Japanese billionaire clothing retailer Tadashi Yanai criticized his government’s response to a severe recession as too tepid and called for tax cuts to spur domestic consumption.
Yanai, chief executive of Fast Retailing Co. Ltd, said the government should shift Japan’s economy away from dependence on exports and provide incentives for domestic producers. He said recent government cash handouts have been ineffective because recipients are saving the money.
“The current policy is very superficial. It’s not a fundamental solution to revive the economy,” Yanai told The Associated Press. “The government is focusing too much on the export industry.”
“They should focus more on domestic industry to create domestic growth and demand.”
Yanai, who is Japan’s richest person and was worth $6.1 billion in February according to Forbes magazine, said he agreed with OECD forecasts last week that Japan’s economy, the world’s second largest, will shrink 6.6 per cent this year and prices will fall in 2009 and 2010.
The government plans on Friday to unveil its fourth stimulus package since August as it grapples with a collapse in demand for exports, which has triggered the country’s worst economic downturn in more than 60 years.
Yanai urged the government to slash a 5 per cent consumption tax to zero for the next three years in a bid to avoid deflation.
“There should be more tax cuts,” said Yanai, 60. “The basic problem is that people are worried about the future so they’re putting their money in savings.”
Yanai said the government should not attempt to make exports more competitive by weakening the yen, which trades at about 100 to the dollar. “100 is ok right now,” he said. “It’s in balance now.”
Fast Retailing’s Uniqlo stores, which account for about 80 per cent of the company’s income, have weathered the current economic storm better than most, posting 12.9 per cent same-store sales growth in Japan for the six months through February.
But even Uniqlo, which sells inexpensive casual clothing, has seen the recession take its toll on results. Same-store sales slowed to 7.9 per cent in March, and Yanai said growth of 5 to 6 per cent the rest of the year was likely.
“12.9 per cent was too good,” Yanai said. “I hope to maintain 5 to 6 per cent growth.”
“In whatever economic climate, a company must grow. That’s what managing is about.”
Yanai was in Singapore to promote Uniqlo’s first store in Southeast Asia, one of eight the company plans to open in the city-state during the next three years.
Uniqlo has more than 800 stores worldwide, including outlets in the U K , China, Hong Kong, South Korea, the U S and France. Yanai said he may open stores in India and the Middle East.
“I want stores in all of Asia, and the Singapore store will be a showcase for Southeast Asia,” he said. “The quality of our products at our price points are the best in the world.”