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Muhammad Yunus sees 'lots of possibilities' in Uniqlo venture

Interviewed by : Nikkei staff writer Hisashi Iwato
Published On: http://asia.nikkei.comPublished date: June 10, 2016 12:30 am JST.

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June 10, 2016

Muhammad Yunus, the founder of Grameen Bank and a Nobel Peace Prize laureate, spoke with The Nikkei about his experience with Uniqlo and his views on social business.

Q: Why did you decide to work with Uniqlo?

A: We did not particularly choose Uniqlo. It was a chance meeting with Tadashi Yanai [the chairman and CEO of Uniqlo] that got things going. I was invited to one of his programs, and I said that we should collaborate on a social business in Bangladesh. Then he agreed. It happened just by chance, and I had no idea about Uniqlo.

I knew little about Mr. Yanai when I first met him, except that he was one of the biggest tycoons in Japan. He is a very nice person, very friendly and down to earth, with a lot of interest in helping poor people and explaining how the project could be done. I said to him, "Let's give it a try. I don't know how this will shape up, but there are lots of possibilities."

He sent some people to Bangladesh to talk to me and design a business. After all of this discussion, we came up with an idea.

Q: What is the role of Grameen Bank in the joint venture with Uniqlo?

A: Basically, our role is to clarify the concept so that the company knows exactly what it means to be a social business. It is one thing to read a book about social business, but when you design something, you have to be very clear about the concept.

A company cannot do everything. It needs direction to reach its objective. We keep the company focused on the objective and help it meet its goal. We provide support in terms of our local knowledge, for example, how to lower costs, how to do marketing, and what should and should not be included. These are not orders. We give advice, and they can decide what to accept and what to hold onto for another day.

You cannot achieve the objective from day one. It is a step-by-step journey.

The idea is, if you finally make it happen the way we imagined, other government sectors and other companies, big and small, will become interested. Everybody wants to do a social business, but they do not know how. So, it is the development of a prototype, and what we are doing with Uniqlo is a good example. Once people say, "Ah, this is what you meant. We can do that, too," it helps them on their way.

Q: How do you see the progress of your social business with Uniqlo?

A: All businesses have their ups and downs. We had problems at different stages.
In the early stages of our work with Danone [which also formed a joint venture with Grameen Bank], we had problems, too.

With what we are doing, we want to make products very inexpensive so poor people can afford them. We have to be sustainable, and at the same time, reach the poor. The hard thing to do is balance the cost and the price. It is a very difficult job.

We have similar problems in every social business we do, but nobody gave up. They simply kept trying. Giving up is not an option for us. Some solved the problem by subsidizing costs, by selling goods to the rich and using that money to subsidize the poor. That is one solution, but there are many others.

Q: What is the goal of Grameen Uniqlo?

A: We go step by step to reach our goal, which is to make inexpensive clothing for children and poor people. We have a long way to go. With Uniqlo, we still have not been able to do that. Currently, we are going slightly above those people to cover costs. The question is: How do we manage cost and get closer to our target?

Winter, for example, is a big issue for us. Winter gets very severe, and children die. So how do we make cheap winter clothing that poor people can afford? We could make warm clothing for them even if we lose money on it. We can cover the cost by selling other products to high-income people. This is one formula that we can follow.

Q: Grameen Bank has worked with many multinational companies like Danone and Veolia. Why do you work with foreign companies, and what do you need to form a good relationship with them?

A: In every case, we are very close to the people at the top of the company.

It is a very close friendship. With Mr. Yanai and Euglena [a startup that grows and sells algae], for example, we have a very personal relationship with them at the top levels, and everything happens because of that. But as time passes, not everything occurs due to personal relationships. They open up the door, but we have to design a business that makes both sides happy. That is the basis of the relationship.

Ours is a new kind of business, one where you do not work for personal profit. You do it to solve social problems. To reach a solution, both sides have to be very excited. It is a learning process, and we want to focus on a particular problem and then come up with a solution.

Q: Are there areas where you want to see other companies come in and start new social businesses?

A: Every business, whether it's large, multinational, midsize, local or small, should have a social business side. Anybody can do it. It does not cost much, but you take pleasure in knowing that you are working in a poor country, and at the same time, you are contributing to solving problems.
If you start a small social business, its impact is sympathetic. Look at Uniqlo. It's a mega-business. And look at Grameen Uniqlo. It is a tiny thing, but you are talking about it. This excites us; that even a big business can start doing good for the people. And it's true for all Japanese companies. If you want to do business in Bangladesh, Vietnam, Uganda or India, wherever you want, let us know. We are very happy to help you design a business. We are not charging you with anything. We just help by giving advice on creating a social business.

Q: Are there any limits to a social business? Are there areas where charities are better than investments, or where you have to leave it to the government?

A: It can be a mixture of charity and social business at the same time. It is not something exclusively charity or social business. Government has a role too, and we all work together.
For example, after an earthquake, you need immediate help with charity, but as you design a charity you also build up a social business. Marketing a product in an area that has been devastated is a social business. Or, we can start a social business to help build housing, and so on.

Q: Where do you think social businesses will lead to in the future?

A: Let's talk about 20 years from now. The world will be completely different from what it is right now. Technology is going to change things entirely. But my worry is wealth consolidation.
Right now, 1% of the world's population, out of 7.5 billion people, owns more than 99% of the wealth in the third world. Just think about how ugly that is. All the wealth is in the hands of a few people, and it induces a lot of explosive situations. This consolidation of wealth is a ticking time bomb, and it is getting worse every day.

I keep saying that all of us should make a pledge to ourselves; every child, young person, student and also the poor. Make a pledge: we will work for ourselves for the first fifty years and take care of us, and after that, we will work for everybody else. People create social businesses to solve the world's problems. Only then can we undo the consolidation. Otherwise, the world will be a very dangerous place.

Interviewed by Nikkei staff writer Hisashi Iwato

Source: http://asia.nikkei.com/Business/Companies/Muhammad-Yunus-sees-lots-of-possibilities-in-Uniqlo-venture?page=2