Ingvar sizes of Chinese apartments also differ

  Ingvar Kamprad founded IKEA in Sweden in 1943.
Mr. Kamprad started by selling door-to-door, offering goods from stationeries
to watches, wallets and etc. Through innovation and determination, IKEA
eventually became a success in Sweden and that success led Mr. Kamprad to
expand his company worldwide, opening over three hundred stores around the
world.

  However, IKEA faced much bigger
problems on its expansion to China. IKEA opened up in China through a joint venture
with the purpose of probing the market, establishing local needs as well as
finding a good strategy to do business in a new terrain. Soon enough, IKEA
realized that the strategies they have to come up with would be very different
from the ones that they had previously employed, considering the difference in
lifestyle and culture of different places.

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  For example, people in China
prefer a different style of furniture—mostly western—so IKEA would have to make
some modifications to its designs. Moreover, the sizes of Chinese apartments
also differ so the furniture built would have to be customized to fit according
to the apartment rooms. The location of IKEA stores also can no longer be in
suburbs like the European IKEA stores. Since the people in China mostly travel
through public transportation, such as trains, it would be a wise suggestion to
have IKEA stores built next to railway networks. Another strategy that IKEA
should change would be the target customers. Normally, IKEA would be selling
its products to mass markets, but in China, where people see western products
as aspirational, it is best for IKEA to target the younger, middle class
citizens who would have a higher income, a better education as well as
knowledge on western style. The normal “low” prices that IKEA sold its products
for in European countries were regarded as higher than the average prices in
China, so IKEA had to be really careful in setting the price of its products. I
would suggest IKEA try to cut down on the price of its raw materials in order
to lower the prices to fit in more with the affordable price range. Besides
that, other competitors in the Chinese market made it hard for IKEA to sell its
products, considering that the competitors were using IKEA’s catalogue—one of
the best ways IKEA has used to promote its furniture—to copy the design and
sell it at a cheaper price. IKEA’s solution to that problem would be to promote
their furniture through China’s social media and “Weibo” instead, which proves
to be rather effective in promotion. One other problem IKEA said they faced was
that due to most consumers in China having a tendency of being price-sensitive
and that the suppliers don’t have the necessary technology, the charging of
plastic bags and making of green products would have difficulties in being
implemented in China. As such, due to extra costs necessary should IKEA provide
the suppliers with the needed technology, IKEA backed down from its standards
just to stay in the market, deciding to keep at low prices. Based on careful
research, these are the problems that IKEA had faced when opening its stores in
China as well as some of the suggestions or actions that IKEA has actually done
to overcome it.