Retailers like Uniqlo are also facing intense competition from ultra-fast fashion as brands like China's Shein and Temu gain popularity with price-conscious customers.
But Mr Yanai says “I don’t think there’s a future for fast fashion".
"They’re producing clothes without any careful consideration which you only wear for one season. That is a waste of the planet’s resources."
He adds that Uniqlo's strategy is to focus on essential items that can be worn for years.
In the 40 years that he has been in charge of the firm, Mr Yanai has grown the business he inherited from his father from a company with annual sales of around 100 million yen ($656,700; £522,400) to a global chain with 3 trillion yen of revenues this year.
The 75-year-old says he aims to overtake Inditex, which owns the global chain Zara, as the world's biggest fashion retailer before he retires.
But to achieve that, Uniqlo needs to expand not just in China but also in the West, where shoppers are increasingly conscious of human rights issues such as forced labour.
Mr Yanai's ambitions may also face more hurdles as Donald Trump returns to the White House on a pledge to impose much higher tariffs on Chinese-made goods.