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bne June 2018 Eastern Europe I 43
Today, IKEA appears to be approaching Ukraine with more caution. Specifi- cally, the Swedish retail giant is trying to secure the support of the government in Kyiv with the aim of smoothing its entrance onto the market.
In late April, the UkraineInvest invest- ment promotion office announced that a special working group would be cre- ated, including Kyiv city administration
intervention' is needed to mediate IKEA’s strict anti-corruption policy, and the failure of Ukrainian officials to meet these standards," Zawada added in a research note. "Regardless of whether this effort to escort IKEA into Ukraine succeeds, however, the Ukrainian government can’t continue to handle foreign investors on a case- by-case basis if it wants a developing economy."
IKEA's experience in Ukraine will also be important for the potential future investment of other Swedish companies. "This will be a guideline for them [...] They will be able to attentively monitor the experience of H&M, one of the larg- est retail chains in the world, which also announced its arrival to the Ukrainian market," the ambassador added.
In 2017, Swedish fashion retailer Hennes & Mauritz (H&M) said that the com- pany is going to open its first outlets in Ukraine in 2018. H&M also intends to enter Bosnia & Herzegovina this year.
Meanwhile, Igor Gut, managing part- ner of the Swedish-Ukrainian project Develop Your Business (DYB), warns that IKEA could act as an “icebreaker” for Swedish companies in the Ukrainian market.
"IKEA will break the old conservative market for its sector. And that doesn’t just mean furniture. IKEA’s catalogue covers practically everything that
one can need in the home interior setting. And recently they even offer individual design services," Gut writes in his column for the Ukrainian Retail Association.
At the same time, it will create a new B2B market for responsible and innova- tive suppliers. But only on its own terms, the expert adds. “It means bigger oppor- tunities for our [Ukrainian] producers, but it also entails a challenge to their weak technologies and lack of systema- ticity. When I sit in Vilnius and drink cof- fee from an IKEA cup that says “Made in Bulgaria”, I ask myself, “why not
in Ukraine?”
“In 2010, the company turned its back on its previous plans to enter the Ukrainian market”
representatives, "for the complex and effective resolution of issues related to certifying products, licensing, customs duties and other matters in order to guarantee that IKEA can open its stores in Ukraine as soon as possible".
Meanwhile, Zenon Zawada at Kyiv- based brokerage Concorde Capital believes that the IKEA saga has become "a barometer for Ukraine’s investment climate."
"It has almost become a tongue-in-cheek part of local lore that Ukraine will have joined the modern world once it has an IKEA store," he added. "Numerous times, the public was informed that IKEA’s arrival was imminent, only for the plans to suddenly unravel."
The expert states that the arrival of a retailer would not normally require the direct involvement of the country’s cabinet. "Yet 'diplomatic
According to Zawada, Kyiv should be actively working to create universal investment conditions in the courts, licensing and taxation – factors that can make this market accessible to investors of all sizes. "Unfortunately, this is not happening, as demonstrated by IKEA's troubles," he underlined.
As long as IKEA has not opened its first store in Ukraine, residents will continue to travel to neighbouring countries
in order to buy products made by the Swedish furniture giant, or to buy IKEA products through Ukrainian intermedi- aries that deliver goods from abroad.
At the moment, dozens or even hun- dreds of such companies offer this service. A similar situation can be observed in neighbouring Belarus,
a market into which IKEA currently has no plan to expand.
Meanwhile, Hagstrom believes that
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