Haier's Marketing Strategies in India

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Case Details:

Case Code : MKTG112
Case Length : 22 Pages
Period : 2002 - 2005
Pub Date : 2005
Teaching Note :Not Available
Organization : Haier India
Industry : Consumer Durables
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"There are already some Chinese companies, such as Haier and Lenovo that are well on their way to becoming global brands."¹

- Shelly Lazarus, Chairman and CEO, Oglivy & Mather Worldwide in 2005.²

"We have stuck to our premium pricing strategy. We are not interested in the numbers game and are more bothered about how consumers perceive us. We have not compromised on quality despite pressures in the marketplace. Our brand message is 'Inspired Living.' We also did a very simple brand communication -- that Haier is a global player. We are not ashamed of the fact that we are born in China. In fact, our strength lies in the fact that we have conquered the world."³

- TK Banerjee, President and CEO, Haier India in 2004.

"The Chinese brands, especially, are adopting the Korean way of capturing the Indian market; they would like to be present in the whole spectrum of the market and brands like Haier have the strength to take on the Korean brands. They would look at gaining market share in the first three years of their presence and later look at profits."⁴

- - BA Srinivasa, Director, Vivek Limited⁵ in 2004.

Introduction

In the decade spanning the end of the 20th century and the beginning of the 21^st, several Chinese companies operating across many industries made inroads into the Indian market, influencing the purchasing decisions of Indian consumers.

From the low end Indian markets in the early 1990s, the Chinese invasion moved to the fast growing consumer durables segment. Haier Appliances (India) Private Limited (Haier) was one of the companies which entered the Indian market in 1999, along October 1999, to form Hotline-Haier Appliances Limited with Haier holding an equity stake of 30%. It planned to subsequently increase the share to 49%.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Haier planned to introduce a wide range of products including washing machines, multi-split air conditioners with one base and four outlets and refrigerators ranging from 40-liter mini-bars to gigantic 780-liter multi-doors. The company claimed that it would provide 'First world technology at third world prices.' Haier bought land in Greater Noida⁶ for the venture.

However, with Haier wanting to focus on imports and the Hotline group not agreeing to this, the two companies parted ways even before the operations could take off.

In 2003, Haier re-entered the Indian markets - this time on its own -- by establishing a 100% subsidiary, Haier Appliances India. The initial investment of Rs. 2 billion was made by the parent company Haier Electrical Appliances Corporation Limited.

The company entered into strategic alliances with domestic players like Voltas and BPL for manufacturing products according to its specifications.

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1] "I Never Said that Haier and Lenovo are not Brands," An exclusive dialogue with Shelly Lazarus, www.people.com.cn, February 28, 2005.

2] Ogilvy & Mather Worldwide is the agency founded by British-born advertising legend David Ogilvy in 1948. By 2005, it had 10 offices in the US and 359 offices worldwide in over 90 countries.

3] "A Season of Achievements, Dialogue of the Week with TK Banerjee," www.exchange4media.com, January 05, 2005.

4] Kaushik Neha, "A Question of Durability," The Hindu Business Line, October 21, 2004.

5] Chennai based Vivek Limited is Rs. 3 billion consumer durable retailer group in India. The group has 50 outlets spread over 250,000 sq ft of retail space.

6] Near New Delhi, part of National Capital Region.