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HAIER

Haier Group is a Chinese appliance manufacturer that originated in 1984. It has become the largest home appliance maker in China and the second largest refrigerator manufacturer globally. To expand internationally, Haier pursued a strategy of first entering developed markets through joint ventures. It focused on niche products before expanding product lines. Haier aimed to derive equal portions of revenue from China, exports from China, and overseas production and sales. This strategy helped Haier become a leading multinational brand while maintaining its position in China.

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0% found this document useful (0 votes)
498 views27 pages

HAIER

Haier Group is a Chinese appliance manufacturer that originated in 1984. It has become the largest home appliance maker in China and the second largest refrigerator manufacturer globally. To expand internationally, Haier pursued a strategy of first entering developed markets through joint ventures. It focused on niche products before expanding product lines. Haier aimed to derive equal portions of revenue from China, exports from China, and overseas production and sales. This strategy helped Haier become a leading multinational brand while maintaining its position in China.

Uploaded by

Anshul Anand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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: Taking a Chinese Company

Global
Lecturer: Johannes M Pennigns
Team Members:

Morteza Javadinia
Tor Halvorsrud
Aliasghar Bahoo

Torodi
Nathanael
Bruchez

USI

Global Market Strategies

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

Between 1989 and 1996, reduction from 100 to 20


refrigerators producers -> more competitive market.

China entered the WTO in 2001 -> new competitors,


multinationals. Difficult start for them, for several reasons.

That said, the multinationals reached 31% of refrigerators


market share in 2002, local companies being losing market
share rapidly.

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

Haier Expansion Strategy Phases


at a glance

Porter Whats Strategy


Framework
Haier Activities System:

Understanding of Markets

Outstanding Product quality

Sourcing & Distribution network


in place

Development of Global brand

JIT delivery (reducing inventory


cycle)

Haier Competitive Advantages


High product quality
Differentiation in products
and services (Thanks to high
investment in R&D)
Single brand management
Quickly response to shifts in market

Yip Globalization drivers


Competitive Drivers
Difficult first, Easy later (more
competitors)
Exports
Cost
Drive
r

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

Product Life Cycle

Development

Introduction

Growth

Time

Maturity

Decline

BCG Matrix

Recommendations:

In global market: Continue Brand Building Initiatives


An individualized brand
The product quality, adaptability and flexibility
Customer focused firm
In Domestic Market: Continuous Innovation
A home company
Increase quality

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

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