TOKYO — Japan’s economy has experienced significant ups and downs in the nearly eight decades following World War II. Especially notable is the prolonged stagnation dubbed the “lost 30 years,” a period of economic sluggishness after the collapse of the bubble economy in the early 1990s. Today, an increasing trend toward “Japan-first isolationism” threatens to push the nation into further decline. How can Japan regain its former dynamism? Tadashi Yanai, the 76-year-old chairperson and president of Fast Retailing Co., known globally for its Uniqlo and GU brands, shared his perspective with the Mainichi Shimbun.
Mainichi Shimbun: Over these past 30 years, Japanese businesses seem to have lost the energy they once had.
Tadashi Yanai: Japan was defeated in World War II in 1945, rebuilt itself, and rose from absolute nothingness until eventually, people spoke of “Japan as No. 1.” Yet afterward, instead of continuing to grow, it seems many (Japanese) companies lack even that ambition. I suspect they have become too comfortable with the status quo. I think there is a sense among them that “we can get by even if we don’t put in much effort.”
Companies here can receive loans even while running at a loss — loans they have no realistic way of repaying. Meanwhile, the government continually issues bonds to keep the economy afloat and then proposes tax cuts and stimulus measures. However, such “economic stimulus” mainly comes down to infrastructure projects, which yield low returns on investment. Both the ruling and opposition parties should instead be discussing ways to increase earning capacity and foster industrial growth.
M: Nonetheless, Japan’s nominal GDP exceeded 600 trillion yen for the first time in 2024.
TY: People shouldn’t think in yen terms, since the world operates on dollars. When considered in dollars, Japan’s GDP has stagnated since the economic bubble collapsed. In fact, the recent depreciation of the yen means GDP is actually shrinking in dollar terms. Yet people mistakenly continue to claim it’s rising. It is an illusion.
It seems like Japan-first isolationism, in a sense. There’s insufficient awareness of Japan’s place in the world. We need a clearer recognition that Japan exists within this global context.
As for the statistic of approximately 3% inflation, ordinary consumers probably feel inflation is higher than that. It seems like a misleading figure.
M: The concept of delivering good products cheaply is deeply entrenched in Japan’s industrial field. Didn’t your company help drive that competition?
TY: Even for us today, the “good products cheaply” approach has reached its limit. Material and labor costs keep rising, and it’s increasingly challenging just to maintain current prices. But if prices rise, products just won’t sell. We need to address today’s excessively strong focus on frugality.
Facing fierce competition, our strategy is to continue lifting the brand value of Uniqlo and GU. We have no choice but to upgrade our products to match the improved brand perception, offering increasingly better quality.
M: It became big news when you raised your starting salary to 300,000 yen for new employees hired in March 2023. Competition over talent is intensifying in Japanese society with its shrinking population.
TY: Our company hasn’t just increased salaries for new employees. We have a system of raising the pay for everyone who produces solid results. At the same time, there are demotions and promotions by selection. We must create a company attractive to people eager to grow.
An outdated seniority-based system is simply unfair. Younger employees would understandably feel frustrated when older employees earn more solely due to their longevity, despite doing the same or even better work.
In Tokyo especially, rent and living costs are high, making independent living impossible for many. The situation is abnormal. Thus, we should provide salaries reflecting individual performance, regardless of age. It wouldn’t even be unreasonable for new employees to earn close to a company’s average annual salary.
M: Yet Tokyo’s over-centralization seems nearly impossible to resolve.
TY: Rural regions don’t offer enough job opportunities. Without sufficient ways to earn a living, people won’t move there. Employment hasn’t adequately dispersed nationwide, which causes the population to concentrate mostly in Tokyo or the Kansai region (around Kyoto, Osaka and Kobe), with some concentration in bigger local cities. Past local revitalization policies haven’t produced substantial results.
Ideally, regional revitalization and industrial development should be integrated, allowing people to earn a proper income in local areas. However, the regions currently lack the human resources necessary for industrial growth. Companies hesitate to invest actively without assurance of certain returns. It’s a difficult “chicken and egg” situation.
M: What perspectives do Japanese companies and individuals need to achieve growth?
TY: We live today through interactions with the rest of the world. Especially in industries like IT and finance, borders have effectively vanished.
Japan should see itself as part of the wider world. A Japan-first isolationist attitude is dangerous. I think companies must look outward to survive. Each company seriously needs to ask itself what initiatives can enable its growth (on the global stage).
(Interviewed by Shiho Fujibuchi, Shizuoka Bureau)
Profile
Born in 1949, Tadashi Yanai joined his family’s men’s clothing store (now Fast Retailing Co.) in 1972. He became president in 1984 and chairperson in 2002. Yanai has held the dual roles of chairperson and president since 2005. Today, Fast Retailing ranks as the world’s third-largest apparel manufacturer and retailer and aims to reach annual sales of 10 trillion yen (approx. $70 billion).