: Taking a Chinese

Company Global in
2011
SEM Section-B Group-8
Amit Kumar Singh
Ayush Srivastava
Saurabh Kumar Singh
Prabhat Sengar

Founder and CEO: Zhang Ruimin

25 years of leadership

Founded in Qingdao
Port city in Shandong
Province

Leading
Manufacturer

No.1 white-goods manufacturer in China,

leading refrigerator manufacturer worldwide
.
From RMB 1 billion in 1984,
51 million profits in 1992

136 Billion RMB

Revenue in 2010

240 subsidiaries,
61 trading companies,
24 manufacturing plants,
10 R&D centers,
21 industrial parks in 2010

Wide
International
Coverage

1984

In 1984, there were approximately 300 refrigerator factories in china

Most of them produced poor quality products

Establishment

Highquality
products
Technology licensing

agreement with German

Zhang saw this and focused on high quality products and service
Licensing agreement with German manufacturer Liebherr which had technical expertise in
refrigerator
JV with Japans Mitsubishi and Italys Merloni

refrigerator maker.

Had a high focus on becoming a first class brand through large

scale operations

In 1992, After becoming Chinas leading refrigerator manufacturer,

Haier Group started to look into other similar businesses

Acquired companies with poor management and implemented new

management With same focus on quality and service

1990

Imported production line.

Foresight
of service

Service
Center

Kept track of tens of

thousands of

1991

customers

Went public in 1993, at the Shanghai stock

Exchange.

In 1997, Started to target the rural areas of china

At the same time, they started to diversify their

product line.

In 2004, became the number one appliance

company in China with 30% market share

Attention to
consumer needs
&
markettwo
trend
Acquired
local

Product
Differentiation

companies to enter
air-conditioner &
freezer market

Early
1990s
Multinational
brand
First exported to UK
and Germany and
then to France and
Italy

Venture into
Overseas Markets

Strategies in foreign market

Short
term
Product
Mix

Operation
Operation
&
Brand
Model
Localizati
on

Limited products to start

Niche market to focus in
US
Product differentiation
OEM
(original equipment
manufacturer)
Learning from the locals
Staff with the locals
Hire local employees
Mergers & acquisitions

Long
Term
More products
launched
Normal products
Longer product
line
Product
differentiation
Brand Image building

Better market intelligence

Place its own people in key positions
overseas
Building own design center

Goals and Philosophy

First Difficult then Easy
Without domestic market business is rootless, without
international market business is weak
Three Thirds Goal

1/3 made and sold at home

1/3 made at home and sold abroad
1/3 made and sold abroad

Three Internationalizations

Internationalization of management system: Build up employee loyalty

Internationalization of service: Build up customer loyalty
Internationalization of brand: Build up international competence

Developing
Abroad
Globalisation of Design
Set up 18 design centers worldwide to consolidate resources from developed
countries

Globalisation of Manufacturing
Set up 10 industrial parks and 22 plants overseas enabling prompt action to satisfy
local user needs for quality

Globalisation of Marketing
5,000 overseas retail outlets and over 10,000 service centers all over the world

Outcome of developing abroad &

deepening at home
No. 1 white-goods manufacturer in China

A 75% increase in Haiers 2010 profits was 8 times its 9% increase in

revenues

28

Rank on BusinessWeeks 2010 list of the most innovative firms

Success Drivers
Quality
Focus on building quality and reliability: Giving the firm's production workers sledgehammers to smash faulty
items
Found better than German brand Liebherr in blind test

Branding
Unlike most competitors made branded and not just OEM products
Higher priced but better products

Customer
Best after-sales service: Chu Xiaomings Case
House calls, warranty coverage, temporary replacements

Reach
Covered entire China: Tough for foreign competitors to imitate
A service network of 5500 independent contractors, one for each sales outlet

Market Position
Market leader in China
Manufacturers needed to produce 1 million refrigerators to be profitable in china

Success Drivers
Organisational
Structure

Flatter Hierarchy
ZZJYTs (Independent operating units): Company wide divisions which were independent profit centers

Technology Transfers
Licensing and JV with Liebherr, Sanyo, Mitsubishi, Merloni

Diversification
Full line of appliances
Growth despite price wars

Innovation
Innovation
Stronger potato washer, tiny washer etc.
Solved difficulty of reaching bottom in deep box freezer

Responsiveness
Responsiveness
Two approaches to win over customers: Speed and differentiation
Products based on modules and subsystems on basic platforms to satisfy assessed needs and identified demands

Supply
Supply Chain
Chain
Pioneered JIT in china: Customer focus and lesser costs
Cross product distribution: When transferring a fridge can transfer a microwave too

Some Recent Updates

o Since 1984 Haier Group has gone through four strategic stages
o In December 2012 Haier Group announced entrance into the fifth development
stage: Networking Strategy Stage
o Priority of Haier in the future is producing products to meet the personalized
demands of the consumers

Networking Strategy

From Haiers perspective, the way of implementing the development strategy

of a networked enterprise is embodied in three respects:
Border-free enterprise
Manager-free management
Scale-free supply chain

Haier has set about eliminating internal and external borders

The company has started to invert its management structure and eliminate
middle management to instead use the Internet to structure self-managing
teams around customers
The aim is to create 'zero distance' with customers and to become a flatter,
more agile company that responds more rapidly to consumer demand
Opening up the company to intensive collaboration, not just with customers,
but also with innovators around the world including with competitors
Reinvention as a truly Internet-based company, open to the world, the
company now uses Internet access to customize every product it sells in China,
whether bought in a store or online
Start with 30 million responses on social media platforms to the question: "What do

you want in air conditioning?

Pay attention to the more than 670,000 people who take part in the online

Haier in China

Acquired GE in a $5.6 billion deal, making it the largest purchase by a

Chinese company in the electronics sector
China's white goods sales increased just 2 percent year-on-year in
2015, compared to 8 percent growth in 2012 and 2013
The economic slowdown in China contributed to a 6 percent decline in
global revenue for Haier in 2015 from the 2014 level
Nevertheless, the firm reported a 20 percent increase in profits 201415

Haier in India

Began operations in 2004 and started manufacturing in India by acquiring a 40acre plant near Pune in 2007
The company is looking to treble its revenue to Rs 6,500 crore by 2020 on the
back on increased manufacturing and increased penetration of consumer goods
Haiers greatest challenge in India was channels
Emerging markets require greater reliance on locals
Hired former Whirlpool India executive to head Haier India
INR 1700 Cr revenue in FY16
The company is looking to treble its revenue to Rs 6,500 crore by 2020 on the
back on increased manufacturing and increased penetration of consumer goods
Haier India is double the capacity of their manufacturing plant near Pune with
an investment of INR 490 crore
Company was only making refrigerators at the plant. Now it will also make
washing machines, ACs, TV panels and water heaters

Thank You