Lunch with the FT: Tadashi Yanai
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At exactly 11.30am, Tadashi Yanai marches into the room and sticks out his hand. The richest man in Japan, worth $15.5bn according to Forbes’ latest reckoning, is definitely not the tallest. A slight, wiry man, with alarmingly short grey hair cropped as if for the priesthood, the founder of the Uniqlo clothing chain can’t be much above 5ft 4in tall. Still, there is a toughness, almost a pugilism about him. Though he is 64 – or, perhaps, because he is 64 – he is among the most driven businessmen in Japan.
His holding company, Fast Retailing, of which Uniqlo is the most prominent brand, is bent on world domination, or at least on overtaking its three larger competitors, Inditex (which owns Zara), H&M and Gap. Fast Retailing, which operates more than 1,000 stores in 14 countries, has annual global sales above $10bn. Uniqlo alone is opening about one new outlet a week and will break into Germany and Australia next spring with stores in Berlin and Melbourne.
We are in the private dining room of Azure 45, one of dozens of high-end French restaurants in Tokyo, this most culinary of cities. This one is spectacularly located on the 45th floor of a skyscraper with sweeping views of Tokyo Tower and the city beneath. A cluster of different-sized glass balls dangles above the table, giving the otherwise haute-chic room the air of a 1980s disco. Yanai starts work at 7am and likes to be home by 4pm to spend time with his wife and to practise golf, so the whole company has shunted its schedule forward. Our 11.30am encounter is early even by Japanese standards, where lunch at noon is the norm.
“Just by looking at your face I can tell you’re English,” Yanai announces as we take our seats at the long dining table. “There’s an Englishness about you.” He is almost imperceptibly leaning back in his chair and, as he speaks, his mouth moves less than you might expect, as if he were a ventriloquist minus a dummy. His face is stern, though beneath is a hint of amusement. Every so often, he bears his teeth as he erupts into laughter.
What, I ask, is so English about me? “The whole package. The air of the English is down-to-earth,” he says. “They care about details, there’s a tradition but there’s also a counter-culture, the younger generation versus the older generation and so on. But then that’s well blended into a happy balance and crystallised into common sense.”
It’s not where I would have started the conversation but it’s a fairly typical line of discourse in Japan, where perceived national characteristics remain an important prism through which to view the world. Seeing as we’ve set off down this road, I ask whether the Japanese are similar. One commonly hears Tokyo cab drivers pontificate on the parallels: both Britain and Japan are islands stuck off the edge of a great continental landmass. Yanai focuses on the differences. “I’m afraid Japanese people tend to collective hysteria,” he offers.
I can’t let that phrase go by, I say. What does he mean by collective hysteria? “Look at history,” he says, describing how Japan, after 300 years of isolation, burst into the world in the late 19th century, beating first, in 1895, China and then, in 1905, Russia in war. “Japan had this gut feeling. ‘We can do it. We can change the world. We can even walk on water,’ ” he says of the hubris that led to the destructiveness of would-be Asian domination.
At least three waiters, all wearing blue suits with light blue ties, are fussing around us. They pour sparkling water – the wine glasses have been whisked away without comment – and begin serving food. In Japan, it’s common to order before you arrive at a restaurant and Yanai’s office must have chosen. The first course is brightly orange Hokkaido sea urchin, served on an off-white sauce of fennel and seaweed cream in a large indented plate, like an inverted white cowboy hat. The sea urchin is delicious on its own but slightly overwhelmed by the creamy sauce.
As Yanai sets about slurping in the Japanese fashion – the action is said to introduce flavour-enhancing air – I apologise before pulling out my iPhone to snap a photo. Through the lens, I notice again his severe haircut and protruding ears. “It’s like cooking,” he says self-deprecatingly of his appearance. “If the ingredients are bad, then the picture probably won’t come out looking like a handsome-looking guy.”
I’d like to pursue the wartime history question, ever-present even as Japanese companies such as Uniqlo become more dependent on Chinese labourers and consumers, but Yanai has dispensed with his first course in a few quick slurps and I feel I should press on. As a chilled mushroom soup arrives, I turn to his childhood. He was born in 1949 in the mining town of Ube in Yamaguchi prefecture, where his parents ran a western clothing store. Yanai compares Ube with the gritty Welsh mining village in John Ford’s How Green Was My Valley, a film about environmental and social despoilment. “Back in those days, Japan was still an occupied country. It was very poor. My parents had a shop on the first floor and we lived on the second floor.” He remembers the taste of chocolate and coffee as “aspirational”.
When a mine shut down, he says, his school friends moved on with their families. “In my childhood, I learnt that all industries have a shelf-life. Everything comes to an end.” Did he want to escape? “I knew there was a certain expectation from my father.” As the only son, he would be required to take over the family business. But he also wanted to become a “salaryman”, an employee of a big Japanese company dressed in suit and tie.
He studied economics and politics at Tokyo’s prestigious Waseda University, where, he says, he devoted much of his time to mah-jong and pachinko, the latter an addictive game in which glassy eyed punters feed metal balls into noisy machines. He listened to jazz and was, he says, “soaked in American culture”. It was the late 1960s and student protests, over the Vietnam war and Japan’s subservience to the US, brought the university to a standstill for 18 months. Yanai took the opportunity to travel abroad and ended up in the UK. He was surprised to find that no one spoke English, or at least not the American version he knew. “I couldn’t understand a word of Cockney English,” he says. The reminiscence proves cause for another eruption into laughter.
After graduating in 1971, he worked briefly for a supermarket chain before returning to his father’s shop in Ube. In 1984, he was made managing director of the expanding business and established the first branch of the Unique Clothing Warehouse in the back streets of Hiroshima. Instead of selling the ready-made men’s suits in which his father’s business specialised, the Hiroshima store dealt in affordable casual clothes akin to those then being sold by Giordano of Hong Kong.
Uniqlo, a contraction of the original name, started expanding and by the mid-1990s had more than 100 stores. Yanai then opened a Tokyo outlet. Before long, the company was churning out hit products, typified by the $20 fleece jacket that is said to have been purchased by one in four Japanese. It experimented with new materials, to retain heat or to breathe in the sweltering summers, co-operating with Japan’s most cutting-edge manufacturers. The leap from Ube to Tokyo was, he says, far bigger than the one Uniqlo subsequently made from Tokyo to London, New York, Shanghai and Moscow, all cities where it now operates. “The world’s major metropolitan cities are more or less the same,” he says.
Still, there have been false starts. In 2001, Uniqlo opened several stores in London only to shut most of them again after miserable results. Yanai says the launch was undone by sloppy standards. In Japan, though Uniqlo’s products are cheap, customers are treated like kings, with bowing staff and immaculately laid-out stores. That’s not how it was on opening day in London, according to Yanai. “I was so angry at how messy the floor was and how the merchandise was stacked any-old-how,” he says, tucking in to the delicately cooked white fish that has been served. “I was infuriated.”
Since that false start, the going has been somewhat easier as Uniqlo has sought to glamorise its brand by opening flagship international stores in prime locations such as New York’s Fifth Avenue. Yanai has set a wildly ambitious target of nearly quintupling sales to $50bn by 2020. Isn’t he making a classic mistake of Japanese business, I wonder, prioritising scale over profits? “Scale has no importance on its own,” he shoots back. “But unless you have scale, you may not be able to stay alive or competitive. Unless you have scale, you can be bought by someone else or you may go bankrupt. Remember, I have seen so many industries dying out,” he says with a nod to his Ube roots.
Some wagyu tenderloin has arrived. Portions are delicate so the parade of food is manageable. The beef comes in a red-wine sauce and is served with little vegetables arranged more like an avant-garde art exhibition than a plate of food.
I ask if the clothing industry’s model is sustainable. After all, it relies on no-longer-so-cheap labour in China, where the bulk of Uniqlo clothes are made, and up-and-coming manufacturing centres such as Bangladesh, site of this April’s appalling tragedy in which 1,100 garment workers were crushed to death when a factory collapsed. Might not consumers in the west decide to buy fewer, better-made clothes, manufactured under more humane conditions? “People say that globalisation has negative aspects but I don’t believe globalisation is bad,” he says, a piece of beef suspended on his fork in mid-air. “It’s criticised from a western perspective but, if you put yourself in the shoes of people in the developing world, it provides an unprecedented opportunity.”
In the case of Bangladesh, it also brought death, I press. Although Uniqlo clothes were not being made in the collapsed Rana Plaza building, Fast Retailing has subsequently responded anyway by joining a European-led initiative to improve factory conditions. “Some European people tend to believe that these labourers are being exploited and deprived of their human rights and that, therefore, what they need is a strong union,” he says, waving away imaginary agitators. “But in my opinion, unless each one of those labourers and all the people in Bangladesh can stand on their own feet they will have no future.”
Even at home, Uniqlo is sometimes labelled as a “black company” because of a high, by Japanese standards, staff turnover rate that sees half of all new recruits leave the company within three years. In Japan, too, the brand has become a victim of its own ubiquity. There is a slang term, unibare, meaning to be caught wearing Uniqlo clothes. Part of Yanai’s global push is aimed at reflecting a better international image of the company’s products back into its home market.
In Japan, Yanai is famous for his prodigious wealth, not always a compliment in a country where money can be held in suspicion. His enormous house in central Tokyo has a mini-golfing range in the garden. In a previous interview, Yanai has said he is not interested in money, though he confesses to liking the idea of being Japan’s richest man. How does he square the two? “I would describe myself as a very average man,” he says. “I’m not extraordinary. I don’t think I was cut out to be making all this money. I have long prioritised being fair, doing something good for society.” Surely he has a Van Gogh or two tucked away at home, I goad. In answer he shows me his wrist to reveal a humble Swatch timepiece. “This is the watch I wear every day,” he says. I’ve seen this before, the classic gesture of a billionaire keen to prove that wealth has not erased his down-to-earth origins.
Ice-cream and coffee arrives, the latter served in fine bone china cups. The previous time I met Yanai, I say, more than a year ago, he was incredibly pessimistic about what he regarded as Japan’s myopic business culture, and an economy that he saw as floating on a sea of debt. Everyone harboured the illusion that they were middle class, he scoffed, but when they woke up they would realise they were poor. “All their savings have been used up by politicians and this bureaucrat-led socialist system.”
Since then, Japan under Shinzo Abe, its new prime minister, has embarked on a bold – some say reckless – economic turnround plan that centres on ridding the country of its 15-year-old deflation. There is also talk of more radical reform, by opening up areas such as agriculture and healthcare to greater competition. Since “Abenomics” was launched nine months ago, corporate confidence has crept back up and the stock market has surged, greatly adding to Yanai’s paper wealth. Japan is growing at more than 3 per cent a year, higher than most advanced economies. Is he now more optimistic?
“What Abenomics has achieved so far has been successful,” he concedes. “But that alone will not be enough unless it entails meaningful structural reform.” Japan must liberalise, deregulate and open its markets to foreign competition, he says, citing what he considers the model of Thatcherite reform in Britain. “If Japan remains isolated and protected,” he concludes with a finality, “it will become a second Greece or a third Portugal.”
Yanai stands to go. He makes his farewell and departs. For a man in a hurry he’s given me a generous 90 minutes. I survey the restaurant, full of well-heeled clientele chattering over their French cuisine. I wonder who among them will wake up to realise they are poor and which of them owns a Uniqlo fleece jacket.
David Pilling is the FT’s Asia editor
The Ritz Carlton (45th floor) Tokyo Midtown
Set meal x 2 Y20,000
Hokkaido sea urchin
Chilled mushroom soup, pink shrimp tartare, lobster consommé
Kanazawa seasonal fish
Wagyu beef tenderloin
Grand Marnier baba, chocolate ice cream, chocolate chantilly
Coffee x 2
Perrier x 3 Y1,590
Total (incl service) Y24,396 (£152)