IKEA currently operates over 30 stores in China. Photo: cnsphoto

Swedish furniture giant IKEA is reportedly investing 1 billion yuan ($142 million) in China, despite certain Western media claiming the global pandemic is pushing supply chains out of China.

IKEA will invest 1 billion yuan to build a headquarters in Dongguan, South China's Guangdong Province, with construction to begin in September and operations scheduled to launch in August 2022, domestic news site jiemian.com reported on Monday. It said the headquarters will cover about 20 of its stores in China and Southeast Asia, driving local purchases of 10 billion yuan annually.

IKEA had not commented on the matter by press time.

IKEA's move comes at a time when some Western media are claiming many multinationals plan to move supply networks out of China as the global pandemic disrupts supply chains among trading partners.

However, China's key standing in the global supply chain and its huge consumption potential will make it difficult for multinationals to move complete supply chains to any other country, said Lu Zhenwang, an independent e-commerce expert. "The structures of China's supply chains are relatively developed, outpacing India in about 15 years," he said.

IKEA told the Global Times in previous interview that China is one of its key markets globally and a market outside Sweden with a complete supply chain - including product design, testing manufacturing, purchase and retailing.

The retailer now has strategic cooperation with about 300 suppliers in China, with the average cooperation period at 11 years. In 2018, China became the largest purchase source for IKEA, accounting for 28 percent of its total global purchases.

IKEA currently operates over 30 stores in China, with three more projects under planning in Shanghai, Changsha in Central China's Hunan Province and Xi'an in Northwest China's Shaanxi Province. IKEA will invest a total of over 16 billion yuan in the new projects.

Amid the global pandemic, IKEA China on March 10 announced the opening of its online store on e-commerce marketplace Tmall to provide its consumers with a more flexible and convenient shopping experience. It is the first time the retailer has offered products and services via an e-commerce platform in China.

However, Lu noted that IKEA should have done so several years ago to complement the shortcomings of brick-and-mortar stores, which are particularly apparent during the COVID-19 pandemic.

As the coronavirus rages the US, IKEA's stores in the country shut in March, and the retailer plans to furlough hourly US workers in store locations and its Service Office from April 19.