10200461 - 23046627

Do Hong Ngoc
UMSD9F-15-3 - Multinationals in the Domestic and Global Context
Component B
Word count: 2105 words

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 I. Introduction
The world is getting more and more connected, without people realizing it, thanks to
globalization. The process through which companies or other organizations gain worldwide
clout or begin conducting business on a global scale is what is meant by "globalization"
according to the official definition (Globalization benefits and challenges, 2020).
Globalization opens doors for companies to experience different cultures and customer
insights all around the world, in order to acquire a competitive advantage in the global
marketplace. Vietnam is a wonderful and appealing country for foreign businesses to
establish branches in, due to low-cost manufacturing and great potential consumers, the
nation's economy is extraordinarily globalized, and after ten years, the GDP per person there
greatly increased, helping to lower the poverty rate (Kopf, 2018). However, Covid-19
attacked every aspect of the global economy, and the supply chain suffered from heavy
impact. Particularly, the volume of demands placed on Vietnamese garment producers
created a significant problem for international investors, including UNIQLO, a Japanese
apparel store.

II. Major findings

1. About UNIQLO
The Yamaguchi-based UNIQLO CoLtd is a Japanese casual clothing manufacturer, retailer,
and designer that was established in 1984. UNIQLO visited Vietnam for the first time in 2019
with the opening of its first shop in District 1 of Ho Chi Minh City. The firm has been
outsourcing the production of its garments to manufacturers in nations that provide cheap
labor. The flagship store is one of the largest UNIQLO stores in the Southeast Asia region,
showing the company's desire to conquer the Vietnamese casualwear market and to
contribute its values to more customers. There are now 17 stores throughout the country, and
over 1000 employees.
2019 was supposed to be a wonderful milestone for UNIQLO for settling down in the
Vietnamese apparel market, yet Covid-19 took a surprising turn, causing significant damage
to not only this Japanese retailer brand, but also to the whole domestic and global economy.
People’s most basic needs were not satisfied, let alone wearing options. Supply chain
activities got frozen, which had a great impact on UNIQLO since the company had to pause
the operation, delay a lot of projects and new items arrivals. Shortage in labor was a serious
challenge as well, putting UNIQLO Vietnam at risk, considering its newly set status in the
country.
However, the Japanese retailer brand succeeded even in the worst scenario of the pandemic.
Thanks to standardization in every country the company set its foot in, the quality is well
assured, making it more efficient for UNIQLO to operate and manage its global stores. In
Vietnam, the clothing marketplace witnessed an outstanding performance from UNIQLO,
despite the extremely serious situation of Covid-19 in the country, the company managed to
open 2 stores to better supply consumers during the pandemic. This shows the “The world is
flat” theoretical view of Thomas Friedman (2005), with reasons explaining why the business
environment is similar across countries, in this case, Japan and Vietnam. The flatteners will

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be discussed further to determine if the world is truly flat or not for both countries during
covid-19.

2. World flatteners
a. The collapse of Berlin Wall
With the collapse of the Berlin Wall in 1989, communism ended, and a new era of
democracy, capitalism, and free markets began. On the other side of the wall, nations who
were barred from the free market may now enter the economic mainstream, providing
Vietnam with a fantastic chance to begin business operations (IvyPanda, 2023). In 1994, Bill
Clinton ended the 19-year trade embargo with Vietnam, allowing US businesses to enter a
market with more than 70 million people who used to have little to no access to American
products. The Vietnamese responded by increasing their exports and embracing international
investors who are no longer affected by US sanctions (Deseret News, 1994). After joining
ASEAN in 1995 and WTO in 2007, this Southeast Asian country finally became part of the
world, eliminating discrimination from other nations.
The value of goods exchanged between Vietnam and the G7, which includes Japan and six
other developed countries, made up to USD 113 billion in 2017, according to official
statistics from the General Department of Vietnam Customs, making up more than a quarter
of the country's total import and export rate (National Institute for Finance, 2018). However,
Covid-19 hit the world like no other pandemic has, causing great damage for people’s lives,
and the economy suffered from substantially negative effects. Trading process was paused,
creating challenges for every nation in the world, and Vietnam is not an exception. The
situation changed significantly, at this point, the world might not be so “flat” anymore.
Covid-19 had a negative impact on Vietnam when it had to close the borders, unable any
exchange to happen.
Japan is an Asian country as well, hence it also benefited from the collapse of the Soviet
Union and the vanishing of the Iron Curtain. In the late 1980s Japan became an economic
threat for its outstanding performance. Globalization in Japan started with good relationships
between the country and China as well as East Asian countries. However, Japan's economy
only grew slowly after the bubble burst in the early 1990s, and despite several recovery
efforts, this drowsy growth continued (Urata, 2022). The world got more “spiky” for Japan
rather than being flat.

Nevertheless, UNIQLO chooses to standardize its quality and products throughout its global
branches, no matter which country it is. As mentioned above, Covid-19 made a negative
effect on Vietnam’s economy, and the domestic apparel marketplace suffered extremely.
Although some item releases had to be delayed because of the lockdowns at Vietnamese
factories, as well as labor shortage, UNIQLO managed to survive. Osamu Ikezoe, Deputy
Director of UNIQLO Vietnam, claimed that opening new stores supports UNIQLO to better
contribute to Vietnamese society and people in the long run, even when the opening took
place during Covid-19. This Japanese clothing brand shows how it succeeds in Vietnam, by
emphasizing its value through LifeWear - one of UNIQLO’s signature product lines.
UNIQLO believes the world now is borderless, and manages to express its belief by offering

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daily basic wear, with high quality and great applicability, which anyone can easily put on.
To UNIQLO, customers will purchase what are the most reasonable items, and this applies
for all customers in all countries, so the company offers items with great quality and keep the
products “uniform”, to better highlight UNIQLO’s unique style, as well as save cost for not
having to customize when globalizing. Common standards in technology also helps UNIQLO
achieve this strategy, and it is thanks to the end of the embargo of the USA as well.

b. Connectivity thanks to the Internet

The Internet is one of the greatest inventions of all time, and it has had a great contribution to
globalization. Being able to access the Internet means information can be shared across the
world. Customers' desire for online shopping has substantially grown since the start of the
epidemic, not just in Vietnam but around the world. More than 70% of Vietnamese people
have access to the internet, 50% have done their shopping online, and 53% have made
payments online using e-wallets (Briefing and Nguyen, 2021). Companies began to explore
online selling more to adapt to the pandemic, with the strong development of eCommerce
platforms like eBay, Amazon, Shopee, and so on.
Understanding this, UNIQLO has developed its own website for customers to access their
items better. The Vietnamese website of UNIQLO was developed as well, with the same
visual and structure as of the Japanese or other ones. However, during the pandemic period,
customers could only check the price and the availability of the items, without being able to
add them to an online cart and actually buy them online. This was particularly a limitation to
UNIQLO Vietnam, when online shopping became a vital part of consumer’s shopping habits.
After 3 years of operation in Vietnam, the website has finally been upgraded so that
customers can buy items without having to pay a visit to the stores, and this new feature is
also applied to all platforms of UNIQLO website over the world.

c. Uploading
This world flattener has a close link with the Internet, as thanks to it could businesses share
and/or public their resources, reports, etc. UNIQLO follows a standardized operation for
every of its global stores. Employees and customers have complete access to daily financial
charts and postings. The company is also highly focused on controlling each and every
consumer interaction and the shopping experience in general. The flat organizational
structure helps UNIQLO encourage staff, and deliver values and goals directly all over the
world. Being a UNIQLO employee is not like being a normal clothing store staff. Every staff
within the company is trained thoroughly for 3 months, with every activity being recorded
and analysed, and this training process applies for all. It creates a uniform and professional
attitude, leaving a great impression on customers whenever they enter a UNIQLO store. In
Vietnam, UNIQLO usually creates opportunities for demanding people to apply for the in-
store staff position, and the company offers a great training program and clear promotion
pathway for qualified employees. When Covid-19 hit, labor shortage became a hot issue
throughout the economy, especially for sale positions since direct contact with customers are
needed. However, with fair and stable support from the company, Vietnamese UNIQLO staff
still chose to contribute for the business as well as customers.

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Another available resource for Vietnam’s UNIQLO stores are the in-store facilities and
environment. Following the standard design, stores in Vietnam are often found in big malls,
with large areas for displaying different product lines, while still emphasizing the simplicity
concept that UNIQLO pursues. Clothes are arranged smartly and organized, which allows
customers to find what fits them best within a reasonable amount of time. Understanding that
customers would like to explore more about their purchased items or shop with deals and
vouchers, UNIQLO developed the mobile app, allowing customers to sign up and be a
member with lots of appealing promotions. Customers can also check their shopping history
via this app and give feedback online if wished, or they can read previous comments from
other buyers to decide on their purchase. All of these features are available globally and help
partly remove the Covid-19 challenge of locking down.

d. Workflow Software and Outsourcing

Japanese businesses choose Asia as their production hub for exports because there are more
low-wage workers there, the infrastructure is better than in other developing nations, and they
have developed close economic ties with Asian nations through trade and other means
(Urata, 2022). UNIQLO is not an exception, rather than owning factories in Japan, the
company outsources the production of nearly every item to factories in China and Vietnam.
The company has built strong relationships of trust with its partner factories, and helps
factories implement improvements when required. This saves UNIQLO a lot of money and
time, since their clothing does not need much customization, yet still satisfies global
customers’ needs, showing the world is flat from the Japanese company’s point of view.
During Covid-19, UNIQLO faced challenges from Vietnam’s lockdowns, resulting in the
delay of new arrivals because Vietnam is one of the company’s key producers. This flattening
factor caused inconvenience for the operation in stores of both countries, when Vietnamese
manufacturers were overwhelmed with orders and shortage in labor.

3. Recommendation
UNIQLO’s success lies partly in its product standardization, and how the company acquires a
truly unique business image among thousands of competitors like ZARA or H&M. Instead of
chasing fashion trends, continuously refreshing its collections, sustainability in UNIQLO
apparels help it stand out and stand still in customers’ minds. However, the company still has
to deal with challenges brought up by globalization. The pandemic situation has been a lot
less serious, and the way UNIQLO managed to survive was amazing, nevertheless, the brand
should focus more on differentiation, rather than being plain and simple for the next
generation. The world after all is not fully flat, it shifts everyday due to external factors, and
UNIQLO should never stop outdoing itself. Another problem that UNIQLO has not resolved
is the digital platform of the brand. According to Roll M., online sales of UNIQLO only
accounted for 9.9% of its total global sales, which can risk the company to lose a competitive
advantage. Globalization now relies mostly on digitalization, and it is recommended for
UNIQLO to level up its online operation, from supply chain, warehouses, to stores.
Upgrading online platforms to manage the company will help generate more revenue as well
as adapting better to the globalization context.

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III. References

Admin B. (2020) “Despite Covid-19, UNIQLO still opens more stores,” The Saigon Times
Online [Preprint]. Available at: https://thesaigontimes.vn/bat-chap-covid-19-UNIQLO-van-
mo-them-cua-hang/.
Briefing, V. and Nguyen, C. (2021) Why Vietnam is Forecast to be the Fastest Growing
Internet Economy. Available at: https://www.vietnam-briefing.com/news/why-vietnam-
forecast-fastest-growing-internet-economy-southeast-asia.html/ (Accessed: July 27, 2023).
Deseret News (1994) “VIETNAM, U.S. MOVE TO REMOVE OLD WALLS - Deseret
News,” Deseret News, 12 June. Available at:
https://www.deseret.com/1994/6/12/19114438/vietnam-u-s-move-to-remove-old-walls
(Accessed: July 26, 2023).
Globalization benefits and challenges (2020). Available at:
https://velocityglobal.com/resources/blog/globalization-benefits-and-challenges/ (Accessed:
July 25, 2023).
IvyPanda (2023) The World Is Flat by Thomas Friedman: What Really happened? - 557
words | Assessment example. Available at:
https://ivypanda.com/essays/the-world-is-flat-3/#:~:text=The%20ten%20flatteners
%20include%2C%20the,%2C%20capitalism%2C%20and%20free%20markets. (Accessed:
July 25, 2023).
Kopf, D. (2018) Vietnam is the most globalized populous country in modern history.
Available at: https://www.weforum.org/agenda/2018/10/vietnam-is-the-most-globalized-
populous-country-in-modern-history/ (Accessed: July 25, 2023).
Martin Roll (2021) UNIQLO - The Strategy Behind The Japanese Fast Fashion Retail Brand.
Available at: https://martinroll.com/resources/articles/strategy/UNIQLO-the-strategy-behind-
the-global-japanese-fast-fashion-retail-brand/ (Accessed: July 26, 2023).
National Institute for Finance (2018) Vietnam enjoys surplus worth nearly USD 45 billion
with G7 countries. Available at: https://mof.gov.vn/webcenter/portal/vclvcstc/pages_r/l/chi-
tiet-tin?dDocName=UCMTMP124420 (Accessed: July 26, 2023).
Online T.T. (2022) UNIQLO in Vietnam: 3 years of challenges but full of love. Available at:
https://tuoitre.vn/UNIQLO-tai-viet-nam-ba-nam-gian-kho-biet-bao-la-tinh-
20221208080854605.htm (Accessed: July 26, 2023).
Reuters (2021) “UNIQLO owner Fast Retailing sees impact from Vietnam lockdowns,”
Reuters, 16 September. Available at:
https://www.reuters.com/business/retail-consumer/UNIQLO-owner-fast-retailing-sees-
impact-vietnam-lockdowns-2021-09-16/.

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Urata S. (2022) Globalization of Japanese economy: reality and impacts - WORLD
INSIGHT. Available at: https://worldinsight.com/news/business/globalization-of-japanese-
economy-reality-and-impacts/ (Accessed: July 27, 2023).
Vietnam Investment Review (2021) “UNIQLO facing sourcing challenges as Vietnamese
factories deal with COVID-19,” Vietnam Investment Review - VIR, 19 September. Available
at: https://vir.com.vn/UNIQLO-facing-sourcing-challenges-as-vietnamese-factories-deal-
with-covid-19-87769.html.