IKEA Boycotts Russian Bureaucracy

23.06.2009 — News

The Swedish company IKEA decided to suspend its development plans in Russia. The major reason behind this decision is the bureaucratic barriers the company has to overcome.

In his interview to a Swedish radio station, Ingvar Kamprad, the founder and the major owner of the IKEA furniture group, accused Russian energy companies in swindling IKEA out of a 1.5 million Swedish kronor (about 136 million euro). IKEA management insists that the energy and gas suppliers overcharged 11 IKEA shops in Russia.

Per Kaufmann, IKEA Russia General Director and Director of Central and Eastern Europe, told RusBusinessNews that the implementation of the investment programme sometimes faces complications. He added that the situation mentioned by Mr Kamprad is now being investigated in court.

IKEA network has around 300 stores all over the world, of which 11 are located in Russia. In addition, IKEA Group owns 13 MEGA shopping centers. Over 4 billion dollars were invested in establishing these shops. However, the revenue for 2008 only amounted to 22 billion euros.

As far as the Ural region is concerned, the company only has a shop in Ekaterinburg in a MEGA shopping center, which was opened in October 2006 and has an area of 128 thousand square meters. In May 2009, during the IKEA management visit to Tyumen, there were discussions about the construction of a MEGA shopping mall of 100 thousand square meters in this city.

Meanwhile, the Swedish company is implementing a production project in the Tyumen Oblast. In August 2008 the company leased 70.2 hectares of forest area on a long-term basis. During the fist stage, they plan to construct a saw mill; by 2012, they plan to build a production plant for furniture board and furniture components with the capacity of 100-150 thousand cubic meters of sawn wood a year.