By Choi Kyong-ae
IKEA Team, which is about to enter the Korean industry, will be an emerging danger to domestic household furniture companies due to the fact of its aggressive pricing, analysts and business folks explained Wednesday.
European furnishings companies like IKEA export their goods to Korea without spending tariffs, and this will set the Swedish furniture retailer in a greater situation in terms of costs below, the Korea Household furniture Association (KOFA) mentioned in a assertion.
“Korean household furniture companies pay eight p.c tariffs on imported supplies such as particle boards and hinges needed to make furniture items,” KOFA Director Lee Yong-won said by telephone.
As a way to endure, Lee urged domestic players to join forces in efforts to reduced the import tariffs on the import materials, amid other items. He envisioned some Korean furniture firms will be doomed to perish in the a long time forward.
In a step ahead, KOFA plans to ask IKEA Korea to market some of goods produced by domestic companies at its retailers. Much more than fifty p.c of items now currently being offered at IKEA’s outlets in China are from Chinese organizations, he explained.
Imported household furniture merchandise accounted for sixteen per cent of Korea’s furniture industry in 2007, up from 9.7 p.c in 2005, according to Data Korea. Throughout the exact same period, household furniture-relevant trade deficits deepened to $ 765 million from $ 402 million, info from the Korea Customs Support showed.
Korea more and more imports furnishings products from China as Korean producers have moved their crops to Asia’s fastest expanding economy owing mainly to decrease labor fees, KOFA stated.
At this critical juncture, Lee explained, “Korean corporations need to go through speedily changing client appetites and produce their personal items and patterns.”
IKEA will provide “cost-effective” furniture products to turn out to be a drive in Korea’s 5 trillion won ($ 4.8 billion) home furniture market place, IKEA Korea explained Wednesday.
Getting purpose at clients sensitive to prices and top quality, the Swedish organization will open its very first outlet in Korea later this 12 months. It ideas to boost the variety of outlets listed here to five by 2020, in accordance to IKEA Korea.
In Korea, where large-identify household furniture organizations this sort of as Hanssem and Hyundai Livart manage the market place, IKEA mentioned it will woo buyers by mainly supplying do-it-oneself furniture merchandise at realistic prices.
“We have been meticulously preparing to advance into Korea and now we are prepared to fulfill shoppers in Korea at the IKEA Gwangmyeong keep at the stop of this year,” Ulf Smedberg, place advertising and marketing manager at IKEA Korea, told The Korea Occasions in a latest job interview.
But he did not specify what industry share the business is concentrating on in Korea by 2020.
For IKEA, Korea is an important industry and is one particular of the most influential Asian marketplaces. The IKEA Gwangmyeong outlet will be one of the world’s biggest, and Asia’s premier IKEA keep, Smedberg stated.
To be positive, the Korean home furniture industry has experienced declining need given that the 2008 monetary disaster strike the construction sector. Home furniture suppliers even now locate the demand from customers operating low due to a extended financial slowdown.
Provided this, IKEA thinks that Korean shoppers will like the encounter of assembling furnishings goods on their personal, and they will welcome the realistic rates of its merchandise.
As IKEA has completed with other marketplaces, the world-wide home furnishing organization carried out “demanding research about the existence at residence in Korea to understand how the people reside at home,” Smedberg explained. “We have accomplished many property visits and a variety of marketplace researches to comprehend the Koreans’ desire, behavior, tastes and so on. and will carry on to do this to get a further understanding.”
By means of the study, IKEA said it has discovered some special Korean life at house pursuits.
Dependent on the results, the Almhult-based organization explained it had discovered that “Korean shoppers seek more storage and arranging solutions and want to produce warmth and coziness at property.”
IKEA located Korean buyers put kid’s security as the best priority, and they want to know how to organize children’s issues successfully at residence.
Thus, “we will share our residence furnishing knowledge with Korean consumers, and encourage them with our affordable and related answers” under the vision to develop a much better each day existence for people, he said.
IKEA was launched in 1943 by Ingvar Kamprad to provide property furnishing items at reasonable charges. It currently employs 151,000 workers at 345 shops in forty two nations. Its product sales ongoing to increase in the past three several years to 29 billion euros ($ forty three billion) in 2013 from 26 billion euros in 2011, according to IKEA.