Reviewing the lessons of the China market, Uniqlo’s founder Tadashi Yanai once said: to adapt to China’s lower income levels, the company lowered both product prices and quality — in hindsight, that was a mistake, an over-localization. One sentence, two actions: cut the price, cut the quality. The error was not in the first one.
Cutting the Price Was Right; Cutting Quality Is Another Matter
Some say adapting to local customs is common sense — a market with lower incomes deserves somewhat lower-spec products, and holding everything at original price and original quality is arrogance. The price should indeed follow the local market; that half of the argument stands. But the same company proved that another road exists: fleece priced at 1,900 yen was itself a response to a low-budget market, with not one gram of quality removed. There are two roads for adaptation — change the cost structure, or change the quality floor. Choosing between them amounts to defining the local customer: short of money, or not deserving of good things. That definition was never put on the table at the time; it hid inside the purchase order.
London Paid the Tuition First
Beijing was not the first stop. In 2001, the first UK store opened on Knightsbridge in London, then quickly spread to twenty stores across London and its surroundings — and within two years, sixteen were closed. The plan at the time called for fifty stores in three years; management brought in senior executives from the local industry and ran a startup-scale business with the hierarchy of a large corporation. Run a startup as a big company, and the processes arrive while the speed of responding to the market leaves. Expansion outgrew what could be looked after. The tuition for that lesson could have been waived in Beijing; instead, it was paid twice.
Full Authority, Full Blame
Beijing’s problem came down to one judgment. The company appointed a senior Chinese employee with full authority over the China business; he judged the China operation to be entirely separate from Uniqlo Japan, and the whole package of price cuts plus quality cuts followed. The result: Shanghai grew below expectations, and two Beijing stores closed. In the post-mortem, the words over-localization landed on him. But the one granting full authority was the institution, and the separate-operation judgment grew in soil the institution provided — the same idea had already failed once in London. The person was only the symptom. What the system lacked was one constraint: what may adapt to the local market, and what may not.
The Fleece Adapted to the Market, Not to a Lower Quality
The counter-example sits inside the same company. Fleece was developed with Toray, spun in Indonesia, produced in China, with costs pressed down through bulk purchasing — 1,900 yen, and 26 million units sold in the year 2000 alone. Facing the same low-budget market, the way to bring the price down to 1,900 yen was not cheaper materials but reordering the entire supply chain. Low price and high quality coexist inside one model, provided the model holds a cost structure rather than cut corners. Both approaches lower prices: one lowers them on the procurement sheet, the other on the customer. The books show the same low price; underneath the books are two different businesses.
Quality First, Price Second
In 2004, the company bought a full-page advertisement, headlined in spirit: Uniqlo says farewell to low prices. The text stated plainly: the pursuit of low prices does not stop, but quality first, price second is the standing rule. Cashmere from Inner Mongolia, merino wool, goose down from Poland — a global buying operation backs the same sentence: cheap does not mean settling. That sentence did not stay in the advertisement; the fleece algorithm was later copied across the whole supply chain.
What Adapts, What Never Does
Every business entering a new market carries the same checklist: language, channels, pricing — these adapt. Safety, quality, promises — these do not. When the second half of the checklist goes missing, localization turns from adaptation into downgrade, and downgrades have memory: a brand that slides from affordable-and-well-made to merely affordable is left with nothing but a price war. The industry only decides how long the checklist is, not whether that line exists. Adapting to the local market adapts the price list, never the floor. Once the floor follows the local market, the brand replays the same scene in every market it enters.
