(Title photo CC yassan-yukki)
Lennart Dahlgren looks like Santa Claus’s baby brother, who left the family toy shop, moved to Stockholm and got an MBA. Towards the end of a successful career with IKEA, he was tasked with securing a foothold for the Swedish furniture chain in Russia. He came to Moscow just as expats were fleeing in droves, following the country’s 1998 financial crisis.
Over the next ten years, he presided over the construction and opening of nearly a dozen superstores around the country. He left the country in 2006, and within a few years IKEA was in the middle of a bribery scandal – what was “business as usual” in Russia, made the company’s iconic owner Ingvar Kamprad weep. Top managers were fired, and IKEA’s continued involvement in Russia is still an open matter.
Meanwhile, Lennart Dahlgren wrote a book. His account of doing business in what is possibly the world’s most absurd environment was never approved by IKEA’s corporate executives, but neither was it opposed. The book just came out in Russian; if an English version is planned, I have not found mention of it. You can read a review at the Moscow Times, but there is a collection of enlightening quotes at the Forbes Russia website. It’s in Russian only, so I’ve translated some of the most entertaining ones below:
“In order to supply goods for our stores, we needed a distribution center. We started looking for land to build on, and found a good option 30 kilometers north of our first store, just outside the village Yesipovo, in the Solnechnogorsk region.
The head of the municipality, Popov, turned out to be an extremely active person – he was always on his way from one meeting to another, always late, and his receptionists always explained away his absence by saying he was in a meeting with the governor. We first met with him in our office – which is, in general, very unlike him. After the normal greetings, he suddenly said: “Mister Lennart, I know all about you.”
Of course, I inquired how he did that. He said that he was just on his way back from the FSB [Russian security services –AT], where he closely studied their file on me. I had no doubts that there was some information on me there. For a while, we suspected that our phones were bugged. Gradually, I tried to get at least some information out of Popov. At first he stuck to general things that could be said about anyone. But I insisted: “At least tell me the bad things it says about me.”
“It particularly emphasizes your main fault. Mister Lennart, you are very stingy, and save money unnecessarily.”
No sooner had Popov left that I wrote an inquiry to the FSB, asking for a copy of my file. I was almost convinced that there would be no answer, but could not resist. Some time later, our security department got a call from the FSB, asking how seriously they should treat my request. Our security manager approached me to find out if I really asked the FSB for this file. When I told him everything, he could barely contain his laughter.”
“Krasnodar was initially not a high priority for us, but the city and region government suggested we start negotiating investments in the region.
After a detailed consideration, it turned out that the city is indeed of interest to us. We got an offer for a very well-located plot, which we immediately agreed to buy. The haggling started as usual. But soon we heard rumors that this territory no longer belonged to the city. These turned out to be true – the city had given the plot over to a different owner. We contacted his representative, who did not disclose the name of the owner, but quoted a price that was five times what we had already agreed upon with the city government.
We told the city’s administration in no uncertain terms that such attempts at deception are absolutely unacceptable. We started talks with the president of Adygea, an enclave within the Krasnodar region. The border between the highly populated Krasnodar and the tiny Republic of Adygea runs along the Kuban river. We purchased a huge plot of land just across from Krasnodar, in Adygean territory. Today that plot houses the “Mega” family shopping center, most of whose visitors come from Krasnodar and its surroundings.”
“The Russian leadership repeatedly said that it wished for IKEA to start its own manufacturing facilities in Russia. They felt that this would serve as convincing proof of the seriousness of our intentions. For the first years of our operations in this country, expenditure on shopping centers was formally not considered real investment.
Only a small percentage of the goods we buy are of IKEA’s own manufacture. Furniture factories in various countries are managed by our industrial arm, Swedwood. Russia’s first Swedwood timber plant opened in 2002, in the Leningrad region, with full support of the regional government. We intended to expand our presence in Russia, among other things by purchasing a fully-equipped industrial production facility that was being sold at auction.
Swedwood’s specialists carefully studied this enterprise, and began submitting their registration for the tender. But soon a dismayed auction administrator called them, and told them that he would not accept the submission. When pressed, he said that he got a call from the Ministry, and was told that this facility was to go to a certain Russian company. This decision could not be influenced, and he could do no more than offer his deepest condolences.”