Ikea with Chinese Characteristics (2004)
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IKEA with Chinese characteristics (2004)IKEA Group, a franchisee of Inter IKEA Systems BS, entered China in 1998 with its first store in Shanghai. Its mainland China stores belong to the IKEA Group and operates as a joint venture between IKEA Hong Kong and IKEA Taiwan, which are separate franchisees. They also opened its first Beijing store in early 1999.Just as physical expansions, revenu expansions are very important. Ikea lowered its prices nearly 10 percent, which created a rise in its sales of 35 percent in 2003, and in 2004 their sales went up 50 percent just in the first three months alone. In the fiscal year of 2003, PRC (People’s Republic of China) factories produced nearly a quarter of IKEA’s goods, and the company aims to produce more than a third of its goods locally in the next four years. In early 2004, 66% of the company’s products were produced in Europe, 31% in Asia, and 3% in the US. In China, Ikea currently uses 362 suppliers and employs several hundred thousand employees.IKEA conducted home visits, surveys, and focus groups to better understand people’s lifestyles and their home aspirations and frustrations to better understand the market they were entering. IKEA faced three main challenges in China, which are pricing, high duty rates, and the PRC bureaucracy. They have been hit with heavy import taxes, strict quotas, and difficulties importing food to its Swedish restaurant. Nevertheless, IKEA has had success in China.IKEA to double presence in China. (2005)2005 Ikea is expanding and doubling its presence in China. The store is going to spend up to $82 million of dollars on a distribution center located in Shanghai, which marks an important expansion for the company in China, as well as opening new stores at three more cities in Asian country; Chengdu, Shenzhen and Beijing. With this successful entry into the Chinese Market the retailer is planning to open its first store in Japan in April, and also planning to replace the already existing Beijing store, which was open in 1998, with a larger outlet. According to Anders Dahlvig, chief executive of Ikea, China and Japan are the two most important markets in Asia to IKEA, by which an outlet will be established in Tokyo, Japan.Ikeas Chinese stores are supplied by Malaysia, and have lower the prices since it first entered in 1998 and also modify its range to set a medium-range target of having ten stores in China as well as making some profit from their business in the country for the next few years. According to Mr. Dahlvig, they have really invested into reducing the sales prices, and everything they gain is pushed back into lower prices.Ikea reports growth in annual sales, boosted by Chinas fastest-growing market (2014)The swedish furniture giant Ikea reported a growth in annual sales improved mainly by the performance in China and a recovery in Europe.China was the fastest-growing market for which the stylish kit furniture has reported a 5.7 per cent increase in revenue to $28.7 billion USD (28.7 billion euros) for the year to the end of August. In the same period last year, the growth was of 3.2 per cent. According to Agnefjaell, Ikea continue to have a large margin to grow, that is because they realize the enormous market that is still available around the world, but emphasizing the growing chinese market with its growing middle class, which is the principal engine that has helped China to become the fastest growing market for Ikea, to continue growing as much as possible.
Ikea group is still been managed from the Swedish town where it was founded owning 315 shops in 27 countries worldwide, but the numbers mentioned before did not include 40 franchise stores. For the reason that this company is a still family-owned, they only publish limited information about results, but it is expected to keep on track growing the next years with a huge weight on chinese market. Ikea gears up for more store expansion in China Ikea Group plans to open three new stores in China in its new financial year Angela Zhu, country retail manager of Ikea Retail China, told China Daily in an interview in Shanghai, that the group would also enhance its distribution networks and e-commerce presence in the mainland. Ikeas store expansion plans comes in the wake of strong results that saw revenue in China, in its full 2017 financial year to August 10, surge 14 percent to more than 13.2 billion yuan ($1.98 billion). Zhu said the companys newly launched e-commerce services improved interactions with consumers and helped Ikea better understand their consumption patterns. Moreover, its China country website－ikea.cn－had 75 million visits last year, representing growth of 24 percent. “The goal of a plan to have a better layout of distribution systems and logistic resources－including five customer distribution centers and five parcel units－is to make sure the “last mile” of the delivery is convenient and fast”, she said. “Ikea is likely to work with a third party e-commerce platform to make its online services nationwide in the coming years”, Zhu added.IKEA in China: Store or theme park? (2013) In China, Ikea is not just a place where you buy what you need and leave. Almost all the citizens in China treat it like a furniture-filled theme park, a place where you walk around, eat and spend hours trying the products.Even with his identical Chinese competitor, a furniture chain named “11 Furniture” in Kunming, southern China that has copied Ikea´s sales model. Ikea keeps its target interested, their market share and still grow more and more, some hard facts about this are that is also common in many Chinese furniture stores the presence of sale assistants which its profit incentive is to earn part of their salaries on commission. It represents a very important impact on the experience and customer preference and consequently in sales.The difficultness of adopt Ikea´s wait-and-see attitude for all furniture stores makes IKEA incomparable against them.Secondly, the huge Chinese market is the key factor of Ikea´s success, in numeric terms Ikea outlets located in china have 40% more customers traffic than in other countries, about 15,000 visitors on a weekday and 25,000 to 30,000 visitors on a weekend, in comparison, 5,000 people visit an average store in Germany each day and 10,000 at weekends.Not conform with this and to take advantage of all the potential of the Chinese market, Ikea is planning to open three stores a year until 2020, many in second-tier Chinese cities like Chongqing, Xi’an and Qingdao.