nationwide had exploded to over 1,000.

Supermarket for Used Books
The books lining the shelves of a Bookoff store look brand new. The big difference is that many of them cost only half or even less of their list price.

These outlets, which first appeared in Kanagawa Prefecture in 1991, are worlds apart from the dim, dusty image commonly associated with used book shops. They are clean, brightly lit and have clear glass walls. There are already over 500 outlets around the country, and shops have opened in Hawaii and New York.

Road Map to the Future
An overwhelming share of the digitized maps used for car navigation systems in Japan is produced by Zenrin Co., a company based in the city of Kitakyushu, Fukuoka Prefecture. It was launched in 1961 as a photoengraving firm and merged with a map publisher in 1983, and it subsequently established a digital database of residential maps. The maps are now used not just on car navigation systems but also in computer applications. Toyota Motor Corp. became a shareholder in 1997, and joint projects with the automaker are in the works. Recently it has expanded its operations to the United States and Taiwan.

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Trends in JapanCopyright (c) 2000 Japan Information Network. Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.