IKEA vs. Bureaucracy

Swedish furniture giant IKEA suffers great obstacles working in Russia. Weekend, the founder of IKEA, Mr. Ingvar Kamprad announced on Swedish radio that IKEA shops were cheated out of 1.5 billion SEK (140 mln euro) through overcharging gas and electricity bills.

IKEA does not fail to open new retail centers in Russia, yet its plans are one by one hindered by the officialdom. In a recent interview, Mr. Kaufmann, the Russia director, told The Associated Press that the inspectoral assault sometimes gave him the feeling that “someone somewhere does not like us”. The decision was taken to suspend further investments in Russia. Noteworthy, that IKEA is one of the biggest investors to Russia outside the energy sector.

Legal routine in Russia has always been criticized By Mr. Kamprad and the IKEA concern. Five years ago, IKEA had to appeal to public for help as far as an IKEA mall on the outskirts of Moscow could not be opened because of the lack of some ambiguous permit to track an access road. Besides, Nytimes informs that back in 2004, officials halted an opening ceremony at a separate Moscow store minutes before it was to begin, saying the parking lot was too close to a natural gas pipeline. An outlet in Nizhny Novgorod was closed for its opening holiday season in 2006 on the grounds of fire-code violations; the opening of an outlet in Novosibirsk was postponed over demands to rebuild a road.

Presently IKEA is fighting against Samara authorities to open its 12th affiliate in Russia. The constructions started in 2006, yet each year the local officials postponed its opening that almost doubled IKEA’s expenses. Now, when the goods have already been delivered to the shop, the officials «made an unexpected demand»: all of a sudden, the 100 000 sq. m. shop turned to be not storm-proof enough. The IKEA management in due course had to dismiss 250 Russian employees in Samara.

Nytimes informs that Samara regional officials have said they were ensuring the safety of the store, and that IKEA’s public statements were attempts to pressure inspectors.

Last year, speaking of the situation for businessmen in Russia, Mr. Medvedev demanded the official agencies “not to nightmarize business” (not to make business a nightmare) alluding to continuous harassments and inspections that businessmen may suffer. Earlier, he reduced a number of inspections per year for small businesses. In May 2009, the law limited a number of scheduled inspections (not tax-related) once again. Since July 2009 the inspections are allowed once in three years. The unscheduled check-outs may happen only in case of a threat to life, health or environment and are to be sanctioned first by the prosecution office. The control agencies will not be able to inspect a company in the absence of a director or an authorized representative. The officials will have to publish the inspection plans on their web-site to make it available and transparent to public. Starting from 2010, all the inspections will have to be approved by the prosecution office.

Back in 2004 there was created a non-governmental anti-corruption committee to join the forces of the law machinery, civil society organizations and authorities to eliminate corruption in Russia. For the late period of 2.5 years the committee co-initiated over 300 legal proceedings against power abuse and fraud of some corrupt officials. The committee is gaining force and popularity rendering legal services to businesses.

The times change.

photo: Ingvar Kamprad, the founder of IKEA, a Swedish entrepreneur. As of 2009 he is the richest person in Europe and the 5th wealthiest person in the world according to Forbes magazine, with an estimated net worth of around US$22 billion.

Source: barentsnova.com