Haier

Turning a Chinese household name into a Global Brand

Introduction
Verge of bankruptcy to a global brand in two decades time Brand building and a better sales network In 2001, declining profit margins and rising operating costs Overseas market sales of $4 billion in 2005 but fell short of targets

Haiers Development Path

1984-1991: Restructuring and Brand building Qindao Refrigerator : losses of US$171000 Worker revolt and loss of trust Zhang Ruimins challenges: poor discipline among workers and low quality production Introduced strict quality controls and after sales service By end of 1991, sales of US$125 million

Haiers Development Path

1991-1998: Diversified development Merged with 49 moribund state enterprises Expanded into white goods Chinese consumer market facing increase supplydemand and Haier enjoying escalating profits Focused on restructuring production and performance evaluation process

Haiers Development Path

1998 2005:Internationalization Decade long price wars in the Chinese market Go-abroad strategy: improve profitability, increase innovation and brand perception Challenges in overseas market: Germanys quality checks Entering niche markets mini fridges and wine coolers

Haiers Development Path

2006 onwards : Global Brand building Haiers own brands accounteed for 95% of foreign sales as on 2006 Brand association: NBA, Beijing Olympics Enjoyed success in both domestic market and overseas BY 2010, expects 20 factories overseas up from 13 in 2006

Global Adventure
Started to venture into overseas markets as a contract manufacturer in the early 1990s Haier also used JVs to explore foreign markets Market value
Area
Europe Asia Pacific US Middle East

Percentage
32 27 25 10

European Expansion
First to UK and Germany, then to France and Italy Entering German market was the toughest Haier refrigerators marketed by the German appliance firm Liebherr under the Blue Line brand Formed JV with Yugoslavian company for multi tasking air conditioners In 2000, acquired Italian refrigerator plant in the north eastern city of Padova

Asia Pacific Expansion

In 1996, JV with Sapporo in Indonesia In 1997, JV with LKG Electric company in Philippines Two months later, JV with Malaysian company

JV with Sampo corporation in Taiwan

In 2002, partnered with Sanyo Electric Co in Japan

In 2000, JV with HBL in Bangladesh

Middle East Expansion

In 1999, established Haier Middle east in Dubai In 2001, Haiers washing machine share reached 20% in Iran and Turkey Also in 2001, introduced a new color TV for Middle East people Constructed an industrial park in Pakistan, which is a JV with Pakistan R group At the end of 2001, established Jordan Haier Middle East Trading Co for Jordanian, Lebanese, Syrian, Palestinian, Iraqi, Egyptian and Kuwaiti markets

US Expansion
Haier Welbilt Local retailer since 1994 JV named Haier America in 1999 US $50 million first year sales Haier Walmart 1999 initial order of 50,000 after lobbying 2000 100,000 ordered 2002 Sales touch 4,00,000 units

INTERNATIONALISATION STRATEGY
Haiers global expansion strategy differed in two ways *Haier decided to establish a brand reputation overseas *Haier opted for bigger market first
In 1998 Haier identified 10 target markets

Introduced innovative products for niche customer markets

Launched production base in Camden and established Headquarters in New York

INTERNATIONALISATION STRATEGY

QUALITY *Haier competed with more customer and quality focused *Speed and differentiation for customer focused *Quality improvement meant higher competitiveness in world market PRODUCT SPECIALISATION *Entered high performance segment *Enable Haier to obtain higher prices and margins *Haiers conquered market

INTERNATIONALISATION STRATEGY

INNOVATION *Highly focused on innovation *Established more than a dozen information and design centers in developed countries *On an average of 1.3 new products were designed for 6 years consecutively *Focused on one product at a time

INTERNATIONALISATION STRATEGY

Explored new markets by exceeding customers expectations Set up design centers in developed countries Introduced direct marketing Focused on providing full range of products Focused on customer service

LATECOMER COMPETITION

MABE *Produced more than 12 million appliance per year *Set up 14 factories and sold products worth about US $2 billion in 70 countries *Joint venture agreement with GE ARCELIK *Arcelik accounted for 50% of Turkeys washing machine exports and 30% of refrigerators export *Invested in R&D and entered into joint ventures *Original brand manufacturer in UK and France

Product Strategy
Products range 96 series and over 15100 specifications Haier was ranked 27th in the 2010 Top 50 Worlds Most Innovative Companies Up to the end of 2009, Innovation driven Haier had applied for 9738 patents

Product mix with differential innovation

RefrigeratorSide by Side; no frost Combi Freezer Super freezing chest-freezer, not melted within 100 hours after switching off, new wine-cooler Home A/C: Full series of healthy and energy saving DC Inverter Commercial A/CMulti Inverter system Asian Washing MachineDual Drive European Washing machine Shower rinse range; night wash models Water heatersafe-care water heater Microwave ovenIntelligent steam Microwave oven Dishwasher: Health, energy saving, A++ Mobile Phone: Quick In new fashion series Notebook 1.3M high definition photographer, protecting the eyes

Green Strategy
2010 Energy-saving China Contribution Prize. 60,000 green products installed in the Venues for the Beijing 2008 Olympic games

Rural strategy
Rural China has 2,812 counties, 35,000 towns and 640,000 villages Haier has the biggest market share in Chinas Home Appliances for Rural Families program introduced in 2009, because it has built up a huge network in rural China

High Pricing Strategy

Improve the product quality as well as customer service and to diversify its product range while not lowering the price despite the pressures Customer satisfaction and reputation are more important than sales volume High quality & high pricing strategy can strength its customer loyalty and attract more potential customers without a loss in profits

Glocal strategy
Glocal strategy the company should think globally but act locally Prices, products, and promotions to meet the unique needs of each areas targeted customers considering their spending power, product references and shopping patterns

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Sales and Net profit

MARKET SHARE

MARKET SHARE
Sales breakdown by region