Thursday, April 01, 2010

Russia Breaks IKEA

So Swedish blond furniture giant IKEA decided to open outlets in Russia. Turns out it was a bad idea.

From the start the company announced that even in Russia it would be adhering to its clearly-formulated Swedish rules, based on the Protestant work ethic and unanswerable logic. As a result, Khimki officials turned off the electricity just before the first Moscow shop opened. There was no practical reason for this. They just wanted to «give them a hard time» for their excessively strict principles. By the time they opened in Petersburg, the Swedes already knew that they had to have their own generator in each of their Russian stores – just in case. A wise decision, as subsequently emerged. From that moment the Swedes did all they could to minimise their dependence on local authority whims, when building their stores in Russia. «We are pleased with our solution to the problem. Better hire a generator than stick our head into a noose,» said Krister Tordson, a company board member . . .

A further blow was in store for Ingvar Kamprad (5th in Forbes Magazine Rich List) a couple of months later. It emerged that the company had overpaid 200 million USD for the use of their generators – IKEA's prize-winning idea – which virtually wiped out the profit from all their Eastern European stores for the last few years. The Swedes had seen themselves as Sir Lancelots cutting the head off the dragon of corruption. What they forgot was that through the looking glass the rules dictate that another head immediately grows in its place. Forensic investigation revealed that the Russian employee responsible for the hire of the generators was receiving kickbacks from the leasing company, so had been considerably inflating the service costs. The company tore up the contract with that firm and was fined 5 million euros by a Russian court for breach of contract. «We had come up against something way outside what we usually encounter,» said a puzzled Krister Tordson . . .

[After documenting rather a lot of theft, corruption, extortion, and murder, the article finally makes its point.]

It's strange, but did the ruling elite really think the law could be broken selectively? That while some representatives of the state are breaking things up, corporate raiding, racketeering and wrecking, others (like complete idiots) will be honestly fulfilling their part of the social contract? Falsehood gone mad has infiltrated the machine of state from top to bottom, poisoning the minds of the junior and middle ranks. Our police today is a huge army of bad lieutenants, capable at any moment of turning into mad majors. [This being a reference to spree killer Major Denis Yetsyukov, who happened to be a Moscow police chief.]

. . . What is most interesting is that people working in the public sector are also anti-state in their hearts. If you talk to any policeman or civil servant off the record, you will find levels of resentment, disillusionment and Jacobinism that the classical anarchists could only have dreamed of. The ruling elite, the masters of life, also think about the prosperity of the state, but it's not a high priority for them, as they hide behind patriotic rhetoric for the sake of carrying out the daily ritual of the absurd. When the time is right, they will scarper to their Antibes or Marbella. Apparently the prime minister's daughters live in Germany or Switzerland – wherever they are, they're certainly not in Russia. He is not, after all, the enemy of his own children.

It all sounds a little over-optimistic to me, but we can hope the author is right.

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2 Comments:

Blogger Ken Thomas said...

The enemy of my enemy is my friend, but I can't figure out which of the two I dislike the most. Russia has nukes and submarines, but IKEA is a lot more smug and obnoxious. I wrote up a post with my thoughts on the great Swedish shopping experience here: http://kenthomas.us/?p=1024

7:43 AM  
Blogger S.M. Stirling said...

It's a good illustration of why guys like Friedman of the NYT should never be trusted when they fly into a country like Russia (or China) and do a brief piece about how the trains run on time and the windmill factory is booming.

11:33 AM  

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