Why IKEA Is Fed Up with Russia

http://www.businessweek.com/magazine/content/09_28/b4139033326721.htm

by cellis • 17 years ago

79 78 17 years ago

businessweek.com

ciudilo2• 17 years ago

It is an interesting article, but why is it posted on HN?

shiranaihito• 17 years ago

Might it be because it's an interesting article?

ciudilo2• 17 years ago

I am new here, was just curious.... Thanks

ilyak22• 17 years ago

Ну и пусть пиздуют со своим китайским барахлом ломающимся.

Seriously: you want to have a business in the country, a profitable and fast-growing one, yet you have complaints about the process. I guess, either shove it or leave.

In Moscow, there was an accident when an aquapark full of people collapsed due to bad engineering and construction, too. So, maybe those delays aren't just corruption? Also: In South Korea, there's a history of mall collapsing under its weight due to poor engineering and exploitation;

The bottom line is: If it would be corruption alone, they'd bribe and move on; they're huge. So, it's not just corruption. And as of stopping investments, maybe they're just out of money in their Sweden?

"The retailer has become such an icon of Russia's boom that today's yuppies are called "the Ikea Generation."" This is crap, never heard anything remotely like that. Perhaps stop making things up?

ilyak22• 17 years ago

And as of their "investments". Those "investments" just build huge malls that sap away money and life from small busines and local furniture making factories, instead introducing a wave of cheap Chinese crap. Why care? Such investments aren't life-savers for anything.

rjurney2• 17 years ago

Except - traditional Russian retailers are terrible compared to Ikea. They do represent a real improvement.

presto1011• 17 years ago

Why does one have to accept the practise of corruption, to have a profitable and fast-growing business, as you seem to suggest?

With your reasoning, we could put forward that maybe the Moscow accident was caused by corruption: the builders paid off the inspectors to save on building costs.

The bottom line is: Ikea and Ingvar Kamprad has stated several times that they will not accept the Russian business practise of corruption. This is one of the reasons why some of Ikea's new locations have stood unopened for years, while waiting for permits from local governments (read: while refusing to pay bribes).

Может тебе сам перестать придумывать вещи, и посмотреть в зеркало?

ilyak22• 17 years ago

Well, you can either accept "practice of corruption" or circumnavigate around in some way, or not have a business.

About the Moscow accident; I'm sure it was, partly. But I don't see how is this fact going to help if their mall in Samara has safety problems, indeed. If it doesn't, as I've told, they have their three choices.

In short: I DO think there's a problem with corruption in Russia; I just DON'T see a problem with IKEA packing its bags and leaving.

ilyak22• 17 years ago

It's interesting being downmodded for being there and having a clue. I'd be to Samara in three weeks, would YOU?

presto1011• 17 years ago

Because you so obviously are more interested in spreading libel and doubt about those who put forward critique of Russian corruption, than to actually analyze the subject matter in a civilized manner.

If you really care about Russia, start acting better than those who libel Russia. That means, don't libel back.

cousin_it• 17 years ago

Downmodded for profanity. I'm another Russian here, and would rather the site stayed civil.

Back on topic, I'm inclined to take the article on face value even though it doesn't provide much evidence, because the situation as described doesn't sound at all unusual. Whether IKEA is a good or bad company is utterly irrelevant to the discussion of bribery.

Confusion2• 17 years ago

There was an article in one of our national newspapers this weekend that shows how deep the corruption goes. A huge investment company, with 4 billion in assets, was unwilling to pay up and was driven out of business. Several government officials committed fraud to the extent of 290 million dollars (seizing taxes the company paid to the Russian government) and despite sending different parts of the government piles of evidence, no one did a thing.

One thing was clear from that article that should be clear to everyone here: Russia is not a good place to do business these days. Your competitors are the government are the criminals.

ilyak22• 17 years ago

Well, you know why they still do business here? The answer is M O N E Y.

So, they bribe to make it happen, thus feeding the corruption loop, and don't see any problem with that! Until they do. Then, they brag the "ikea generation" crap in newspapers.

Confusion2• 17 years ago

If you need to pay bribes, you need to raise your prices to still make a profit. Your customers, i.e. you, need to pay more. Corruption hurts the population of a country, as every cent comes directly out of their pockets. That is partly why people in properly democratic countries have, and keep, a higher standard of living.

praptak• 17 years ago

What you described is unethical but quite a rational strategy in a corrupt political system. Pay up as long as the bribes are tolerable, use political leverage otherwise. Add a risk bonus (and bribe bonus) to your prices.

That is exactly something to be expected from a corporation. You don't expect corporations to take the moral high ground and heal Russia's political system at the expense of their own profits?

With respect to corruption there's bad news and good news. The bad news is that only Russian people can do something about it. The good news is that Russian people can do something about it.

asdflkj• 17 years ago

"These days" as opposed to which days? Yeltsin days? If this is what you meant, then this is sneaky of you (perhaps unintentionally so), because you are offering political opinion, which is wrong, and which I may not refute on this site because of its political nature.

Corruption is a fact of life in Russia--almost a natural law--and has always been. If you find this distasteful, then don't do business there. Ikea has known this from day one. Everyone who has ever dealt with Russia since the Iron Curtain was bound to find out on day one. This article is a move in a chess game, and both sides (in fact there is probably a handful of sides in this one) are on exactly the same ethical ground.

Interesting if you're interested in minutiae of Russian politics, but otherwise business as usual.

cellis• 17 years ago

I don't think it was a retrospective statement. I think he meant "these days" as opposed to days in the future, where Russia is less corrupt than it always has been. Saying this is political opinion is a straw man argument.

tallanvor• 17 years ago

Problems like this seem to be endemic to Russia. Not only is corruption extremely common, but outside investors also have to worry about the government basically taking their shares and selling them to Russian companies, leaving them with nothing to show for the money they invested.

froo• 17 years ago

I'd just like to take the time (and the modding down this comment will probably get) to thank HN, simply because this article has been posted for more than 4 hours and nobody has yet made an "in soviet russia" joke.

Thank you all for the continuing maturity.

coconutrandom• 17 years ago

In Hacker News, Soviet Russia thanks YOU!

known• 17 years ago

Russia is Fed Up with IKEA.

steveblgh3• 17 years ago

The article makes the implicit claim that IKEA does a favor to Russians by selling them stuff and not Russians do by buying the stuff. I'm not saying the opposite just that this is not as obvious as the article makes it sound. It says that they invested x billions of dollars. Obviously they are planning to make a profit, so on the net money will leave the country due to their presence. If I understand correctly they want to open retail stores not manufacturing plants. Did I miss some finer point ?

Retric• 17 years ago

In theory, trade only happens when it benefits both parties. I might hate the local Exxon selling soda for 2$ a bottle, but I can still buy it at other stores. The only reason you complain is they are charging you for the amount of effort they save you and not their costs.

So, opening a store is a net gain, as is investing 4 billion in the economy. In theory.

steveblgh3• 17 years ago

Of course state protectionism might help local furniture manufacturers to catch up and grow their own business and that might actually benefit the Russian economy even more. Perhaps the legal, administrative burdens are there with a purpose, or maybe I'm reading too much into it...

stcredzero2• 17 years ago

Trade happens when both parties think it benefits them. If one side gets fooled and screwed enough, it should stop. If that one side is the government, it may not, since it is paying with someone else's money.

krschultz• 17 years ago

And they pay rent in what country?

Built buildings in what country? With materials and contractors sourced from what country?

Have employees from what country?

steveblgh3• 17 years ago

Sure, but on the whole they make a profit, so the money they take out of the country will be more than what they bring in the form of products, rents, wages, etc. or otherwise they would go bankrupt.

rdtsc• 17 years ago

So are you suggesting that IKEA is in the philanthropic business of propping up developing countries? At a loss, they will provide local workers with employment, will hire local construction companies to build unneeded crap just to help them out? Really?

I know a large part of IKEA's corporate structure is a non-profit organization, but trust me, that is only to evade taxes.

This is a giant corporate entity vs. a giant corrupt government. IKEA is complaining against the complicated bureaucratic nightmare that Russia set up so that it would be easier to extract bribes from companies like IKEA. _Technically_ IKEA is one breaking some local construction safety rules. Somehow I don't see Russians re-writing their crappy laws and regulations to suit IKEA. They might let IKEA ignore some of them... but that is exactly where the bribes come in ;-)

So far IKEA is going about it the right way -- shaming Russia on the international level.

Why IKEA Is Fed Up with Russia

Related Stories