Miniso's Overseas Push Isn't Selling Goods, It's an Overflow of Operating Capability
Phone makers go abroad on manufacturing strength; Miniso goes abroad on brand and operating capability. It runs direct-operated stores in the US and partners with a family conglomerate in the Philippines, because wherever the traffic gateway is, that's where the strategy has to be.
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Retail has no siphon effect; it runs on ordinary people enduring hardship
Shen Shuaibo sees Miniso as ‘a victory of a bunch of ordinary people’: retail, unlike the internet, doesn't expand through resource-based, Matthew-effect-style growth. Its employees aren't recruited from the best schools, but their capacity for hardship is far higher than many better-educated people. The picture he paints: a Miniso store selling over a hundred thousand a day, shelves empty by daytime, and the whole night spent restocking and re-merchandising. Faking it for the occasional day is doable; sustaining it long-term is very hard. So retail also depends on luck, but not that much on luck, and not that much on the accumulation of innate resources.
— Shen ShuaiboThe less technical difficulty something has, the higher its operating difficulty
Shen Shuaibo's judgment: the less difficult something is from a manufacturing standpoint, the higher its operating difficulty, because everyone thinks they can do it. He uses bottled water as an analogy — so simple you just pump the water up and bottle it, so in the early years there were ten thousand drinking water companies, every region had its no-name brands, and in the end only a few like Nongfu Spring survived. Evergrande couldn't pull it off; it's not something money alone can build. Miniso faces the same with small commodities: low technical barrier, but an extreme test of management, channels, marketing and overall capability. Reaching super-large scale is far harder than people imagine.
— Shen ShuaiboGlobalisation in the past was roughly equivalent to Westernisation
In malls in India and Egypt, Shen Shuaibo saw that although these are Arab countries, what he saw was still Dove, Head & Shoulders, Pantene — just with a string of Arabic added under the English logo. His explanation: the industrialisation of Southeast Asia, South America, the Middle East, South Asia and Africa was castrated. Without a supply chain you can never enter brand competition, so the only brands that can appear are Western ones. China's biggest overseas push in recent years was phones — Xiaomi, Huawei, Transsion, Lenovo, Hisense, Haier — which is essentially ‘mid-range scarce supply sold there at a lower price’. The high-end market is still Samsung and Apple.
— Shen ShuaiboPhone overseas expansion is manufacturing strength; Miniso is an overflow of operating capability
Shen Shuaibo divides overseas expansion into two types: phones and new-energy vehicles are overseas expansion of manufacturing strength — few players, rigid demand, and once you get the general agency rights you can coast in the early days. Miniso is overseas expansion of brand plus operating capability, selling spray bottles, hairbands, power banks, dolls, slippers, facing global competition. His picture: dump a pile of bottles, jars and dolls into a store on New York's Times Square and still have to sell several million to tens of millions a month to survive — the operating pressure is enormous. 7-Eleven and FamilyMart can open across the globe because they export management, supply chain and organisational capability in full.
— Shen ShuaiboRetail doesn't sell products, it sells the store format
Shen Shuaibo breaks Miniso's development into stages: stage 0.5 is getting the store format working, because for a company that becomes a big chain, the most important product is that store format, not the individual products inside it; 1.0 is finding ‘the greatest common denominator of consumption’ — a Starbucks Reserve store of several thousand square metres can only open in the top locations of five top cities, so it's not the greatest common denominator; Luckin's and Miniso's store formats are. After that comes rapid expansion through an iron-army team of extreme management — the operations chief is a veteran who leads everyone in morning exercises, because managing an unlimited number of stores demands extreme execution.
— Shen ShuaiboFranchisees get paid daily; the thrill beats fixed-income wealth management
Miniso's managed franchise model: the franchisee only has to find the store, pay for renovation and stock, while the management staff are all Miniso's, and then profits are split. Shen Shuaibo interviewed a franchisee with 500 stores; at two in the afternoon the man's phone erupted, and beaming he said ‘we're splitting the money right now’ — 500 text messages arrived, splitting yesterday's takings. Weekdays are paid daily; Friday, Saturday and Sunday are paid the following Monday. Shen Shuaibo says the design is clever: paid by the day, across 500 stores, the thrill is strong — like Alipay paying you interest every day, it beat a lot of the fixed-income wealth management of the past.
— Shen ShuaiboThe people sent to run the US business can barely speak English
The hard part of Miniso's globalisation is the team: Shen Shuaibo says many people's first trip to the US is to run the US business, and they can barely speak English; many people's first trip to Chile is to Chile, and to Egypt is to Egypt. Business representatives are dispatched from China, with locally hired people on the ground. Some countries use an agency model — for example, in the Philippines, local Chinese partnered with the largest developer, the SM Group, to sign with Miniso, giving access to all SM malls, but a country representative still has to be sent to communicate and adjust the local product mix. Vietnam has a dry season and a rainy season; umbrellas and slippers must be in place before the rainy season — if you wait until the rainy season next month to submit the order for approval, it's too late.
— Shen ShuaiboPeople in countries that don't like making money all love buying dolls
Shen Shuaibo quotes Miniso's country agent: in all countries where people don't like making money, they love buying dolls. Demand for dolls in Latin America is far higher than in more northerly countries; per capita income there is three to five thousand RMB, yet some people spend three to five hundred RMB a month at Miniso on dolls and cups. His example: an Indonesian fan of a squat-machine IP bought every new release, and even wrote a letter saying I'm getting married — Miniso custom-made him a squat machine that looks like him. In many Southeast Asian countries wages are paid every half month, the money is spent within half a month, and people have to borrow from the boss against the second half of the month.
— Shen ShuaiboNo company succeeds through extreme low prices; they succeed through extreme cost
Shen Shuaibo says all companies succeed through extreme cost, not extreme low prices — sell one and lose one and you'll definitely die; if others die selling at ten yuan and I can still wield power selling at ten yuan, I can live indefinitely, and once scale arrives selling at ten yuan turns out to be very profitable. When Uniqlo places orders it tells suppliers ‘I now want this made at 199, with quality that must reach this standard — will you do it?’ Because it's buying a hundred thousand units globally, everyone does the math and agrees; if you say you're buying a hundred units, nobody will make it for you. Miniso, Uniqlo and Walmart are all extreme low-cost strategies, built on extreme supply chains and extreme brand positioning.
— Shen ShuaiboIn their own words · checked verbatim
Have you noticed that the less difficult something is from a manufacturing standpoint, the higher its operating difficulty actually is, because everyone thinks they can do it
有没有发现从制造角度 越没有难度的事情 其实经营难度很高 因为所有人都觉得能做
Shen Shuaibo35:35
In fact, globalisation in the past was roughly equivalent to Westernisation — that's a rather cruel realisation
其实过去的全球化 约等于西方化 这是比较残酷的认知
Shen Shuaibo36:35
No company succeeds through extreme low prices; all companies succeed through extreme cost — a low-cost strategy, not a low-price strategy
没有一个公司是靠极致低价成功的 所有公司是靠极致成本成功的 低成本战略 而不是低价战略
Shen Shuaibo1:24:03
Brand and marketing are two different things, OK. More often than not, brand is a group's prejudice and mindshare, while marketing is something closer to advertising and various actions — the business of spreading the word, a matter of traffic
品牌跟营销是两件事情 OK 更多时候品牌是一个群体的偏见和心智 而营销可能是一个接近广告的和各种动作 广而告知的事情 是个流量的事
Shen Shuaibo1:30:12
Figures
| Number of Miniso stores in the US | 100 stores | 30:31 |
| Room rate at the Hyatt in Times Square | A 16-square-metre room at 400 USD a night | 30:31 |
| Miniso US prices | Slippers 12.99 USD, socks around 16.99 USD | 1:13:55 |
| Starbucks China FY2023 sales | 3 billion USD | 1:16:58 |
| Price of three or four Hermès makeup items | Bought in Japan, 4000 RMB after conversion; a domestic set is 200 | 1:30:12 |
| Number of stores of a Miniso franchisee | Close to 500 stores; the company manages over 400 stores with 20 people | 56:45 |
Glossary
- retail is detailed
- A phrase Shen Shuaibo quotes, meaning retail's competitive moat is the sum of every complicated detail.
- Greatest common denominator store format
- A store format that can open in most locations nationwide, as opposed to a flagship that can only open in top-tier locations.
- Flywheel effect
- A concept proposed by Amazon: scale brings procurement advantages, and procurement advantages bring even greater scale, in a loop.
How to listen
Founders and investors in overseas expansion, retail and consumer investing, especially teams torn between direct operation and agency, or between extreme value-for-money and trading up.
1:31 to 27:47 on research methodology runs long; you can listen to just 2:00 to 13:15.