Ikea faces Russian tariffs
Local producers lobbying for protectionist measures
March 19 2003
Swedish furniture giant Ikea faces a curb on expansion eastward as the Russian government considers punitive import tariffs on foreign furniture.
Russian consumers has proved receptive to the Swedish retailers iconic designs. However, a government commission looking at protective measures is due to report next month, and Russian furniture producers are confident they have won their case for a further rise in import tariffs on furniture.
The local producers say their share of the market has declined by 13 per cent since 1999, when import tariffs were cut by 60 per cent and Ikea and other foreign retailers stepped up expansion into Russia. Home-produced furniture now account for about half of all sales in a market worth $1.67bn last year.
Local furniture producers have increased production over the same period, and even grown a healthy export business, bur argue that they need several years of grater protection in order to develop their ability to compete with IKEA and other foreign retailers.
IKEA argues that it already pays high tariffs. Currently customs officials can levy a value-based tariff of 20 percent or a weight-based tariff of 0.5 euros per kilogram on unassembled furniture – Ikea’s speciality – and 0.6 euros per kilogram on assembled furniture.
The proposed tariffs would affect about 30 per cent of imports, and raise about $50m a year for the Russian treasury. However, overseas retailers would have the option to source from local producters to avoid the tax.
