IKEA and the Russian Jackals
The story of IKEA’s foolhardy entry into the Russian market is a cautionary tale for any Western business, and the moral of the story is simple: Don’t do it! We must confess, we take some pleasure in watching the zebra-like carcass of IKEA being ripped apart and devoured by the Russian jackals. It’s a fate the company richly deserves for playing its part in supporting the Putin dictatorship. Sensible consumers should buy their furniture elsewhere.
Just a few months ago, we reported on how the Kremlin was illegally preventing Ikea from opening one of its stores, forcing the layoff of 250 Russian workers. It was an outrage, but now IKEA may feel it was lucky in that regard, because it turns out that it’s actually even more costly to actually do business in the stores it has been allowed to open.
Last week, we learned the Kremlin had cheated the Swedish firm out of nearly $200 million via gas and electricity overcharges. IKEA responded by announcing it was shutting down all future investment in the land of Putin for the forseeable future.
There’s no gentle way of putting it: IKEA got what it deserved. By investing in Russia, IKEA is giving both direct and indirect support to the Putin regime, and facilitating the consolidation of totalitarian rule in Russia. The company and its stockholders should have known better, and now they are paying a terrible price for their arrogance and ignorance.
Some people never learn. And so we find French retail giant Carrefor ironically opening its first retail outlet in Russia even as IKEA begins to drown. Obsessed with the pathology of market share dogma, these firms will roll the dice and expand anywhere that might conveivably allow them to increase market share even marginally, heedless of both the financial and the moral risks they are taking.