Steinheist. Rob Rose
across the eastern bloc. Nobody wanted to do it. So, I was able to build great relationships with the government officials, who needed Deutschmarks.”
Initially, Steinhoff had the exclusive rights to import East German goods into only two states in the western part of Germany – Lower Saxony and Hesse. But the business began to thrive. Perhaps the major slice of luck that put Steinhoff on the map was a single piece of furniture: the Gabi chair. The Gabi, with a rounded cup back and thin tapering legs, had a strong, mid-century Scandinavian influence. If it was in dusty pink or mint green, you could imagine it being quite a drawcard, even today. Typically sold in red, and upholstered without armrests, it might well be the unobtrusive seat of an arch-villain, waiting in his minimalist underground lair to welcome a shackled Sean Connery.
But, back then, its patented design flew off the shelves faster than Steinhoff could get it shipped to his warehouse. Even today, Steinhoff attributes much of his early success to the Gabi. If you visit his office, next to his desk you’ll see a miniature model of the Gabi. “I saw this chair on one of my trips. The [East German] government couldn’t sell it, even though they had huge amounts in stock. So, I told them: ‘Give me the contract, I’ll do it.’ And I did. I became very famous in East Germany for it, and after a year the government gave me a contract to sell all the upholstered furniture they made,” he says.
Soon after, the East Germans approached Steinhoff and asked him if he’d help them develop their factories across the eastern bloc. “I said, ‘Sure’.” So, Steinhoff hit the road, travelling to Hungary, Romania, the old Yugoslavia and Bulgaria, building factories in those countries and swapping prized Deutschmarks for furniture made behind the Iron Curtain.
At the time, as a 27-year-old, Bruno built a head office for his new, expanding furniture enterprise in Westerstede, a sleepy German countryside town, criss-crossed by horse trails and bike tracks. It wasn’t exactly an obvious place as the base for a rapidly expanding European furniture empire, but Bruno was drawn to it, as much for the nearby lake, Zwischenahner Meer, where he could use the boat he’d bought, as for the fact that he’d made close friends nearby. It was the sort of place you could bring up children. His company, too, was a strictly family affair. His mother, who had spent decades working on the farm, took up the role of her son’s secretary. “I started with nothing. We built the warehouses from scratch, we built the logistics arms from scratch,” he says.
Most of the time, Bruno was on the road, if not doing deals, then staying up late drinking vodka and whisky with his business partners in smoky rooms in Sofia, Budapest or Moscow. He’d got married in 1970 and a few years later had two daughters, whom he rarely saw. Often, he’d land from one gruelling overseas trip, only to pick up his boarding pass for the next. “My wife accepted it, the fact that I was not much at home. But there was no choice for me. I was the frontman: if there was a problem, I went to settle it.”
Financially, the business provided Bruno with a windfall. The year before he started Bruno Steinhoff Möbelvertretungen und -vertrieb, he’d taken home a salary of 10,000 Deutschmarks a year. But in its first year his company made 500,000 Deutschmarks.
Bruno Steinhoff was also uncompromisingly strict. If a factory did not perform, Bruno was unsentimental about chopping it. “Obviously, I bought shit businesses. It is normal to make mistakes, even though you forget this when you look back. But the people who always go on about the mistakes forever – they’re not business people, they’re teachers. So, what I did was, I sold those shit businesses. You learn the first time when the bankers knock on your door not to wait around. You act fast.”
But Steinhoff’s ambition didn’t stop at Europe. In 1974 he decided to take his flirtation with communist commerce a step further and travelled to Mao Tse-tung’s China. There, he painstakingly built up a new network of traders. “I went to China, Thailand, the Philippines and I bought everything from the east: cane furniture, watches – everything. I imported whatever I could because these people here, in the west, they had too much money and were lazy, and were too anxious about dealing with foreign countries after the Second World War. So, I had no competition doing this,” he says.
Simultaneously, about twelve hundred kilometres north, there was another furniture company that had also been slowly expanding its way across various borders. Started in 1943 in Sweden, it took its name from the first initials of its founder, Ingvar Kamprad as well as those of the farm on which he grew up, Elmtaryd, and his home town, Agunnaryd: in a word, Ikea. Ikea would become the yardstick by which all Steinhoff’s victories were measured. It would be the Coca-Cola to Bruno’s Pepsi, the Nike to his Reebok. And it was Ikea that ultimately would push Bruno Steinhoff into doing business in South Africa.
The story is that in 1974 Ikea opened its doors in West Germany, sparking a craze for natural wood furniture that gained pace over the next decade. “Over the next few years, everyone wanted pine furniture,” says Steinhoff. “Of course, there are different qualities of pine, but I did some research and found that the best place to find really quick-growing pine was South Africa. So, I went to South Africa for the first time.” It was a decision that would entwine his company’s fate with a country thousands of kilometres away, at a point when most foreign businesses in South Africa were padlocking their shop doors and fleeing the country. It was 1985. The townships in South Africa, where black people were confined, were burning; Nelson Mandela, the putative leader of the African National Congress (ANC), had already been imprisoned on Robben Island for 23 years; and the ruling National Party had suspended what few rights existed in that country under a “state of emergency”. The year 1985 would be the singular turning point for grand apartheid.
President PW Botha, the brutish enforcer of the security state known as the “Groot Krokodil”, as much for his curled snarkish bottom lip as for his white-hot rage, had signalled in August that year that big changes were imminent, that the country was about to “cross the Rubicon”. Time magazine, in anticipation of the event, had even described the speech that Botha was expected to give as the “most important announcement since the Dutch settlers arrived in South Africa 300 years ago”.
Instead, people across the world watched Botha give a speech that flatly rejected reform and stubbornly recommitted the country to apartheid. And the prospects for commerce fell apart. “The rand fell sharply, capital flight accelerated and markets closed. South Africa faced an escalation of sanctions,” says Hermann Giliomee in his book The Last Afrikaner Leaders. “In late August 1985, the United States Congress passed the Comprehensive Anti-Apartheid Act, which banned new investment and loans, withdrew landing rights and severely curbed imports of coal, uranium, iron and steel. The European Community and the Commonwealth imposed a variety of milder sanctions.”4
But, as executives from multinationals like Barclays, General Motors and IBM were crowding aboard the packed Boeings at Joburg’s Jan Smuts Airport, Steinhoff was stepping off the plane for the first time. “South Africa was a very strong country then, and I was sometimes the biggest buyer there during apartheid,” says Steinhoff. “I was in all the factories here in 1985, so I got to know South Africa very well. I bought lots of furniture here.”
Culturally, Steinhoff felt good chemistry with South Africa. “There were other countries I went to, where I decided I’d never go again: people there, they’d steal your money.” But it still took no small amount of gumption to set up shop in a country that, at the time, had become the world’s number one pariah. It was this blindness for politics that mirrored Bruno Steinhoff’s earlier decision to cosy up to the communists. “Politics, I don’t notice,” he says. “Business has nothing to do with politics. I’ve always gone where no one wants to go and then it’s easy: you have no competitors. It’s wonderful actually.”
Still, Steinhoff’s early South African venture wasn’t exactly a huge success. From the beginning, Steinhoff was attracted to the country’s thick-growing pine – Pinus radiata – which is similar to the pine you get in Chile and Brazil. However, while the pine that Ikea sold was clear white pine from Scandinavia, the South African pine was yellow – and the colour only deepened over time. “It was a big mistake. In the shops, people were ready to buy the Scandinavian pine at double the price and more, so I had to stop this business with South Africa.”
Then,