ikeacn2.jpgEurope
is famous for many achievements but shopping malls is not one that
first springs to our minds. Nevertheless, for those who long for the
true European shopping experience, construction has just begun on European City in the Nanshan district of Shenzhen.

The centre will house such icons of European shop-till-you-drop
culture as Sweden's Ikea, UK home improvement store B&Q, German
supermarket chain Metro and French sports equipment manufacturer
Decathlon.

European City will occupy 105,000 sq metres of land with a total
investment of 1bn yuan. It is promoted as “a household decoration
business centre” and aims to attract shoppers from all around Pearl
River Delta but, especially, we suspect the large number of expats who
live in Nanshan.

Ikea is the anchor tenant in the European City and its interesting
that it apparently is unperturbed about having a competitor like
B&Q on its doorstep.

China is important to Ikea from the sourcing perspective as it buys
more than a quarter of its items in the PRC, but it is not yet a
significant source of revenue.

The Swedish giant opened its first store in China in Shanghai in
1998 and currently has just four stores in the PRC. It hopes to have
ten large stores up and running by 2010. It has already opened a new
redesigned store in Shanghai to replace the original one, and a similar
move will happen in Shenzhen when European City opens in 2008.

When Ikea first entered China, the store was considered too
expensive for its target consumers–young, professional couples–and
the company was forced to lower its prices.

More on Ikea's China strategy in this China Business Review article.


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