Fukushima clothing chain expands in China

Kyodo

A Japanese maker of casual wear for young women is expanding operations in China with its “kawaii” (cute) clothing.

“I love cute Japanese clothes and buy them here repeatedly because they are inexpensive,” said Wang Tianyi, a 19-year-old college student who visited Honeys Co.’s store in a shopping mall in Shanghai.

Wang said she reads Japanese fashion magazines to follow the trends in Japan.

Li Xiaoyi, 19, who was visiting with Wang, purchased a pair of pants for 228 yuan (about ¥3,800).

For Honeys, known as Haolizi in China, word of mouth is the most important marketing tool because the company, based in Iwaki, Fukushima Prefecture, avoids paying for advertisements.

Honeys was founded in Iwaki in 1978 and operates a network of some 840 stores in Japan. After entering China in 2006, the company now has about 570 stores under direct management, much more than Fast Retailing Co., operator of Uniqlo, the rapidly expanding casual wear chain.

Honeys chalked up more than ¥10 billion in sales in China in fiscal 2012, accounting for 17 percent of its sales. Although it has been able to offer low prices by cutting costs through integrated operations from product planning to retail, it has actively hired Chinese workers to produce clothes matching the tastes of young Chinese women.

Xu Feng, head of product development for China, was hired by Honeys in Japan after graduating from a Japanese university. Noting that consumers in Shanghai prefer brighter colors in comparison with those in Japan, Xu said products for the local market need to combine Chinese tastes with the image of Japanese fashion.

Despite its rapid expansion in China, Honeys expects to fall into the red in China in fiscal 2013 through May because of competition from major U.S. and European casual apparel makers, which have been making a splash in the Chinese market.

Michihiro Ono, head of Honeys in China, said the subsidiary will close unprofitable operations to overcome the toughening market environment.

“Some companies may be forced out of the market,” Ono said. “It’s time for us to hold on.”