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Why IKEA Is Fed Up with Russia
- steveblgh 17y agoThe 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 17y agoIn 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.
- steveblgh 17y agoOf 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...
- laut 17y agoProtectionism is bad. It doesn't benefit an economy. It can benefit the protected industries short term as well as the people they bribe to get the protection. But overall it is bad. See http://en.wikipedia.org/wiki/Comparative_advantage http://en.wikipedia.org/wiki/Comparative_advantage for instance.
- stcredzero 17y agoTrade 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 17y agoAnd they pay rent in what country? Built buildings in what country? With materials and contractors sourced from what country? Have employees from what country?
- steveblgh 17y agoSure, 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 17y agoSo 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.
- coyul 17y agoIKEA does not have to be "in the philanthropic business" to benefit the countries in which they have operations. The fact that they make a profit does not preclude other people (the landlords, contractors and employees in the post you replied to, among others) from benefiting. Economics is not a zero-sum game. Wealth can be created. More at http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creation.html http://www.coyoteblog.com/coyote_blog/2007/04/wealth_creatio...
- ciudilo 17y agoIt is an interesting article, but why is it posted on HN?
- shiranaihito 17y agoMight it be because it's an interesting article?
- ciudilo 17y agoI am new here, was just curious.... Thanks
- ilyak 17y agoНу 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?
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- ilyak 17y agoAnd 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.
- rjurney 17y agoExcept - traditional Russian retailers are terrible compared to Ikea. They do represent a real improvement.
- ilyak 17y agoHowever, traditional Russian furniture is fine compared to Ikea's chinese crap. Crap's cheaper, tho. I know that on the basis of having some. As for retailers: if it wouldn't be an IKEA mall, it would be some other kind of mall, it's not like there would be much difference.
- Confusion 17y agoThere 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.
- ilyak 17y agoWell, 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.
- Confusion 17y agoIf 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.
- tallanvor 17y agoProblems 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 17y agoI'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.
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- coconutrandom 17y agoIn Hacker News, Soviet Russia thanks YOU!
- known 17y agoRussia is Fed Up with IKEA.