Ikea Eyes Further Expansion in China

Swedish furniture giant Ikea is looking to expand further into China, its shopping centre development arm said Thursday, beyond three new malls already announced in major Chinese cities.

Inter Ikea Centre Group, or IICG, said Ikea would partner with French supermarket Auchan, Chinese appliance retailer Suning and cinema operator Jin Yi Film for the three malls in Beijing, central Wuhan and eastern Wuxi.

“Ikea is eyeing first and second tier cities for more stores and we are looking for suitable cities and locations along with them,” Ding Hui, managing director of IICG China, told a news conference.

“Shanghai is certainly one of our targets,” he said.

Ikea has said it plans to more than double its number of stores in China from the current eight by 2015.

IICG, based in Denmark, currently owns and operates 30 shopping centres in 14 countries, mostly in Europe, and China is its first stop in its foray into Asia.

It announced last year it would invest $1.2 billion in the next five years to build the three regional shopping centres in Beijing, Wuxi, and Wuhan.

But the final investment for the three projects, which have a combined gross leasable area of 500,000 square metres (5.4 million square feet) could exceed that, Ding said.

The combined retail space of its current 30 shopping centres totals 1.85 million square metres.

The Wuxi shopping mall is scheduled to open in late 2013, followed by Beijing in 2014 and Wuhan in 2015.

Ikea and the malls’ three other anchor tenants will fill around half of the leasable areas.

China’s rapid urbanisation would support Ikea’s ambitious expansion plans, Ding said, adding he was not worried about the outlook for the shopping centres, which are much larger than most of its European malls.

The planned Beijing shopping centre, located in the capital’s less-populous southern outskirts, has 7,000 parking spaces and cost IICG at least five billion yuan ($758 million).

“You have to take into account the urbanisation trend and be very forward thinking,” Ding said.

“We had thought the 1,500 parking lots at the Beijing Ikea store was enough but it turned out cars had to park outside in the second month since opening,” said Ding, who was previously vice president and chief financial officer of Ikea China.

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