How Muji China Is Using Localisation To Drive Its Next Growth Phase

When Muji opened its first store in Mainland China in 2005, it chose one of Shanghai’s most prominent retail locations: Nanjing West Road, a destination strip that has since become home to global and local retail flagships including Lego, Uniqlo, Bosideng and Starbucks.

Two decades later, the Japanese lifestyle retailer is taking a more subtle approach to growth in China. While the brand has adjusted its store network – including the closure of some locations as part of what it describes as routine optimisation – its broader strategy remains focused on expansion, localisation and deeper consumer engagement.

China is now Muji’s largest overseas market, with more than 400 stores and a growing focus on locally developed products, flagship experiences and integrated online and offline retail.

For Shu Wu, board member and CMO, China, the opportunity is not simply about adding stores. It is about ensuring the brand remains relevant as Chinese consumers evolve.

“Muji aspires to be an essential brand for a high-quality lifestyle,” she told Inside Retail on the sidelines of the recent Food & Beverage Innovation Forum 2026 (FBIF2026) in China’s Hangzhou.

“Guided by a belief that ‘simplicity is not merely modest or frugal, but could possibly be more appealing than luxury’, we aim to use as few resources as possible to support a life that is rich both materially and spiritually.”

Wu says the brand’s philosophy remains anchored in its long-standing ‘Power of Nature’ concept.

“We wish to convey a sense of reverence and respect for nature – producing goods from natural materials without disturbing nature excessively, bringing life closer to its natural state, and continuing to create a truthful and sustainable life and society for all.”

However, she says that expressing that philosophy in China requires a stronger local connection.

“In the local market, while staying true to this positioning and approach, Muji places even greater emphasis on local connections. With respect for Chinese nature, culture and society, we continue to deepen our roots here.”

Building a China strategy through localisation

Muji’s growth in China has been built over time, with Wu pointing to three factors behind the brand’s development: Long-term investment, localisation, and consistency of purpose.

“Muji’s development here is the result of long-term, deep local cultivation,” she says.

“Firstly, we have always been confident in the local market and committed to long-term investment.”

The company has continued expanding its physical footprint, opening around 40 new stores annually while strengthening its channel network.

“China’s consumption structure transformation has brought sustained motivation and potential. In this context, Muji has continued to increase investment, strengthen channel development, including stores, maintain a steady pace of opening new stores, and steadily expand our market coverage here.”

But Wu says growth has not come from simply replicating the Japanese model.

“We have continuously deepened the localisation strategy.”

Since 2019, Muji has had a dedicated local product development team in China, enabling it to design products tailored to local lifestyles and conditions, sourcing locally to “truly meet the needs of Chinese consumers”. Today, around 70 per cent of Muji’s lifestyle goods are developed in China.

“This enables us to develop products based on Chinese consumers’ living environments, climatic conditions and usage habits, making our products more relevant in both function and design.”

She highlights products such as the Cooling bedding series, developed for China’s hot and humid summers, and the OBP (Ocean Bound Plastic) series of handmade weave bags, which incorporates Shandong’s straw plaiting heritage.

“We believe that only by deeply understanding Chinese consumers’ lifestyles and responding to their genuine, evolving needs can we establish natural connections and resonance with them.”

“Based on this, we have gradually built a closed local supply chain loop – from raw materials and product development to sales.”

Competing in a crowded, value-conscious market

Muji operates in an increasingly competitive environment, with domestic brands such as Miniso and other lower-priced alternatives vying for consumer attention.

Wu says Muji’s response is not to compete purely on price, but to reinforce product quality, purpose and relevance.

“In product development, we adhere to three principles in manufacturing: The selection of materials, streamlining of processes and simplification of packages.”

“We return to the essence of products and insist on delivering high-quality goods to Chinese consumers.”

Flagships are becoming experience destinations

Muji’s investment in larger flagship stores reflects a broader shift in retail: Stores are becoming spaces for brand engagement rather than simply transactions.

And, she explains, the company’s strategy is not about pursuing larger stores.

“Based on the characteristics of different cities and commercial districts, we aim to offer Chinese consumers more comprehensive lifestyle proposals and experiences through more complete space and a more comprehensive retail experience.”

The company has expanded its flagship formats while continuing to develop standard stores that better align with consumers’ daily routines.

“Different types of stores play different roles: flagships present the relationship among products, services and space more completely, with more comprehensive business formats; standard stores are closer to daily life, making it convenient for consumers to shop and experience the brand in their everyday routines.”

Wu says flagship locations have delivered strong results.

“In terms of actual performance, flagship stores have achieved outstanding sales, ranking among the top-performing stores, and have attracted a large number of visitors.

“These stores have played an active role in strengthening the brand’s connection with consumers and deepening the expression of local culture.”

Digital growth complements the physical experience

While Muji continues investing in physical stores, China’s digital ecosystem has become an increasingly important part of its broader retail strategy.

Wu says the company sees online and offline channels as complementary rather than competing.

“For Muji, online and physical stores are not substitutes – they complement each other and enhance the Chinese consumer experience together.”

The company operates official flagship stores on major Chinese e-commerce platforms, with online sales now accounting for more than 20 per cent of its local performance.

“E-commerce channels now account for more than 20 per cent of Muji’s total performance in the local market. In the coming years, online channels will become one of our key growth drivers.”

The company has also embraced instant delivery, launching O2O services in 2022 through food delivery platforms. That service is now available in more than 400 stores across over 80 cities nationwide.

Wu says digital convenience does not replace the role of stores. “Physical stores offer irreplaceable value, including product texture, store atmosphere and interaction with staff – experiences which are not available online.

“We want consumers to feel the same Muji experience, whether in online stores or physical stores.”

Muji China’s next phase of growth is less about defending a legacy position and more about adapting a global brand philosophy to a changing local market, Wu concludes. 

“This philosophy is deeply rooted in the Eastern cultural understanding of nature and the essence of life, and it points to people’s universal pursuit and aspiration for a better life.” 

In another presentation at FBIF2026, Christoph Schwaiger, former CEO of Aldi South, explained how the German company built its foothold in China prior to expanding nationwide. 

The post How Muji China is using localisation to drive its next growth phase appeared first on Inside Retail Asia.