IKEA decided to invest USD1.4 billion in China for the year 2020 to boost weak sales growth in the country.

The Swedish furniture retailer plans to open a few more stores in China by the end of 2019, and upgrade its existing ones. In short, IKEA is betting that China's huge consumption potential will make the investment worth more than it deserves.

Anna Pawlak-Kuliga, an IKEA executive in China, said that the investment will accelerate the online and offline development simultaneously.

IKEA has opened 27 stores in China for the past 20 years. However, in recent years, IKEA's sales growth in China has been declining rapidly, due to competition from local online and offline competitors.

As part of its strategy, IKEA is moving into some "small" cities in China, hoping that the purchasing power of their residents will give IKEA a boost in revenue growth. At the same time, IKEA is exploring the "small store model" in China.

These strategies seem to be effective to some extent. IKEA, opened in Zhengzhou, attracted thousands of customers queuing outside the store, and the IKEA stores in Changsha and Guiyang are just around the corner.

"The Chinese furniture market is expanding at a double-digit rate every year," said Anna Pawlak-Kuliga. "For consumers, IKEA's investment is absolutely timely and investment in the Chinese market is a very important part of IKEA's global strategy."

The Chinese market can rank among the top five in terms of IKEA revenue contribution. In 2018, IKEA's revenue in China was RMB15.5 billion, with a year-on-year growth by 6% in contrast with 2017 during which a growth rate of 19% was achieved, the number of which constitutes a qualitative difference.

IKEA's traditional big-store model is becoming less attractive to Chinese consumers, who are more accustomed to online shopping, and some foreign brands, such as MUJI, are encroaching on what was once IKEA's market share.

One of the coping strategies is that IKEA has opened a product development center in Shanghai, as its first product development center outside Sweden, in a bid to win the favor of Chinese consumers by forging their own products.

In addition, according to Anna Pawlak-Kuliga, IKEA's small stores will open in Shanghai next year. This new strategy aims to cater to Chinese consumers with less leisure time, and IKEA's current size of 3,000 employees in China will expand to 17,000 next year.