HAIER
HAIER
Global
Lecturer: Johannes M Pennigns
Team Members:
Morteza Javadinia
Tor Halvorsrud
Aliasghar Bahoo
Torodi
Nathanael
Bruchez
USI
Agenda
Case Overview
Haier Strategy in Chinese Market
Haiers International Expansion Approaches
6 Frameworks / Tools (Porter, Yip, Dunning,
BCG, PLC, Integration/Responsiveness Grids)
Discussion
Case Overview
Haier Group is a multinational company specializing in the
production of home appliances and consumer electronics.
Originated in 1984, When founder and CEO Zhang Ruimin took
over failing refrigerator factory in Quindao, China.
Case Overview
Zhang Ruimin took over in 1984, when it was approximately 300 refrigerator factories
in china.
Most of them produced poor quality products.
Zhang saw this, and therefore went to the other direction : Focusing on high quality
products and service.
Went into a JV with among others German manufacturer Liebherr which had technical
expertize in refrigerators.
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 manag. With same focus on quality and service.
Went public in 1993, at the Shanghai stock Exchange.
1997, Started to target the rural areas of china.
At the same time, they started to diversify their product line.
2004, became the number one appliance company in China.
At the same time, experiencing stronger and stronger competition from domestic and
Case Overview
By 2004, the Haier Group was the largest home appliance
maker, holding approx.. 30% of the white goods market (third
globally)
They were the second-largest refrigerator manufacturer in the
world, and had a growing presence in the black goods market.
At this stage, with domestic market success, they were
considering going abroad and become a multinational brand.
But could they do this without loosing their position in china?
Strategy Chinese
Market
Strategy Chinese
Market
Haiers competitive advantages in the
Chinese market
Haier is known in China for its high quality products ; It has
therefore a very good brand reputation.
Closer to chinese customers (design, needs) in comparison with
multinationals.
High investment in R&D (5-7% of revenues) and thus new
products every year, very innovative.
High market responsiveness, focusing on meeting customers
needs ; 42 distribution centers in China operating as sales
Strategy Chinese
Market
Haiers competitive advantages in the
Chinese
market
High level
of services, with better after-sales service than competitors ;
According to the customers, one of the biggest advantages of Haier.
Very good distribution channels/network, with Haier Logistics ;
Advantage over multinationals, since establishing a logistics network in
China is complicated.
Staff cheaper than multinational competitors.
That said -> these strengths in distribution and service networks, and
the superior knowledge of the domestic market may not last forever!
They are provisory advantages, since multinationals have already had
Company Goals
Haier Three Third Goals:
1/3 Revenue from goods produced and sold in China
1/3 Revenue from goods produced in China and sold
overseas
1/3 Revenue from goods produced and sold overseas
Strategy Global
Market
Expo
rt
Entry
Strategy for
International
Markets
Contract
ual
Investme
nt
Strategy Global
Market
Entry Mode: Joint Venture with multinational
brands (1990s)
In 1995 Haier become first company which engaged
in FDI
In 1997 lunched first European manufacturer based
in Belgrade through JV.
Until 1999 Haier continued OEM production for
multinational companies
After 1999 start selling under Haier Brand
Strategy Global
Market
Three Main Global Expansion Strategies:
1 - Non-traditional expansion Focus on difficult market first
We chose the developed countries first because the
requirements of both customers and retailers are very tough
and not easy to meet
High Prestige
Being well-known in developed markets can enhance
market penetration ability in emerging markets
Competition in developed markets can guarantee the
success in emerging markets
Strategy Global
Market
Three Main Global Expansion Strategies:
2 Begin with niche products
When we entered the U.S market, we found that nobody
was making competitive refrigerators for students or for
offices.
Starting with mini-fridge , compact refrigerators
After we were successful in the niche products, then we
started to introduce regular products to the U.S market.
Strategy Global
Market
Strategy Global
Market
Strategy Global
Market
The America:
1994 JV with Welbilt
1999 Haier America
Employing American staff
Establishing industrial park in South Carolina (To build brand
reputation , being quality oriented)
Focus on niche which enabled Haier to avoid competition with GE,
Whirlpool
and ..
Haier Europe:
1990 JV with some brands in UK, Germany and France
2000 HQ in Varese Italy
Employing former sales executives of Italys Merloni as a local
experienced staff
Europe and America were similar in terms of size and degree of
developments
Strategy Global
Market
Haier India:
1999 JV with Indian appliance firm (Fedder Lloye Corp.)
Establishing refrigerator and R&D Center
2004 alliance with Whirlpool and Voltas to produce refrigerator and
Air Conditioner
Main Challenge in India Hard to find top chain store
In United States you can easily find the top ten chain stores
but in India you cannot find them
Understanding of Markets
Government Drivers
Entering to WTO
Exchange Currency
Market Drivers
Growing demand for high quality
Eclectic Paradigm
Dunning
Internalization (Value chain optimization)
Location (Entry to developed markets)
Ownership (Change from JVs to owned FDI)
Haier
Transnatio
nal
Sales
Development
Introduction
Growth
Time
Maturity
Decline
BCG Matrix
Recommendations:
Discussion
Would Haier diversify their products by having different brand
names, or should the continue with one big brand?
Would you use JVs as entry mode to global markets?
Did they make the right strategy by entering to developed
market rather than easy markets?
Thanks for
your
Attention