MANAGEMENT STRATEGY When IKEA coming to China in 1999

When IKEA coming to China in 1999, they has been faced a huge challenges. According to Ulf Smedberg the marketing manager of China in 2001 mentioned that the challenges that faced IKEA was pricing and high duty rates. Firstly, when the opening of IKEA’s store in Shanghai the Chinese customers saw IKEA as an expensive western furniture brand. Low price was the big challenges of IKEA in China because of the high import duty tax. Not to mention that IKEA was having difficulties into reaching a large number of people in China since the income level is very low. Another challenge of IKEA China is the competition with others furniture company that copying on IKEA design products. Instead of giving up due to the various challenges IKEA find ways to solve it. The first thing IKEA do is by making a connection with the local by producing the IKEA products with the local materials. As this can in reduce more on the price. In which with low price which enable IKEA to compete with other competitors in the Chinese market. (Jonsson, 2008) At present, IKEA has manufacturing factories and some material suppliers in China (Li, 2007). Therefore, IKEA reduced prices by 10% resulting in increasing sales by 50% in the first quarter of 2004 (People’s Daily Online 2004, cited in Capdevielle, Li & Nogal, 2007). In addition, home interior competence which is the key competitive advantage of IKEA in China has been chosen and promoted to strength the position of IKEA in Chinese market. On the contrary, there are few furniture firms in China that choosing this positioning strategy. (Jonsson, 2008)


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