Managing Asia

Managing Asia

Fast Retailing CEO: Go global if you want to succeed

Reporting by Kaori Enjoji | Written by Aza Wee Sile
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Meet Japan's richest man and retail legend
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Meet Japan's richest man and retail legend

Globalization is the buzzword fuelling the success of Japan's richest man.

Fast Retailing CEO and president Tadashi Yanai found his niche in affordable apparel and transformed his company into an clothing powerhouse by expanding overseas.

Yanai highlights two key challenges facing any global brand today: Globalization and digitalization.

"I believe whoever manages to adapt to these two things will become the winner, this is the biggest challenge," Yanai told CNBC's Managing Asia.

Fast Retailing is the holding company of several apparel brands, most notably affordable fashion brands UNIQLO Japan and UNIQLO International which are known for collaborating with global brands and celebrity designers from Pharrell Williams to Disney to Carine Roitfeld.

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The retail giant began with its first UNIQLO store in 1984 in Japan, while its first international venture was into the U.K. in 2001. It has made great strides since then, with over 798 UNIQLO international stores and 841 UNIQLO Japan stores as of August 31. The company had 2,978 stores, as recorded in FY2015.

Now global markets are the company's key drivers of growth and in a few months' time, Fast Retailing will have more stores outside of its domestic market.

The company reported $13.7 billion (1,681 billion yen) in FY2015, but its goal is to triple sales to $40.8 billion (5 trillion yen) by 2020 and become the top global apparel retailer.

Digitalization is a part of achieving this goal, as Fast Retailing together with consulting group Accenture announced plans to build a global, cloud-based platform to improve Fast Retailing's digital commerce, mobility and analytics capabilities.

Fast Retailing is also building Tokyo's largest warehouse to become a global logistics hub, which would help improve the transfer of goods.

"In a virtual world, anyone will be able to make a purchase from wherever they are and receive the goods in the same day, I think that is the ultimate goal," said Yanai.

Qilai Shen | Bloomberg | Getty Images

Fast Retailing is currently ranked fourth in terms of total sales in the industry of Specialty Share Retailers of Private Label Apparel (SPA) companies, falling behind Inditex, Hennes & Mauritz and Gap.

However, the retail giant could be faltering from its trajectory of reaching its goal.

Fast Retailing missed its last annual profit targets for the fiscal year that ended 31 August, by 17.8 percent. This alarmed investors and raised questions not only about the company's pace of growth but also the impact of China's slowdown on Fast Retailing.

But the billionaire is calm and collected about China.

"I believe there are necessary changes that come with [China's economic transition]," Yanai said. "The fact is they have a population of 1.3 billion, that's the U.S. and Europe combined and is an incredible opportunity."

Yanai, who recently won CNBC's ABLA Lifetime Achievement Award, is looking further afield and planning ahead for the company which manages the entire clothes-making process to distribution and retail and inventory management.

"As our business grows, China's capacity might not be enough," said Yanai. "Although China remains our most important country, we need to consider other manufacturing bases like Vietnam, Cambodia and Bangladesh."

"We rely far too much on one country," he noted.