IKEA's Globalization Strategies and its Foray in China

IKEA had, in fact, been quite successful with its 'one-design-suits-all' global expansion strategy in many markets. However, industry experts were doubtful as to whether this strategy would translate well into new, culturally diverse and riskier markets. They felt that a higher degree of localization was essential for companies like IKEA to be successful in diverse markets.

The Asian markets, together with the Middle East and Australia, accounted for only 4% of IKEA's total revenues in 2004. The company was keen to increase this share in the future. Upon entry into the far eastern markets, IKEA faced a number of challenges in terms of varied cultural, demographic and market specific needs.

IKEA also had to alter two of the most important aspects of its time-tested and proven global strategy when it came to China; while elsewhere in the world, IKEA had always located its stores in less expensive areas and sold its furniture on the do-it-yourself (DIY) principle, these elements had to be changed in China. IKEA claimed that it had decentralized most of its functions including HR and stores management in China, but despite this, there was criticism that IKEA was far too bureaucratic with many of its operations being globally controlled and systematized. Commenting on this, Ian Duffy, IKEA's China retail manager commented, "We need time to learn and change in the (Chinese) market to become a success."⁵