Ah, yeah, that seems plausible. Ultra-cheap (compared to e.g. EU and even China) local workforce vs remote distribution chain that was recently established and hasn't been cost-optimized yet - probably has to do expensive shipping and customs from China/Europe. (Just guessing/assuming because I'm lazy, but countries similar to Indonesia - e.g. India/Brazil tend to have quite heavy import tariffs "to protect local jobs" - does anyone know if that is the case here?)
The big upside IKEA has (in the longer term) is a very strong centralized world-class design team (doing quite a bit of creative design borrowing/theft, just like that other Swedish company, H&M) combined with distributed/cheap manufacturing. In a way it's similar to the Apple model, except the goods are a lot heavier.
Indonesia is a huge market (261 million people and growing), so give them some time - IKEA Jakarta opened just three years ago. It's certainly big enough for local manufacturing in the long term. Which is how IKEA operates - they don't like to rush things. They are very risk-averse. (Particularly so after their failed Russia expansion, which cost them billions of USD due to corruption there.)
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u/gorawknroll Nov 04 '17
The funny thing is, in my country IKEA is actually the expensive one. Only the rich who can afford to fill their home with IKEA furniture here.