May 4, 2017 5:30 am JST

Muji bringing its first hotels to China in brand boost

Beijing, Shenzhen locations to open this year

Muji enjoys strong brand power in China.

TOKYO -- Ryohin Keikaku is opening hotels in China to strengthen its Muji brand there, a move likely to accelerate its business expansion in a vast market rich with potential.

The news of the first Muji Hotels coming to China has created a buzz online. The hotels, set to open in Beijing and Shenzhen in the second half of 2017, will feature everything Muji -- including beds, curtains and sofas -- and will have 40 to 80 guest rooms as well as Muji housewares stores and cafes.

Ryohin Keikaku's main role will be selecting and delivering furniture and household items for the hotels. The Japanese company will collaborate with Odakyu Electric Railway in Beijing, and with a local developer in Shenzhen.

Muji is known in China as a high-quality Japanese brand. An analyst at a foreign securities brokerage says Chinese view it as a label with a premium feel, like Nike. Many observers therefore expect hotels carrying the Muji name to enjoy strong demand.

"We wanted to incorporate our company concepts," such as simple designs and special attention to materials, into travel offerings, says Ryohin Keikaku President Satoru Matsuzaki. He admits, however, that the hotel business may contribute little to earnings.

Yet China is an important market for Ryohin Keikaku, so the company seeks to broaden its brand recognition by offering comfortable experience at its hotels.

Since opening its first store in China in 2005, Muji has expanded to 200 locations there by the end of February.

Ryohin Keikaku aims to generate 18.2 billion yen ($161.9 million), or more than 40% of its fiscal 2017 operating profit, in East Asia, including China. In a four-year plan through fiscal 2020, announced in April, the company hopes to increase operating profit to 60 billion yen, up from 38.2 billion yen in fiscal 2016. To achieve this, expansion in China and Southeast Asia is essential.

Muji offers a wide variety of items, including furniture, household items and travel goods. Shenzhen is known as the Silicon Valley of China, where middle-class income is rising sharply. The hotel business can be seen as a message for both within and outside the company that it will remain on the offensive in Asia's largest economy.

Ryohin Keikaku Co., Ltd.

Japan

Market(Ticker): TKS(7453)
Sector:
Industry:
Retail Trade
Apparel/Footwear Retail
Market cap(USD): 8,099.90M
Shares: 28.07M

Odakyu Electric Railway Co., Ltd.

Japan

Market(Ticker): TKS(9007)
Sector:
Industry:
Transportation
Railroads
Market cap(USD): 7,245.00M
Shares: 368.49M

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