ICA AB is one of the Nordic region’s leading retail companies, with approximately 2,300 of its own and retailer-owned stores in Sweden, Norway and the Baltic countries. The company has set up a sourcing and quality control operation in Asia to get full control of the value chain and achieve more competitive prices.

The business case was easy

“ICA AB is a fairly large company and we have used operating agents in Asia to buy our non-food products. We calculated that we would make substantial cost savings and reduce purchasing prices by at least 10-15% if we brought the operation in-house,” explains Thommy Järlefelt, Managing Director of ICA Global Sourcing Ltd. By setting up a sourcing and quality control operation in Asia, ICA AB is also in control of the quality of the products and the health and safety of the factories, which is also very important to the company.  In addition to the regional headquarters in Hong Kong ICA Global Sourcing Ltd. is establishing offices in Shanghai and Vietnam.

Why Hong Kong?

The major part of ICA AB’s business takes place in South and South-East China and South-East Asia and the company predicts that this will only expand in the coming years, so this meant Hong Kong was the obvious place to locate its regional headquarters. It is also easy to establish a company in Hong Kong and there is easy access in and out of Hong Kong.  Another major benefit is that ICA Global Sourcing Ltd. based in Hong Kong can be set up as a financial profit centre in the coming years.

All the major business competencies are also found in Hong Kong: management, trading, sourcing, quality assurance, logistics and IT infrastructure. “These reasons and the quality of people’s education and language skills are why all the main sourcing companies are located in Hong Kong. As the marketing says, Hong Kong really is the Asian hub for international business,” explains Järlefelt. Shanghai is a major production area for ICA AB but the company found that there were more benefits locating its regional Asian head office in Hong Kong than in Shanghai. Fantastic InvestHK service Järlefelt is also very enthusiastic about the support he received from InvestHK in helping him set up the business.  “The InvestHK service was fantastic, it made me so happy.  I would recommend InvestHK to other investors,” Järlefelt said.  The InvestHK support included help with company formation, employment visas, sourcing business service providers including an accountant, property agent, recruitment agent and an IT provider and help with getting school places for Järlefelt’s two children.  Although Järlefelt had lived in Hong Kong before, a lot of his knowledge had become out of date. InvestHK ensured that he had the right information, and made the business set-up as easy as possible.

(From left) Managing Director of ICA Global Sourcing Ltd, Mr Thommy Järlefelt; Director-General of Investment Promotion, Mr Mike Rowse; CEO and President of ICA AB, Mr Kenneth Bengtsson and Vice President of ICA AB, Mr Anders Nyberg.

Future plans “ICA AB’s business in Asia is currently quite small, but its management all recognised that Asia was an important element of its business operation to support its future business expansion” explains Järlefelt. ICA AB currently sources nonfood products from Asia which is a small part of its business, but once ICA Global Sourcing Ltd. is fully set-up, the second focus will be to source food products from Asia which is a substantially bigger part. Järlefelt concludes “On the InvestHK website, Marks & Spencer said they were the last major retailer to come to Hong Kong in 2005. They were wrong. ICA AB is the last, and we are here 20 years too late. All our competitors have been here for 20 years, but by coming now, we can focus on doing it right.”  www.ica.se Top tips for investors • Contact InvestHK. • Investigate the market and the industry – don’t base decisions on old information. • Make sure you are in the right location. • Take the time to find the right people. • Outsource your non-core business.