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Interview

Don't kill the economy over the coronavirus, Uniqlo chief says

Yanai warns of long-lasting side effects to halting business operations

Fast Retailing CEO Tadashi Yanai urges companies to devise creative solutions to keep the economic ticking amid the pandemic. (Photo by Shihoko Nakaoka)

TOKYO -- Business management is like reading a book backward, Fast Retailing Chairman and CEO Tadashi Yanai once said, underscoring the value of knowing the conclusion first before deciding what must be done to get there. That philosophy may be informing his outlook in navigating the repercussions from the coronavirus pandemic.

The global economy must not shut down completely as governments work to contain the outbreak, Yanai told Nikkei in a recent interview, warning that doing so will make a recovery longer and more painful.

Yanai founded the Uniqlo brand in 1984 and has expanded Fast Retailing into the world's third-largest seller of clothing. The chairman, who has experience leading a company through a crisis, called on businesses to devise better ways to continue operations during the pandemic.

Edited excerpts from the interview follow.

Q: What should the Japanese government do right now?

A: Enacting radical measures without killing the economy is crucial. The government needs to test every person in Japan and communicate the situation to everybody. It also needs to thoroughly examine those who are coming in or leaving the country. But the government's biggest role is to help everybody who is facing financial difficulties. It needs to set a threshold for help and quickly distribute aid. It should leave the rest to local governments.

Current discussions focus just on economic stimulus. But these efforts need to be accompanied by an industrial recovery. How should we invest to prepare for a post-coronavirus world? And even though we should help those in need, people shouldn't start expecting to receive money from the government. The government should tell the public to consider what it can do as well.

I think many Japanese companies are operating like they are run by the government. They focused too much on flashy fields like artificial intelligence and computers. We need to think about how we can contribute through our main operations and seek wisdom from around the world. Business leaders need to take the lead in dealing with this problem.

Q: What are your thoughts on the global push to curtail economic activity?

A: We should not sacrifice public life and especially the economy to beat the coronavirus. If nobody is making money, we can't survive. In Europe, only stores in Sweden were allowed to continue operating. The idea was for companies and individuals to decide for themselves whether they wanted to keep operating without government interference.

I understand why governments are asking businesses to suspend operations to help contain the outbreak. But companies can come up with better solutions than for everyone to close their doors. They need to think up ways to continue their business activities while coexisting with the coronavirus and preventing its spread. If the economy tumbles, society as a whole will fail. That's the reality.

It takes time to restart economic activities once they stop. Fast Retailing closed about 390, or about half, of our stores in China at the peak of the outbreak there. Most have reopened, but their revenues are 60% to 70% of what they used to be. Customers don't come back to stores that have been closed a long time. It's the same in other industries, too. If this is how things are playing out in China, a recovery in Japan will take even longer.

Q: This isn't your first time weathering a crisis as a business leader. There was the global financial crisis in 2008 and the Fukushima disaster in 2011.

A: The spread of the coronavirus drove home how deeply the world is connected. Smartphones weren't even that common back during the Lehman Brothers crisis in 2008. Since then, many more people have connected to the rest of the world, thanks to the rise of the internet, AI and robotics.

The coronavirus is a once-in-a-century crisis, like the Spanish flu pandemic. A major recession is unavoidable with the current policies. The International Monetary Fund is predicting the worst economic downturn since the Great Depression, but things might end up even worse than that.

Q: The 1918 Spanish flu was followed by catastrophes, like the Great Depression and World War II.

A: We need to realize that the coronavirus outbreak could lead to similar crises as well. The world is connected. Anyone can go anywhere at any time. That's the reality. The world needs to come together and discuss how we can put an end to the outbreak once and for all.

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