The 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 ?
Why IKEA Is Fed Up with Russia
51–60 of 82 posts
Re: Why IKEA Is Fed Up with Russia
#52Earlier quoted context omitted.
It does. But I don't think they deserve some special rights because of that or because of their size; that is, a right to use corruption (when trying to do something questionable) and blame corruption (when it gets in their way) at one time. As for improving the lifestyles, you'll soon realise that cheap chinese wares don't improve the lifestyles that much. Cheap, but ugly and non-durable.
Are you claiming that Ikea is using corruption (bribing someone) in Russia? On what grounds?
I don't believe you can operate a large business in Russia and not pay bribes. To think otherwise is naive.
Although my experience is 5 years old, I don't think things have changed so much that Ikea isn't paying bribes.
Re: Why IKEA Is Fed Up with Russia
#53Earlier quoted context omitted.
Well, you can either accept "practice of corruption" or circumnavigate around in some way, or not have a business. About the Moscow accident; I'm sure it was, partly. But I don't see how is this fact going to help if their mall in Samara has safety problems, indeed. If it doesn't, as I've told, they have their three choices. In short: I DO think there's a problem with corruption in Russia; I just DON'T see a problem…
You might like IKEA, or not. There is an easy argument to make that they are a net destroyer of taste and destroy culture. I am not certain, personally. But as a business, IKEA is as serious as a heart attack and is a competitor that seems unbeatable; an inspiration for all. IKEA builds and manage an incredible amount of stores everywhere -- without any serious security problem. I've never read any article that IKEA…
I don't think it would have any noticeable consequences for anyone except IKEA itself.
Re: Why IKEA Is Fed Up with Russia
#54Earlier quoted context omitted.
Well, doesn't it seem strange to you that they SUDDENTLY discovered that there's corruption. There's two branches: - It's really the first time they ran into corruption; it would be a cool fairy-tale, but neither I nor you beleive this. - They managed to get along before despite corruption. Which means that either corruption is not so much severe (they managed to open and operate successfully and profitably, on a lar…
Do you see the title of the original article: it includes the expression "fed up". It implies they have been fighting corruption issues before, but until now managed to stomach it. Now, however, they are fed up with it, resorting to going public. See?
How did they "fight" exactly?
Re: Why IKEA Is Fed Up with Russia
#55Earlier quoted context omitted.
I argue that IKEA uses "free press" as a lever to get whatever it wants from government, for cheap. Then I say that if we don't like IKEA that much, we shouldn't buy into that.
Are you implying Ikea would want anything else than normal, civilized treatment from local authorities? If not, why on earth would Ikea need to slander the local government for anything? I'm sure this is not the kind of publicity either one wants.
Maybe they want normal, civilized treatment. However, they do some serious bashing in process of acquiring that, so I did some bashing too.
And! I didn't want anything besides normal, civilized treatment, too!
Makes it an interesting social experiment.
Re: Why IKEA Is Fed Up with Russia
#56Earlier quoted context omitted.
How would IKEA ever interest us outside of the context of its products? "In other news, IKEA, after operating in Russia for 9 years, suddently discovers that there's a massive corruption there". IKEA uses press to bash government for bad process; I use HN to bash IKEA for bad wares; If I troll, don't they?
Ikea would interest us as a company trying to do business without paying bribes in Russia. No matter what the quality of its products, it does not deserve to be extorted by corrupt authorities. So don't mix up the quality of its products with the corruption issue.
If you can have a huge successful business without paying any bribes, that sounds like a pretty managed level of corruption.
Re: Why IKEA Is Fed Up with Russia
#57Earlier quoted context omitted.
Thanks for mentioning that theory, yeah I'd heard about it. I don't really buy it, though. It strikes me as being too cute by half and I can think of any number of counterexamples. For example, Norway, Canada and Australia have immense resource wealth per capita and no-one would say they're bad places to live. And Canada has 3x Russia's oil reserves, with 1/5th the population! I think resource wealth is just a multip…
I think there is some benchmark that a country doesn't become a democracy if it has a certain percentage of export income from natural resources. Norway was a democracy before the oil income. (I don't know about export incomes and Canada/Australia. Do they get most income from that?) Edit: Syntax, so it will parse in your brain.
Well, I don't know about Canada but in AU there's a mining lease fee, then corporate and income tax, then ownership restrictions (majority local ownership of shares). The government certainly gets its pound of flesh, in fact we're running our first deficit in 15 years mainly because commodity income is down, heh.
But yeah, good point on being a democracy before the money started to flow. That might indeed be the key. Resource income enables an otherwise uncompetitive, poorly-run country to keep its head above water, and sustain the worst sort of government even in the absence of advanced industry. And Russia is certainly pumping its oil as fast as it possibly can.
Who knows though. A bit of oil money would probably help North Korea. At least they'd have something to trade, some link to the outside world, some foreign currency to buy food. That's what I don't like about nice neat theories like that - they try to simplify the inherently unsimplifiable ..
Re: Why IKEA Is Fed Up with Russia
#58The 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…
In 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.
Re: Why IKEA Is Fed Up with Russia
#59Earlier quoted context omitted.
I think there is some benchmark that a country doesn't become a democracy if it has a certain percentage of export income from natural resources. Norway was a democracy before the oil income. (I don't know about export incomes and Canada/Australia. Do they get most income from that?) Edit: Syntax, so it will parse in your brain.
Well, I don't know about Canada but in AU there's a mining lease fee, then corporate and income tax, then ownership restrictions (majority local ownership of shares). The government certainly gets its pound of flesh, in fact we're running our first deficit in 15 years mainly because commodity income is down, heh. But yeah, good point on being a democracy before the money started to flow. That might indeed be the key.…
You could mangle/simplify the "resource curse" theory:
1. Liberal democracy. Economy works more or less, so the leaders have lots to stea.. tax.
2. Dictator. Most everything, including citizens, belong to the dictator. Bad economy and dangerous, since dictators must have external enemies (so all complaints are treason).
3. A country with natural resources. There is no need for leaders to go to 1, since there is enough to steal anyway. Keep people down and fill the Swiss account as long as possible.
This categorization explain why democratizing has gone up for a few decades.
Model "1" generally gives more to steal for the politicians, even though they can only get part of the country. "2" is the only alternative if most people (would) hate the dictator if they got free media. See North Korea. Iran is an obvious example of model "3".
(The only country I can mention that doesn't fit the [broad] categories is China, but they start far back so give them time.)
Point is, oil would help NK's dictators but not anyone else.
Re: Why IKEA Is Fed Up with Russia
#60The 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…
In 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.
Of 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...