Page 20 - bne magazine July 2022_20220704

20 I Companies & Markets bne July 2022
to the interests of the local population, which, unfortunately, suffered greatly after the imposition of sanctions,” Davitashvili said.
Borjomi’s workers are currently on strike over the management's reorganisation plans, which have included asking workers to work at half pay under temporary contracts.
Garibashvili said that the government would attempt to settle the dispute with the company’s workers. A new mediation process is underway between Borjomi’s 400 striking workers and the management of the company's two local factories.
IKEA to sell off Russian inventory and plants
“People should not have the feeling that someone is being unfairly oppressed, and all their fair demands should be satisfied,” Garibashvili said. “After the state becomes a co-owner of [Borjomi]... we will solve all the problems,” he added.
Employees of Borjomi demand the reinstatement of 49 employees laid off as a result of the reorganisation plan, payment of overdue wages, as well as the conclusion of open- ended contracts, the conclusion of a collective agreement, and the eradication of blackmail, threats and coercion. The workers went on strike on May 31, after an initial 21-day mediation process ended without success.
IKEA had been trying to open stores in Russia since the 1970s and in 2000 it finally got the first one off the ground in a landmark event that ushered in the post-Yeltsin boom. Wiki
The pull out of the Swedish furniture icon is probably even more significant and shocking than McDonalds departure,
as both companies have been wanting to do business since Soviet times and the launch of both are etched in the Russian consciousness as landmark events. The new Russian owners of McDonalds, that have rebranded the stores Tasty. Period., launched last weekend in what has been taken as an end of an era event.
The opening of IKEA’s flagship store in Khimki in north Moscow in 2000, in the same month as Russian President Vladimir Putin was first elected president, is widely seen
as a seminal event that marked the end of Yeltsin’s chaos of the 1990s and the start of a decade long boom that brought a western standard of living to Russia.
The queues to get into the Khimki branch snaked around the car park and within months every apartment in Moscow looked identical as they were all furnished with IKEA furniture. The store carried a restricted product line, due
to the lower incomes in Russia at the time, but it quickly became the highest grossing IKEA branch in the world on
a sales per square metre basis.
bne IntelliNews
Swedish furniture major IKEA will scale down its business in Russia, lay off some employees, sell off inventory, and will start looking for buyers for its four Russian plants in the Leningrad, Kirov and Novgorod regions, the company's press service told RBC business portal.
"IKEA's retail business in Russia remains on pause. This decision will entail optimisation, which will also affect many employees," IKEA told RBC, adding that it does not see the possibility of resuming sales in the foreseeable future.
The company employs 15,000 people in Russia, operates 17 stores and one distribution centre. IKEA also owns 14 Mega malls. In 2020, IKEA's sales in Russia reached €1.6bn (4% of total global sales).
IKEA has not definitively pulled out as the company hinted that it may restart if relations with the West improve, but the announcement on June 15 is a huge blow to Russia’s prestige and bodes ill for the recovery of the Russian economy.
As bne IntelliNews reported, IKEA has been building an empire across Emerging Europe with a total of 49 stores, but the Russian business has always been the jewel in the crown.
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