The Teflon Shield : TRENCH WAR: With activists on the march, multinationals are desperate to deflect the brand-bashing attacks of the anti-global protesters. Here's how the prototypical Teflon multinational does it.(IKEA)

IKEA is a curious success story. The lines at the Swedish stores are endless, its furniture requires an engineering degree to assemble, yet its $8.5 billion global sales empire is expanding rapidly. Even more interesting is its reputation. It hires factories in impoverished countries like Laos, and its wooden furniture is a threat to forests from Borneo to Russia. Its image as the McDonald's of home furnishing is enough to offend the sensibility of anti-globalization protesters. Yet time and again, IKEA has managed to duck the charges that stick to brands like McDonald's and Nike, and to keep its name off the banners now waved in anger from Seattle to Prague to Bangkok.

IKEA is the prototypical Teflon multinational. Like Ronald Reagan, known as the "Teflon president" (after the nonstick coating on cooking pans), there is an emerging class of global corporations that by virtue of cleverness, charisma or plain dumb luck manage to dodge or deflect the brand-bashing attacks launched by angry radicals. Obviously, it helps to come from a little country like Sweden, not the big, bad United States, and to be No. 2 or 3 in your industry (far smaller than the likes of Home Depot). The largest target always catches the most flak. Yet for more than a decade now, IKEA has also been moving quickly--even pre-emptively--to address charges linking it to everything from child labor to dangerous plastics. As a result, no charge ever sticks for long. Executives have scanned the horizon for possible threats--and stunned save-the-forest types by showing up at the door with generous offers of money and help. Not surprisingly, IKEA has rarely heard its name chanted in disgust, at least not for long. "Maybe it's because we don't do things just to get rid of a problem," says CEO Anders Dahlvig. "It's rooted in our value system."

This sounds like traditional public-relations speak. But IKEA's strategy goes well beyond that. It involves clashing with one's enemies, building coalitions with the opposition, backroom deals, painful reform--in short, political trench warfare. Ever since the Battle of Seattle in December 1999, when rioting protesters trashed the city's business district during a free-trade summit of world leaders, the anti-globalization forces--from unions to environmentalists to students--have been widening their hit list. They've launched new campaigns against new targets, from banks to home builders. They now talk cockily of their ability to "swarm," to rally many activist allies for "direct action" against the stores and offices of a single corporation around the world on a single day. As the protests gain momentum, so do the efforts of multinationals to slip away from charges that they run roughshod over workers, plants and local cultures in the developing world. They are trying to build a Teflon shield, whether they put it that way or not.

Many may end up studying how IKEA has maneuvered through the past decade unscathed by charges against it. When residents of several rich New York suburbs rose up last month to block the construction of an IKEA store, it was not the first time locals had complained that the Swedish retailer would wreck the neighborhood. Yet IKEA still poses no challenge to Wal- Mart as the symbol of the invasive megastore. News that IKEA will open its first store in Israel this year got a positive reception, even though the company's founder, Ingvar Kamprad, now honorary chairman at 75, admits he attended Nazi gatherings after the war.

The quirky, privately held company was run for decades by Kamprad, who built the business into an affordable yet attractive self-assembly furniture store for the masses. Notorious for cost-consciousness, he forbade first-class flights and forced managers to find the cheapest hotels. The egalitarian tone still exists in practices such as "anti- bureaucratic weeks," when managers work in stores or warehouses. So when it came to corporate responsibility, says Dahlvig, "we didn't have to force it down the throats of our managers."

IKEA liked to think of itself as a better corporate citizen than most, so it was stunned by the first threat to its good name. The issue of child labor had just reached popular awareness in Europe in 1992 when IKEA was blindsided by a Swedish documentary. The film showed kids chained to weaving looms in Pakistan, and cited IKEA as a customer. The newly hired business manager for carpets, Marianne Barner, immediately terminated the Pakistani contract. Then she added a clause to all supply contracts forbidding child labor, and set off to Pakistan, India and Nepal to have a look around. On the advice of an activist with Save the Children in Stockholm, she hired a company to monitor suppliers in the region.

The headaches had just begun. A year later a German documentary claimed that kids as young as 5 were slaving over hand-woven rugs for $4 a day at Sheena Exports, a carpet factory near Delhi that had supplied IKEA for five years. Barner immediately fired Sheena for what she thought was a "black and white" issue. It turned out that the story was fabricated, but with 80 percent of IKEA carpets made in India, the PR damage was severe.