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The headline everyone read wrong
UNIQLO Shanghai flagship store, China. Photo: Fast Retailing Co., Ltd.
On 8 October 2026, Reuters reported a milestone: for the first time, Uniqlo's combined sales in North America and Europe (¥877.6bn) overtook Greater China (¥724bn). Fast Retailing also posted its fifth straight record year, with operating profit up 32% to ¥743.1bn.
Most people read it as "Uniqlo is moving on from China." Read the fine print instead. In Greater China, business profit rose 25% to ¥112bn, one year after it fell.
That is the real story. In the same market, LVMH shares are down about 37% this year, German premium carmakers lost a quarter or more of their China sales in Q2, and Inditex has already pulled three brands out entirely. China did not get easier for Uniqlo. It got harder for everyone, and Uniqlo found its way back anyway.
So why does a Japanese basics brand survive where Europe's most powerful names cannot?
24 years in China: a slow start, a fast climb, a hard reset
Uniqlo did not walk into China and win. It took eight years to find its footing, a decade to dominate, and a painful reset to stay relevant.
2002–2009: the cautious start. Uniqlo opened its first mainland store in Shanghai in September 2002, the same year it launched in London. The UK expansion went badly, so China grew at a measured pace, reaching 189 stores by 2010.
2009–2019: finding the gap. Two moves changed everything. In 2009 Uniqlo started selling on Alibaba's Tmall, working with the platform instead of fighting it. In 2010 it opened a flagship on West Nanjing Road, Shanghai. Analysts at Mintel later said Uniqlo had spotted the empty space between cheap, joyless clothing and expensive luxury, just as China's white-collar middle class appeared. Store count raced past 800 by 2021, and Uniqlo won Tmall's Singles' Day apparel crown six years in a row.
2024–2025: the wobble. As China's post-COVID spending slump set in, revenue and profit fell. In July 2024, Greater China CEO Pan Ning called it a "turning point" and launched "scrap and build": close weak stores, open bigger ones in better locations. Uniqlo also trained around 2,000 staff for livestream selling. Fiscal 2025 (Sep 2024–Aug 2025) still ended with China sales and profit down.
2026: the comeback. Autumn 2025 sales recovered, helped by a new partnership with JD.com that brought in new online customers. By fiscal 2026 (Sep 2025–Aug 2026), China profit was up 25% with roughly 900 stores still open.
How Chinese shoppers changed
In ten years, Chinese shoppers went from buying logos to show status to splitting their money into two pots: things that are good value, and things that make them feel something.
Uniqlo itself noticed the shift early. In 2024, Pan Ning argued Uniqlo's relative competitiveness was rising because shoppers were hunting for affordable alternatives to branded goods.
Why Europe fell and Uniqlo didn't
European brands got stuck between the two pots. Luxury sold status, which lost value when the economy turned. Mid-market fast fashion sold trends, which local brands now copy faster and cheaper. Uniqlo sold function at a fair price, which is exactly what the value pot wants.
European luxury | Western fast fashion | Uniqlo | |
|---|---|---|---|
What it sells | Status | Trends | Function |
Which pot | Emotional, now taken by local brands | Neither | Value |
Outcome in China | LVMH shares down ~37% in 2026 | Inditex exited three brands in 2022 | China profit up 25% in FY2026 |
Luxury lost both pots. Status buying fades when confidence falls. Worse, the emotional pot did not disappear; it moved to Chinese brands. Laopu Gold, a jeweller built on traditional Chinese designs, became a Gen Z must-have, while Louis Vuitton drew consumer criticism over a trademark dispute with a local tea brand. The same pattern hit cars: sales of seven imported luxury car brands fell from 730,000 in 2024 to 480,000 in 2025.
Fast fashion lost its reason to exist. Bershka, Pull&Bear and Stradivarius closed their stores in early 2022 and their Tmall shops that August. Old Navy, Selected and Esprit had already left, as analysts noted conventional fast fashion was losing appeal with Chinese shoppers. A trend-driven Western top is easy to dupe; a Chinese factory can match it within weeks.
Uniqlo survived on five things:
Function over status. HEATTECH and AIRism solve a problem. When budgets tighten, people cut status first and utility last.
A price nobody has to justify. Basics at a fair price sit naturally in the value pot.
Platform-native, early. Tmall in 2009, livestream training in 2024, JD.com in 2025. It joined each new channel instead of resisting it.
Willing to shrink to grow. Scrap and build meant closing weak stores rather than discounting to keep them alive.
Not dependent on China. With the West now its largest overseas region, Uniqlo never had to chase Chinese sales at any cost.
Case study: Mistine, the Thai brand that cracked China
AI-generated illustration of MISTINE. Not actual store photographs.
The best proof that this playbook works does not come from Japan. It comes from Thailand. Mistine, a Thai cosmetics brand founded in 1988 and long known for door-to-door sales, made ฿16bn in China in 2024 and expects its China business to pass ฿20bn in 2026, its first year at that level.
It followed the Uniqlo pattern almost point for point:
One functional hero product. Mistine led with sunscreen built for hot, humid climates. Sunscreen made up 70–80% of its China sales, and the brand says it has topped China's sunscreen sales chart every year since 2021.
A fair price. It sits firmly in the value pot, competing against global brands at a fraction of their price.
Chinese control. Mistine entered in 2016 through a joint venture, Better Way Shenzhen, where the Chinese partner holds 51%.
Platform-native. By 2022, 95% of its China sales came from online platforms.
Made and invented in China. About 70% of what it sells in China is made in China, and it opened an R&D centre in Shanghai in May 2025.
Local faces. In June 2025 it signed Olympic table tennis champion Wang Chuqin; launch-day gift boxes passed 40m yuan in two hours.
It is not frictionless. Management admits rising platform fees and online marketing costs are squeezing profit. But Mistine now plans a Chinese stock market listing in 2027–2028, using China as a springboard to the rest of the world.
The twist: Mistine won in China by becoming almost Chinese. European brands tried to win by staying European.
The lessons
Uniqlo and Mistine sell very different things, but they won China the same way.
Pick a pot. Be the best value or be loved. The middle, a decent product with a borrowed foreign halo, is where brands die.
Function travels; status does not. Status is local and moves with the economy. A product that solves a real problem keeps selling in a downturn.
Go where shoppers already are. Tmall, livestreams, JD.com, Douyin. Both brands joined each platform early instead of protecting their own channels.
Let locals drive. Local leaders, local partners, local production, local faces. Mistine handed majority control to a Chinese partner and grew faster for it.
Don't need any single market. Uniqlo could close weak stores in China because the West was growing. Desperation leads to discounting, and discounting destroys brands.
So what for Southeast Asia?
The flow is now running the other way. Chinese brands hold over 60% of SEA's smartphone market, and Mixue, Luckin and Chagee are winning SEA consumers with the same value-first, platform-first playbook. Any brand entering Vietnam, Indonesia or Thailand will meet competitors that learned their trade in China's brutal market.
The question for founders here: is your product in the value pot, the emotional pot, or stuck in the middle?
Test your own brand's position
We turned this framework into the Brand Positioning Scorecard, so you can place your brand on the same value-versus-emotion map. Start with the free web tools to get a first read in a few minutes.
What's coming next
Mon 2 Nov: Why global coffee chains struggle in Vietnam. Starbucks has about 150 stores there after 13 years. A local chain has more than 1,000. We look at how it happened.
Wed 4 Nov: Income vs living cost in Southeast Asia, part 1. What a salary actually buys in each market.
Your turn: Uniqlo won in China where European brands didn’t. Which brand do you think is next to win or lose in Southeast Asia? Reply to this email.
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