IKEA in China

Résumé du document

Managing across cultures is a priority for companies that pursue an internationalization strategy.
The case of the Swedish furniture company IKEA illustrates the complexity of this process.
The Swedish company IKEA, which pioneered flat-pack design furniture at affordable prices,is the world's largest furniture manufacturer. The Group owns 258 IKEA stores in 24 countries. In total, there are 292 IKEA stores in 36 countries/territories. The other stores are owned and run by franchisees outside the IKEA Group in 16 countries/territories. Historically, IKEA started its business in a �small village in Sweden in 1943 and was founded by Ingvar Kamprad when he was 17. The name IKEA comes from his initials (I.K) plus the first letter in Elmtaryd and Agunnaryd, the farm and the village where he grew up. The founder has provided patriotic values to profile IKEA very much as a Swedish company.
To illustrate this point, all outlets are painted in the same colors, the blue and yellow of the
flag.

The internationalization of IKEA witnessed a sharp increase in the early 90s particularly in Asian territories. In 1998, the company opened its first store in Shanghai. The strategic orientation of the group to access more foreign investment in China can be explained by the positive global environment of the country. The rational for foreign furniture companies like IKEA for direct investments in China is two-fold: to produce furniture for the export market and to produce furniture for the huge domestic Chinese market.

Ikea's decision to enter China stems from supporting political, social and economic conditions that allow IKEA to beneficially exploit advantages in the Chinese market.

 Economic: China has seen tremendous economic changes in the last few decades. China's annual GDP growth has averaged more than 8 percent in the past 25 years, and in 2007, its GDP grew by a record-breaking 11.4% .The development of China's economic policy during the last twenty years was aimed at manufacturing; especially export oriented manufacturing.

Extraits

[...] Chinese people are easy to accept the autocratic leadership and bureaucratic structure in the company. MASCULINITY vs FEMINITY LOW Sweden is a very typical femininity country. They need a friendly atmosphere and they relate very well to their boss and collages. Besides, women in Sweden have the same modest, caring values as the men. So that is why there has no behavior of “Ladies first”. HIGH The high masculinity of China means they pay more attention to the aspire of job objective. It is indicates China experiences a high degree of gender differentiation. [...]

[...] - Work culture: Working hard is highly valued. In China, the business culture in dependent on the industry, company or even the geographical location of the company. For example, in Northern, business is seldom discussed unless there has been a fair amount of socializing at the restaurant while in the South, business may come before social interaction. Moreover, businesspeople strongly believe that networking is one of the keys to increase security for business success. This principle calls Guanxi is an informal mechanism of exchange and co-ordination between individuals rather than institutions in China. [...]

[...] Time The Chinese perception of time is polychromic. Chinese people accept that time is money, but look at it from a different perspective. Their logic is that time spent on relationships will effectively generate money by creating a favourable climate in which business activities may take place. The revolution in Chinese business values: “being rich is glorious” Political Since the socialist revolution in 1949, introducing one-party dictatorship, the communist part has played a dominant role. Marxist ideas and Chinese tradition supervised Chinese society IKEA IN CHINA BC3 15003S‐CROSS CULTURAL ISSUES IN INTERNATIONAL BUSINESS 9 in a really difficult framework. [...]

[...] In 1998, the company has built its first store in Shanghai. The strategic orientation of the group to get more foreign investment in China is explained by a positive global environment of the country. The rational for foreign furniture companies like IKEA for direct investments in China is two-folds: to produce furniture for the export market and to produce furniture for the huge domestic Chinese market. The decision of IKEA to enter China comes from supporting which are political and social and economic conditions allowing IKEA to beneficial exploit advantage in Chinese market. [...]

[...] Also IKEA had to adapt its location and do-it-yourself assembly concept to China. IKEA has built transportation lines near to its stores in republic of China and IKEA offers home delivery and long-distance delivery to major cities in China for a fee, maintains, taxi lanes and offers fee-based assembly services. IKEA was aware that China had to be different since, for example, only 20 percent of visitors in Shanghai have cars. But the stores also need parking places so that people can visit with their own cars in the future. [...]