It is easy to marvel at IKEA’s products, in addition to the low cost. They are indeed beautifully designed. What struck me on my first ever visit to IKEA, however, was not only the designs beauty but the reality that the majority of their products come from China. There were rows and rows of products and I kept thinking, what is the lead content and what other dangerous chemicals lurk in these products. Unlike toys, families can keep these products 15 years, and use them daily. The smart move for IKEA would be to test the products themself and add labels that indicate “lead free,” etc.
IKEA’s powerful formula for success is simple. Design products in Sweden, make them in China and avoid all income taxes in the US, both Federal and State, by structuring your business as a non-profit charity. In addition, they file no disclosures with the Securities and Exchange Commission.
It’s not hard to see why they drive other competitors from the market, especially when they get location and infrastructure concessions from local politicians. Here is a great inside read on IKEA from the Economist. Me, I’ll shop elsewhere when I can. I don’t mind buying products form China yet it is nice to know the sellor, for example, Costco, is supporting the nation via payment of income taxes.