Uniqlo could exit US market if told to manufacture locally

'America First' is proving to be a difficult task for foreign companies, especially if they are forced to make their products locally in the USA in order to have access to its market.

The 'America First' rhetoric was part of President Trump's election campaign, which boldly stated it would return manufacturing back to the States, even if making products on its home turf turned out to be neither economically feasible or consumer benefitting.

Japanese fast fashion retailer Uniqlo on Friday stated it would not be able to move its production to America. Were that to be a condition for the company to remain in the US, there would be consequences. Uniqlo's parent company Fast Retailing told news media there was "no chance" the company would manufacture in the US.

“If I was directly told to do so, I will withdraw from the United States,” Fast Retailing chairman and president Tadashi Yanai stated. Yanai iterated it would be impossible for the company to retain its current quality and price structure if it were to make its clothing in America.

American-made goods may not make sense for every business

"Anyone will think that it is an open-and-shut and impossible situation," Yanai told Asahi Shimbun. "If [manufacturing products in the United States] is not a good decision for consumers, it is meaningless to do business in the United States."

Yanai also stated he sees the American market as a big opportunity, but that its US operations are a long-term investment to profitability. The company would ideally open 20–30 stores a year with target areas including Silicon Valley on the West Coast and major East Coast cities if there was no requisite to produce locally.

President Trump has been very vocal via Twitter, using the social media platform to voice his opinions, which include implementing a ‘border tax’ for importing goods from outside the USA. Studies have shown, however, that despite consumers favouring locally made products, Americans are unwilling to pay more for them. Clothing items made in the USA could cost 5 percent more at retail, which would be a hard sell to customers who are used to paying less.

An Associated Press-GFK poll in 2016 found that 75 percent of consumers want to buy American but will usually go for cheaper items first.

Photo credit: Uniqlo, source: Uniqlo.com

 

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