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Ikea owner 'distressed' over Russian expansion

Ikea owner 'distressed' over Russian expansion

Published: 11 Dec 2010 14:08 GMT+01:00
Updated: 11 Dec 2010 14:08 GMT+01:00

"The documented mess in our Russian shopping centre company is completely unacceptable. I have been too optimistic. It is shocking and deplorable that we have wandered off course," Kamprad said in a statement on Friday.

"I realise that I have a moral responsibility in this. I am convinced that Ikea can also contribute to a better life for the many people in Russia in the future," he added.

Over the years, Kamprad has actively supported and shown a personal interest in the company's Russian operations and did his best to encourage rapid expansion of shopping centres with Ikea stores in Russia.

The company's unsuccessful venture into Russia concerns its Ikea shopping center company in Russia, or Ikea Mos. After several external parties conducted a substantial review of Ikea's operations in Russia, the company decided to appoint a new CEO on October 1st.

"We see great potential in the Russian market and are here to stay. We now need to do our homework and my focus is to build up a strong Ikea Mos from Ikea values," new Ikea Mos CEO Per Wendschlag said in a statement on Friday.

Audit work was performed by external experts in accounting and engineering, including KPMG, Ernst & Young, PriceWaterhouseCoopers, Sweco and Cowi in addition to internal investigations conducted by Ikea.

The investigations mainly examined the buildings, license and permits, corporate governance and leadership and corporate culture at Ikea Mos.

The shortcomings include serious problems at some of the shopping centres' buildings, lack of permission for operations, poor corporate governance and weaknesses in internal controls and poor personnel management.

Allegations of unethical business behaviour with third parties and complex legal disputes regarding diesel equipment and electricity supply in St. Peterburg, which have since been resolved, also surfaced during the investigation.

Ikea operates 12 shopping centres and 12 stores in Russia, with another two stores in the pipeline. The company emphasised that the country is an important market for Ikea, with great potential in retail trade, purchasing and manufacturing.

Vivian Tse (vivian.tse@thelocal.se)

Your comments about this article

14:49 December 11, 2010 by Gletta
Welcome to Russia Mr Kamprad
16:26 December 11, 2010 by JulieLou40
Comment removed by The Local for breach of our terms.
16:36 December 11, 2010 by Swedish123
Yes. Welcome to Russia.
19:53 December 11, 2010 by ISayWhatPeopleThink
""I realise that I have a moral responsibility in this. I am convinced that Ikea can also contribute to a better life for the many people in Russia in the future," he added."

"...my focus is to build up a strong Ikea Mos from Ikea values"

Maybe try to use the honest approach with the Russians? Tell them, "Hey. we'd like to sell you cheap stuff you assemble on your own so we can make a profit" instead of all this life-changing value-building "we're here to make your life better" hoopla.

Considering Russia's history, they've heard a lot of bullshit in their time and have become adept at detecting it. :P
14:36 December 12, 2010 by JulieLou40
I see my earlier comment was removed by The Local "for breach of our terms" when all I did was point out that they had spelled "emphasised" wrong!!!!!

What's the matter, guys? Can't you take it when people point out your third-rate writing???
14:39 December 12, 2010 by Tanskalainen
Venalainen are a world unto themselves. You have to have your sh*t together to do any kind of business in Russia.
14:52 December 14, 2010 by Yuretz
Russian continue to listen a lot of bullshit everyday! Nothing changed! :-)
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