Ikea China to invest US$1.4 billion in expansion

Ikea China will invest RMB10 billion (US$1.41 billion) into the market within the next fiscal year.

The Swedish furniture maker’s largest investment yet into the Chinese market, the funds will go towards strengthening operations over a three-year strategy to improve the customer experience and build on its business digitisation. The company’s own online sales channels will be expanded as well.

While the move is in response to changing demands in the local furniture market and is a departure from the company’s traditional emphasis on physical stores, store upgrades and the opening of small retail outlets are expected to form part of the firm’s emerging strategy following the increasing urbanisation of Chinese retail in general.

Ikea China plans to launch four new locations by the end of the year alongside its expanded coverage online, and will hire an additional 3000 staff as the online furniture industry picks up more competitors, including Alibaba-backed Red Star Macalline Group.

“China’s home furnishing market is currently in a period of steady growth,” said head of Ikea China Anna Pawlak-Kuliga. “At the same time, urbanisation continues to accelerate alongside digitisation and the rise in per capita disposable income.”

Ikea had already announced an intention to build an RMB8 billion ($1.12 million) shopping centre in Shanghai last year.


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