IKEA kicks off facility in Shanghai

By Zheng Lifei (China Daily)
Updated: 2007-03-30 21:50

An IKEA store in Shanghai. [Wu Changqing]

SHANGHAI: IKEA, the world's largest furniture retailer, yesterday kicked off construction of a mammoth distribution center in Shanghai that will be its biggest in the Asia-Pacific region, as it steps up efforts to cash in on China's booming consumer market.

The $150-million facility, with warehousing capacity of 300,000 cubic meters, will be IKEA's largest in the Asia-Pacific region, according to David Hood, director of IKEA Asia-Pacific distribution services division.

Located in Shanghai's suburban Fengxian District, close to the deep-sea Yangshan port, the distribution center will also be the biggest foreign-owned warehousing facility in China.

It is the second distribution facility for the Swedish furniture retailer in Shanghai it set up a center in Songjiang District in 2005.

IKEA plans to make Shanghai its warehousing and distribution center for the Asia-Pacific region, Hood said.

"The facility will not only bring advanced professional logistics expertise to China, it also signifies the importance of Shanghai being one of Asia's major economic and shipping centers," Hood said.

The distribution center will beef up IKEA's logistics efficiency in China, as well as across its Asia-Pacific markets.

Major international home improvement and furniture retailers such as US firm Home Depot and British rival B&Q have all set up in China, lured by its booming consumer market, which is set to overtake the United States to become the world's second largest by 2015, according to a Credit Suisse report.

China's domestic consumption, the Zurich-based bank said in the report, is projected to hit $8.8 trillion by 2020.

The retailers have all set ambitious expansion goals for China.

IKEA plans to have 10 stores in China by 2010, Ian Duffy, IKEA's Asia-Pacific president, said last year.

The Swedish firm entered China in 1998 and will open a store in South China's Shenzhen this year.

It currently has four stores in the country in Beijing, Shanghai, Guangzhou and Chengdu.

B&Q opened its first chain store in China in 1999 and plans to have 100 stores here by the end of 2010, up from its current 50-plus outlets.

Meanwhile, Home Depot acquired domestic home improvement chain Home World late last year.