Ikea may open a West Bank store, but decides against North Korea

July 24, 2013

Ikea's China branches – this one is in Chengdu – have proven some of their most popular, and they're planning a branch in nearby South Korea. But not the North, not yet. (Liu  Jin/AFP/Getty Images)

Swedish furniture mega-chain Ikea has stores in 42 countries, from Europe to the Middle East to East Asia, with plans to expand into, among others, Indonesia and Egypt. But the chain might be discovering some limits to its expansion.

Ikea is getting so big that it's even planning a possible expansion into the West Bank. Israeli media reported late last week that the furniture chain sent two senior executives into the occupied Palestinian territory to discuss the potential store with local officials, who are reportedly receptive. The most likely location seems to be Ramallah, where the Palestinian Authority is based. A Sunday story on the Israeli outlet Ynet, noting that logistics to and from the occupied territories can be difficult, suggested that a West Bank branch might be able to easily ship goods to and from the stores in Israel proper, allowing Palestinians easier access to affordable contemporary furniture.

The possibly entry of Ikea to Ramallah is seen as both a reminder of how quiet the West Bank has become in the past few years and of the Swedish outlet's aggressive expansion policy.

Is there any place where Ikea won't expand? The chain may have finally found its first no-go country: North Korea. On Wednesday, South Korea's government announced that it had been actively courting Ikea to become the first non-Korean company to set up shop in the Kaesong Industrial Complex, which is in North Korea and jointly run by the two Koreas. Ikea, according to the Wall Street Journal, declined.

If it had agreed, Ikea would not have opened a store in Kaesong, a vast industrial park, but used the dirt-cheap North Korean labor and South Korean management to produce its furniture. Though Sweden is one of the very few Western countries that still maintains an embassy in North Korea, Ikea apparently wanted nothing to do with the project.

That may have been wise. In early April, as North Korea ramped up tensions with the outside world, it shut down the Kaesong complex, which remains closed. The Journal points out that South Korea, which relies on the complex for cheap labor and sees it as a peace-building tool, may have sought investment from Western firms  to discourage Pyongyang from closing the facility.

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Max Fisher · July 24, 2013