Home appliance maker Electrolux has had some trouble managing its Chinese operations. While the company has been in the country for 10 years, it has yet to turn a profit here. Since 1997, seven different people have served as president of Electrolux China. The previous president, Li Yan, departed in December 2008 after serving for only a year. The company subsequently cut 3,000 jobs worldwide. The new president, Gunilla Nordstrom, immediately decided to sell a factory producing low-end refrigerators in Changsha. She also announced she will reorient the company’s strategy toward selling higher-end appliances, and inked an exclusive agreement with retailer Suning to sell Electrolux washing machines. Electrolux has been gradually delisting from international exchanges. However, the firm still lists in Stockholm, where its stock has performed relatively well.
Telecommunications giant Ericsson still retains a heavy employment footprint in Sweden. In China, however, the company’s strategy has hit a rocky patch. It began running into difficulties selling its joint-venture Sony Ericsson cell phones in China due to surging local and international competition, and has had difficulty regaining market share. Last month Lu Jiansheng, director of Sony Ericsson in China, resigned without explanation. Indeed, even in Sweden the firm is now facing Chinese competition in the telecommunications infrastructure business: Huawei just beat out Ericsson to build out Sweden’s 4G cellular network. However, the firm can console itself with its recently won contracts with China Mobile and China Unicom, collectively valued at US$1.7 billion.
Ikea started out with a bang in China, opening an enormous store in Shanghai in 2004 that was its second-largest in Asia. At first the company tried to apply its one-size-fits all marketing plan and product mix to China, but was forced to readjust: Unlike in the West, in China Ikea is a place to buy expensive furniture. This created a pricing challenge, which was further complicated by China’s heavy import duties. As a result, while Ikea became a weekend leisure hotspot, it was less popular when it came to buying; the crowds tend to spend more time taking naps than they do making purchases. Ikea has also been plagued by carpenters using the measuring tape provided by the stores to copy its products. In 2009, Ikea closed three trade offices in Chengdu, Wuhan and Xiamen and said it was considering additional restructuring elsewhere. However, in November the company announced plans to build two shopping megalopolises anchored by new Ikea stores in Beijing and Wuxi in Jiangsu province.