The head of Asia’s largest clothing retailer has warned that Japan risks economic collapse if the government fails to contain the coronavirus outbreak, criticising Tokyo’s inadequate testing and lockdown strategy.
Tadashi Yanai, the founder of Japanese group Fast Retailing, said Prime Minister Shinzo Abe’s decision to declare a nationwide state of emergency without mass testing was a “mistake”, in a sharp rebuke of Japan’s handling of what he described as “the biggest crisis for mankind in the postwar period”.
“Every citizen should be tested so the patients can be identified and isolated,” Mr Yanai said in a phone interview. “Once the [heavily infected] areas are specified, then the emergency declaration should be made, in limited scale. Otherwise, if you just ask everyone to stay at home, the economy would collapse.”
Mr Yanai, the country’s richest entrepreneur, joins SoftBank’s billionaire founder Masayoshi Son in publicly questioning Japan’s response to the pandemic, in a striking break from the country’s corporate tradition.
He also took a swipe at rising coronavirus tensions between the US and China, saying “it was no time to be fighting” over national interests.
Mr Abe last week extended an emergency declaration from just seven urban prefectures including Tokyo to the whole country following an increase in Covid-19 cases, which now total about 12,300.
The state of emergency declaration gives prefectural governors the power to request business closures, but Japan’s attempt to control the pandemic without resorting to a full economic lockdown has been controversial. Its testing rate has remained low compared with other countries, with an emphasis on treating critically ill patients.
Mr Yanai also opposes a financially devastating lockdown, but his primary concern is a lack of testing that has created uncertainty about the true extent of infections in Japan. The government should focus on containing the most heavily affected areas, he said, instead of a blanket emergency declaration that risks prolonging the adverse impact on the economy.
The economic lockdowns across the rest of the world have hurt the owner of the Uniqlo casual clothing brand, which has slashed its annual net profit forecast by 39 per cent.
Fast Retailing expects sales in the US and Europe to fall as much as 70 per cent in the next two months with about 400 of its 1,431 Uniqlo stores globally now closed. In Japan, nearly 290, or more than a third, of its outlets are shut.
One indication of how fast Uniqlo sales could recover is China, where only three stores are now closed compared with a peak of about 395 in February.
While clothing production in China also has recovered to about 90 per cent, Fast Retailing plans to push ahead with diversifying its manufacturing base, a trend already under way before the virus outbreak. That may involve expanding the role of factories in south-east Asia to making garments, whereas now they primarily sew China-made fabric, Mr Yanai said.
The company projects sales in China to return to last year’s level by summer, but Mr Yanai expects the outbreak to weigh on consumer psychology as long as global travel restrictions remain in place.
“People are afraid about everything at the moment and unfortunately there is no mood for buying clothes,” he said. “It will likely take a year from when the outbreak comes under control until people can be confident that they have overcome coronavirus.”
