Ikea bets on China with $772 million investment

Ingka Group, the parent group of Swedish home furnishing giant Ikea, will invest 5.3 billion yuan (RM3.5bil) in China in the fiscal year 2023.

The investment will be used for further business digitalization, construction of new stores and shopping malls and integrating multiple distribution channels, CEO and president of Ikea China Anna Pawlak Kuliga told a press conference yesterday.

Lydia Song, vice-president of Ikea China, said the company would announce the investment of a wind power project in China later this year.

As for the store expansion plan in China for the fiscal year 2023, which will start on Sept 1, Ikea will open a smaller scale store in Hefei, the capital city of East China’s Anhui province. It will also launch a second store in Xi’an of Shaanxi province.

In early July, Ikea shut down its 8,500-sq-m store in northeast Shanghai’s Yangpu district.

The major purpose is to realize more effective mapping in the city.

While Ikea will remain “agile” in China over the next few years, Shanghai will remain as one of the key investment destinations for Ikea.

Ikea announced a three-year strategy in 2019, especially for the Chinese market, which included 10 billion yuan (RM6.5bil) of investment.

The company said it has fulfilled that investment target, with which Ikea developed more products and solutions for Chinese consumers, set up an omnichannel distribution network and offered more discounts.

Over the past three years, Ikea’s services have extended to nearly one billion Chinese consumers with the online platforms such as the Tmall store and online shopping mall on WeChat.