Posted on 12/01/2012 2:28:45 PM PST by nickcarraway
Swedish retailer Ikea said Friday it was reviewing sweeping curbs imposed on what it can sell at its planned new stores in India. One will reportedly prevent it offering its famed meatballs.
India's foreign investment panel has rejected 15 of Ikea's 30 product lines, a report said on Friday, underscoring the regulatory hurdles faced by foreign stores who are eyeing the Indian market with renewed interest.
"We are now internally reviewing the details (of the investment board's decision)," an Ikea spokeswoman told AFP, adding that she could not confirm the curbs as reported by The Economic Times on Friday.
Among the lines Ikea has been told by the Foreign Investment Promotion Board that it cannot sell are gift items, fabrics, books, toys, consumer electronics, and food, the newspaper reported.
The group will, however, be allowed to sell furniture -- its core business.
The investment panel also reportedly told Ikea it cannot offer customer financing schemes because that would violate banking regulations, or open cafes and food markets because that would break food policy regulations.
Ikea's entry into India -- it has pledged to invest $1.9 billion in the coming years -- is being closely watched by competitors as a test case for how a large foreign corporation negotiates India's byzantine rules and red tape.
India's government announced a string of pro-market and investor-friendly reforms in September that relaxed or removed barriers preventing foreign retailers from operating in the country.
Ikea hopes to open 25 of its trademark blue-and-yellow stores in India through a 100-percent owned unit, Ingka Holding, as part of a wider push into emerging markets like China and Russia.
The government initially insisted that Ikea obtain 30 percent of its supplies from small Indian manufacturers that the Swedish retailer feared would not be able to keep pace with demand.
Later the government dropped the demand specifying the size of the supplier, but kept the 30 percent local sourcing requirement.
Stuff like this is why despite never having had a full command and control centrally-planned economy in its history, India is a relative backwater compared to China. What’s astonishing is that Vietnam, whose economy was destroyed via a combination of war and communist rule, will overtake India with respect to GDP per capita in a couple of years, despite having undertaken economic reforms almost a full decade later than China.
I went to IKEA some months ago with my wife to buy new drapes for the window. I wanted a drape to cover the bottom half of the window because I like natural light and to look at the sky.
The IKEA lady told us it wasn’t worth their cost to cut drapes in that size and directed us to go to a place across the parking lot, which we did with no problem.
I told my wife: Only we can get kicked out of IKEA like this. Everyone else is chopping and pasting and bolting.
I am sure all the Free Trader Globalists who cheer-lead about India will find some way to spin this
India is still pretty much a Third World Hole, with worse living standards than all of Central America. IKEA should concentrate on areas that will allow their stores into their nations without red tape
Even as cheap as IKEAs products are....95% of Indians cannot afford them
So you are saying they should close stores in the U.S.?
What's to spin? India is still a corrupt, bureaucratically-controlled kleptocracy that is starting to prosper despite itself. I suspect you agree with all the regulation given your comment.
Ikea sells ‘famed’ meatballs? Who knew.
China can build ghost skyscrapers and empty shopping malls with slave labor, but in the end India will leave them in the dust.
I had never heard of Ikea till I moved to Slovakia.
I thought the store was great, and bought many of my furnishings there.
Even better is the way the furniture is broken down and packaged. I was able to ship my computer desk, book shelves, a three drawer unit, and my computer swivel chair when I moved to the Philippines, and all was in just a few boxes.
China can build ghost skyscrapers and empty shopping malls with slave labor, but in the end India will leave them in the dust.
If India had a robust concept of property rights and contract law, it would now be a developed country on par with the US and have an economy 4x ours. Instead, the annual per capita GDP is around $1500 a year, compared to China's $5400, and Vietnam's $1400. If China's is slave labor force, India's would be a sub-slave labor force, given that incomes are about 1/4 China's.
See what I mean?
I failed at curtains!
Bottom line is that China's economy is going through a down cycle, just like every other capitalist economy, with one key difference - unlike many of these other places, it actually went through a massive boom before going through the bust (if 7.5% growth can be described as a bust). India's growth has slowed to 5.3%. Where were India's years of double-digit growth - encountered by every East Asian tiger economy from Singapore, Hong Kong, South Korea and Taiwan during their fast growth years? Ultimately, India's economy is a relative backwater that, although large in aggregate due to its population size, has been mismanaged since its independence in 1948, in part due to its callous disregard for both property rights and contract law.
I once bought an entertainment center from IKEA. I’m convinced that IKEA is Swedish for: “Here is a box of wood and some glue, dumba$$!”
That certainly seems like something to work with. If they want to make food available at their outlets, hiring a local contractor might work.
The meatball could be someone’s mother.
What’s to spin? India is still a corrupt, bureaucratically-controlled kleptocracy that is starting to prosper despite itself. I suspect you agree with all the regulation given your comment.
And you just proved my point...”Free Trader Globalists will spin this...”. Unreal
India is as corrupt, if not more so, than Mexico.
And you prove mine. There is a breed of so-called conservative that yearns for government control even while pretending to despise it. This time, he claims, the government will do right.
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