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The latest warnings from China brought a call for restraint from Japan, which on Tuesday announced it had bought the disputed islands in the East China Sea from a private Japanese owner, an act Beijing called a violation of its sovereignty.

"With Japan's so-called purchase of the islands, it will be hard to avoid negative consequences for Sino-Japanese economic and trade ties," Chinese Vice Minister of Commerce Jiang Zengwei told a news briefing.
Because of this political tension, IKEA will expect difficulties to ship furnitures from China to Japan, may be higher taxes or more complicated process. One thing IKEA can do is shipping from other countries such as in South East Asia or India, but the transportation cost will be higher, and the production speed in these countries are often slower than China.

Source: http://www.reuters.com/article/2012/09/13/us-china-japan-idUSBRE88C04620120913

 
 
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An era of persistently high oils price has an tremendous influence to the multinational corporations that have come to rely on globe-girdling supply chain. Crude prices have backed off last month's run toward $150 a barrel. But they persist above $110 a barrel, a level that was hard to fathom even a year ago. The end of cheap oil heralds a potentially dramatic reshaping of the globalized trade flows that have emerged in the past two decades. Rising transport costs are suddenly a key factor in decisions about both where to place factories and how much inventory to stockpile. 

This is a huge disadvantage for IKEA because it relies so much on transportation. The more expensive fuel gets, the more IKEA have to pay to ship furnitures from factories to retailers all over the world, which means more expensive products. Also, IKEA may have to charge more for the shipping cost from retailers to consumers, which can make them less likely to buy. 

Source: http://usatoday30.usatoday.com/money/industries/manufacturing/2008-08-11-cargo-costs-oil_N.htm

 
 
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On November 24th the coalition government, led by the Congress party, said that in cities of over 1m folk, foreign firms could now own 51% of “multi-brand” retailers, such as supermarkets (up from zero), and 100% of single-brand chains (up from 51%).


This is a huge change for IKEA. IKEA has been waiting years for permission to take full ownership of its local operations in India. Take full control will allow IKEA to be more active in its decision-making process and business management. The article also mentioned that Ikea are among the multinational retailers having expressed interest in investing in India if the rules were changed.

Source: http://www.nytimes.com/2011/11/25/business/global/india-to-allow-foreign-retailers-to-own-stores.html?_r=0

 
 
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On 19 March 2013, Xi Jinping has his first high-level meeting with US representative since he was confirmed as the president of China. He said the two countries should "work together to reduce barriers to trade and investment." Mr Lew, from USA said that as the world's two largest economies, the US and China had "a special responsibility to maintain strong, stable and sustained growth in the world". 

US and China has been two of IKEA biggest markets for a long time. This move will narrow down the trade gap between two countries. Stronger bond between the two countries will make it easier for IKEA to import goods into US from China (IKEA's biggest manufacturing country), and also bring high-skilled employees from US to China. 

Source: http://www.bbc.co.uk/news/world-asia-china-21840071

 
 
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The Dascanova Co. introduced at Ligna 2011 a new panel product with a wave-like internal structure, resulting in an improved internal bond strength. The company said it has seen a variety of benefits, including that the raw material costs for the panels can be reduced by up to 30 percent in the panel production, while achieving the same or better mechanical properties of standard panels on the market. The panels are basically the same as standard wood based panel : same fittings, same connection elements,...  

The final products with this new wood panels will be lighter and cheaper than the standard panels. This will reduce cost for IKEA in term of production and transportation. Also, using this new method will help IKEA to reduce environmental impact and complete its CSR. 




 
 
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SnapShop Showroom, developed by San Francisco-based SnapShop Inc., can be downloaded for free on iTunes.

It enables a consumer to use a smartphone to browse and pull furniture images from a catalog, then virtually place it a photo of room or a live image of the room. The image of the room can then be shared with the user's social network for feedback. The photos usually are accompanied by a retailer's URL, further driving traffic to the retailer website. 

This can actually disadvantage IKEA. IKEA is famous its showrooms, for creating a feeling of being at home and put furnitures together as bedroom, kitchen,... for consumers to have a vague idea of how they should look like in a room. But now, using this app, consumers can simply get online, get a more precise idea of how the furniture would look like in their apartment, and also can compare the price between retailers (not including IKEA).  




 
 
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BASF has now developed a technology for an innovative wood-based material with the potential to revolutionize the furniture market: Kaurit® Light. "Wood-based panels made with the new technology weigh 30 percent less than conventional chipboard while offering the same strength," explains Dr. Stephan Weinkötz, project manager at BASF. "Kaurit® Light panels consist of wood chips, a foamed polymer and Kaurit® glue. For this new development we have combined and successfully utilized existing know-how from two of BASF's operating divisions," continues Weinkötz.

This new technology can help IKEA to manufacture more light and high-quality furnitures, while remaining the quality. The new material doesn't need large financial investment in new machines. Transport and handling costs are lower, less packaging material is required. Both of which also save energy and conserve resources. This fits in IKEA's ideal furniture: lightweight, high-quality and easy to assemble while remaining the cheap price.


 
 
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According to CNBC, China remains the world's largest exporter of low-end goods, but has recently started to lose share in key markets such as textiles due to its rising labor cost. Meanwhile, although many countries can now compete with China on labor costs, it is countries elsewhere in Asia, able to take advantage of strong infrastructure and existing supply chain networks that will be the main beneficiaries of China's move out of low-end manufacturing. 

Because China is IKEA's number one supplying country, it will cost IKEA more to manufacture the same products. The consequence is either decreasing company's profit or rising products' cost. However, this can be solved quite easily. According to the same article, many countries have benefited substantially from China rising cost, especially South East Asia countries where labor cost are currently half those of China's. By offshoring production to these countries, IKEA can reduce cost, remain products quality while get rid of the "made-in-China" tag. 

 
 
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At the ZOW 2011 in Bad Salzuflen, adhesive supplier Henkel is presenting tailor-made solutions for the production of visually attractive and high-quality furniture. Thanks to a new laminating process, it is now possible to use a newly developed hotmelt adhesive that combines excellent surface quality with high environmental compatibility.

Not mentioning the cost, this might be useful for IKEA as a leader in furniture industry. As IKEA furniture's quality is still a controversial topic, maybe trying to use this technology will help improving products quality as well as their reputation.

 
 
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According to an article in the Hong Kong Journal, “Over 90% of Hong Kong families today live in homes smaller than 700 square feet.” The average apartment size in Manhattan is around 1,300 square feet, and that’s usually occupied by a single person. Moreover, according to South China Morning Post, Hong Kong housing price has jumped two places to become the third most expensive city for housing price in the world. 

This is a good things for IKEA as they offer a wide range of furnitures specifically for small spaces such as loft beds, sofa bed, room dividers, corner work stations,..... Hong Kong citizens will find IKEA products to fit in their tiny apartments with reasonable price that won't add up much to the already-crazy housing price.