MINISO, “Fair-priced MUJI Style” Has Beaten MUJI

MUJI, the Japanese based designer brand claiming to stick to the life philosophy of “simplicity” and “good quality” — seems to have lost its original attraction in the Chinese market. Meantime, local Chinese brands of fair-priced household commodities, which advocate similar MUJI style, are prospering at a fast expanding rate. MINISO is one of the most compelling examples among them.

According to Bloomberg News, June 25, MINISO, the inexpensive household items and consumer goods retailer known as “MUJI at a fairer price” is planning an IPO, or starting capital raise of $ 1 billion. People who have access to the plan revealed that the company would hold its IPO in Hong Kong or the U.S.

On the contrary, the “authentic” MUJI is now stuck in a predicament in China. Since 2016, the comparable sales growth of MUJU in the Chinese market has been declining. The company’s financial results released on its official website show that its sales volume in the Chinese market has been down by 3.9% since the first quarter of 2019.

There is a Chinese proverb saying “Teach the disciples, starve the master”. What has the “Chinese disciple” done to edge out and embarrass the “master” ?

MUJI Style at a Fairer Price?

Mr. Ye Guofu, founder of MINISO, is a Chinese entrepreneur from Hubei, a typical “uncle-style businessman born in the 70s”. Before MINISO, Ye’s most impressive business “creation” was Ai Ya Ya, a trinket store where, similar to dollar store, most items were sold for 10 yuan.

In 2006, two years after its foundation, the number of Ai Ya Ya shops reached more than 400; a year after that, the number rocketed to nearly 1000, boasting total retail sales of 560 million yuan, and business growth of 200%.

As a matter of fact, MINISO’s success can also be attributed to the same pattern as Ai Ya Ya: both highlight best cost performance and take over the market by opening up stores at a fast rate of expansion.

The idea of establishing MINISO originated from Ye Guofu’s trip to Japan in 2008. While traveling, Ye noticed there were plenty of 200 Yen Shops in Japan. And most of the products sold in these shops were made in China. “200 Japanese Yen is RMB 12 yuan! The products are well worth the money. The Japanese consumers are not alone in their habits of careful calculation and strict budgeting. The Chinese would rush to make a purchase as well.” Ye Guofu was fascinated by the thought.

Back from the trip, Ye decided to transform the business by applying the running pattern of dollar store, Ai Ya Ya, to MINISO.

The target consumers of MINISO are mainly white collar and student groups aged 18 to 30 living in first and second-tier cities. It adopts a similar product strategy, like Decathlon and Uniqlo, sticking to a low price while promoting popular release by sophisticated product appearance, design, and quality. The store offers over 3000 kinds of products, with nearly 10,000 SKU, including household items, daily life products, health and beauty, fashion accessory, digital products, and so on. Most of the products are sold at the price of 10 yuan and 20 yuan, and no more than a maximum price of 99 yuan.

The product turnover and update period in MINISO stores are faster. The product turnover in general department stores usually takes three to four months. But MINISO stores refresh its products in merely 21 days. The stockings in MINISO stores are updated every 7 days, which renders MINISO being rated as ZARA in household and daily life consumption market.

In accordance with its high-speed operational efficiency, MINISO opens up new stores at a rapid pace. In 2013 when Ye started to build the brand, there were merely 27 stores; after only a year, the number of stores swiftly increased to 373; in 2016, the number exploded to 2000, with a business turnover of 9.7 billion; until 2018, MINISO has opened over 3500 stores in 79 countries and regions around the world, with revenue of 17 billion, and a total staff of over 30000 employees.

Ye Guofu said that a MINISO store in a first-tier city with good sales turnover receives up to 2000 consumers daily. Suppose a consumer spends 30 yuan on average, the total amount of monthly consumption can reach 1.8 million. “By contrast, some famous fashion stores opened up in top shopping centers earn a monthly sales turnover of no more than 200,000.”

Asked about the competition from MUJI, Ye Guofu said in one of his interviews that MINISO and MUJI actually have the same suppliers. But the product of the same supplier, say, slippers for example, sold at 20 in MINISO, will cost consumers 100 yuan in MUJI. “MINISO is MUJI at a fairer price”.

Design Disputes

Ye Guofu has not come up with the slogan of being “MUJI at a fairer price” merely because of his confidence in the great price advantage of MINISO. The chief designer of the company, Mr. Miyake Junya, has also gained huge popularity among consumers due to his excellent design style.

As a new representative of Japanese “simple life” living style, Mr. Miyake Junya once described his design philosophy: simplicity and peace, instead of magnificent luxury, can be touching power to strike a note in our heart.

In Ye Guofu’s opinion, the core value of this style is “simplicity”. Simple design style is key to making the product look tasteful:

 “How can we make the products look tasteful? While many ascribe the success of MINISO to its low price, which seems to be apparent, its true secret lies in product design. Simplicity, in the end, is the highest and the biggest fashion.”

Yet, the design style which Ye Guofu proudly declares as his magic weapon has also put the entrepreneur into several disputes.

Since it entered the market, MINISO has been haunted by the scandalous accusation of “plagiarizing” and “faking.” “MINISO” resembles several Japanese brands in many ways. For example, its company logo of white on red is similar to UNIQLO, a LifeWear brand; its store decoration and product package reminds us of MUJI which also advocates a simple and natural style; its product pricing and categories are the same as Japanese retail store “DAISO”……. Therefore, it has been mocked as “a fake collection of famous Japanese brands.”

Not only the store is accused of plagiarism, the products sold in it are also blamed for “imitating famous brands”, pushing boundaries of the law. Several make-up products sold at low price in MINISO are said to intentionally imitate the style of famous brands.

Wang Yang was an operational partner of MINISO. He explained that MINISO was actually making some “micro-innovations”. Wang also summarized MINISO’s typical three steps in pursuing success: simplify the original product; improve product appearance; and lower the price to about 1/10 of the authentic international famous brand.

If MINISO can still get by, despite being accused of “imitating and adapting” by the public; the legal infringement disputes are not so easy to be dismissed.

In March, 2018, NOME sued MINISO for Trademark Infringement; in October, MINISO lost the lawsuit and ended up apologizing to Bai Guan, the illustrator, for infringement; at the end of November, Shen Wenjiao, founder of PIY, an innovative and inspiring unique flat-packed furniture brand, published an article, denouncing that MINISO should be responsible for infringement.

Ye Guofu, however, disapproves these accusations, saying “there is no imitation in the realm of design; we are just learning from each other.”

Potential risks

Instead of infringement disputes, the bigger risk against MINISO lies in its way of expansion.

There are two ways of cooperation in opening a MINISO shop: one is to invest jointly with MINISO headquarters at the proportion of 1:1, sharing the risk and the profit; the other is in the form of “franchise”: MINISO headquarters will be in charge of store operation, staff recruitment, commodity distribution, and other work; while the franchisee has to pay for the rent, 80,000 brand royalty, 350,000 decoration cost, and 750,000 deposits.

After the shop opens, the franchisee receives 38% (33% of food and beverage) of the business turnover of the previous day, and the MINISO headquarter gets 62% of the earnings.

Apparently, MINISO adopts an asset-light strategy, making the franchisees LP investors, who make investment but do not manage, while MINISO acts as management (GP).

In this division of interests, MINISO gains a considerable cash income stream by a “combining pattern” to require the payment of “brand royalty + deposits” + “profit allocation based on previous day turnover”; besides, by linking profit splitting with business turnover, rather than profit, means the headquarters always gets a share of the sales, whether the franchised store is making a profit or not.

Now, we finally understand why MINISO is so obsessed about opening new stores at a fast speed. In essence, the company is running on a B2B business model: with more stores open and the business turnover increases, more profits are generated for the corporate headquarters.

But, as calculated earlier, to open a MINISO store, the investor has to plunge at least 2 million yuan into an initial investment, a vast amount that would scare off many potential franchisees.

Ye Guofu has made full preparation for this. Ye is not only an “experienced industrialist,” but also known as “internet financial godfather.” He has established more than 30 Internet financial platforms, with a total investment of over US $5 billion. Among them, there are P2P Peer-to-Peer Platforms “,” internet collection platform “,” and cash loan platform “” is the biggest platform in which Ye Guofu has made major investment. It is also the platform which has the deepest connection with MINISO.

According to a report from, among the 200 shop financing projects displayed on the page of, there are 54 investments into MINISO as franchisees, with the amount of money involved at 434.6 million. As for profits generated, the franchisees have to pay for the loan costs at annualized rates of 18% on the platform.

In other words, for investors who have financial deficits, MINISO offers loans through its internet loan platform; the loan eventually flows back to MINISO in the form of deposits and brand royalty. Meanwhile, investors have to pay for the loan interests, which is yet another source of profit for, which, in turn, helps MINISO expands its business.

The pattern adheres to a circle of cash flow “between industry and finance”. When the economic environment is active and healthy, and when franchisees can earn a profit, the pattern will complete the circle and develop smoothly. But when there is any economic crisis, and the shop cannot generate enough profit to cover such costs, the franchisee may break the contract. will put its investors in huge risk; plus, there are so many franchised stores. If the investors ask to withdraw their deposits at the same time, MINISO will have risk of runs.

Beyond the seas

In fact, the risk has already emerged.

Bai Shuo, an employee at, another representative of dollar stores in China, reveals that most of the dollar stores are suffering from business decline. “Actually the entire business has been shrinking since the second half of last year. Sales in most stores have stopped growing, if not going down. Because the products sold in dollar stores are not rigid demands. If consumers are financially stressed, they will cut down on buying,” Bai Shuo explained.

According to a report of, a MINISO employee once said that about 10% of its stores were losing money; another media report even claimed that 1/3 of MINISO franchised stores were in the red.

Another set of data deserves our attention.

MINISO boasts good revenue scale, claiming total revenues of 17 billion yuan by its 3600 stores at the end of 2018. In 2016, the number was 9.7 billion by 2000 stores. But the average annual income of a single store is 4.72 million in 2018, and 4.85 million, in 2016. This means despite the fast growth in store number, the annual income has dropped. Single store productivity has reduced.

When the growth of efficiency cannot keep up with the scale of expansion, the risk of franchised stores closing up is increasing. 

Ye Guofu admitted in his interviews that the closing rate of MINISO stores is 4% to 6%. But has quoted some investors, insisting that the number is higher than 10%.

Ye Guofu has probably also realized the threat from such risks. Since 2016, MINISO has transformed its strategic focus to overseas market, trying to find more sources of cash flow by opening stores abroad.

In 2016, MINISO established a strategic partnership with partners in more than 40 countries and regions. It opened nearly 200 stores in more than ten countries and regions. Until 2018, MINISO had expanded its market in more than 70 countries and regions, opening more than 1800 stores. According to Ye Guofu’s plan, by 2022, 7000 out of 10,000 MINISO stores will be opened overseas.

In its overseas expansion, developing countries like Mexico and India with a large population have become MINISO’s top priority. There are nearly 100 MINISO stores in Mexico. The number is estimated to reach 180 in 2019; in India, up until the end of 2018, there were almost 70 MINISO stores.

In this case, the future competition between MINISO and MUJI may not be limited to the Chinese market.

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