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Going Global: Haier Appliances

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52 views1 page

Going Global: Haier Appliances

Uploaded by

Naomi Thornley
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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mini-case 1-429-065

March 29, 2010

Going Global (F): Haier Appliances

Haier is a good company and somebody we’ve got to pay a lot of attention to.

PY
David Swift, Executive VP, Whirlpool North America

In 2009, Haier, one of China’s largest appliance manufacturers, produced over 96 categories of consumer
goods, including refrigerators, air conditioners, washing machines and microwave ovens. The company was
recognized as China’s most respected company by Financial Times and the Far Eastern Economic Review. The
CO
company had revenues of $17 billion in 2008,1 with international sales of $4.5 billion. Haier dominated
China’s home appliances sector; in 2008, Haier benefitted from the government subsidization of home
appliances for rural households, selling over 1.2 million units of home appliances domestically.2 The company
had passed Whirlpool to become the world’s largest fridge-maker in terms of sales3.

China’s accession to the WTO in 2001 opened the domestic market to international competition and led
to plunging returns in Haier’s domestic white goods business. Increased domestic competition, coupled
T
with political pressures (China’s political elite believed that the emergence of Chinese multinationals was
important for national pride), combined to drive Haier into global markets. Haier established a manufacturing
NO

facility in a small South Carolina town in 2000. The aim was to respond more quickly to U.S. retailers, make
Haier a household name in the U.S., and save on shipping costs. Haier exported to 160 countries and was
the global market share leader with a 6.3% share.

Haier traditionally competed based on its low price strategy. For example, the company introduced a
refrigerator without an agitator for larger loads and gentler washing, which was 40% cheaper than a similar
Whirlpool model.4 The company claimed 50% of the U.S. wine chiller and mini-fridge market. U.S. sales
totaled $750 million in 2005.5
DO

Haier also moved to reward creativity among its employees by granting engineers wide autonomy.
Some analysts, however, suggested that this has led to over-engineering and over-diversification. For
example, Haier produced a washing machine that was also designed to clean sweet potatoes. In addition to
offering such obscure product features in its core product line, Haier had entered the computer, cell phone,
interior design, and pharmaceutical markets.

Published by GlobaLens, a division of the William Davidson Institute at the University of Michigan.
© 2010 William Davidson Institute. This mini-case was written by Research Manager Kelly Janiga and Professor Robert E.
Kennedy, the Tom Lantos Professor of Business Administration at the University of Michigan.

Unauthorized reproduction and distribution is an infringement of copyright. Please contact us for permissions: Permissions@GlobaLens.com or 734-615-9553.

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