Haier - The Chinese Global Competitor

            
 
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Case Details:

Case Code : BSTR181
Case Length : 19 Pages
Period : 2001-2005
Organization : Haier
Pub Date : 2005
Teaching Note : Available
Countries : China
Themes :Globalization | Turnaround
Industry : Consumer Electronics

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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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EXCERPTS

Turning Around Sick Companies - The Haier Way

Haier's success was built upon a strategy that comprised three elements. The company extended this recipe of success to the bankrupt companies that it acquired in order to turn them around. The first element of the strategy was paying close attention to customer needs and preferences. 

An instance of this was the observation made by Haier in 1989 pertaining to the sales of one of its refrigerator models. The model sold well in Beijing but showed disappointing sales in Shanghai. Haier realized through research that the people in Shanghai did not have the space for large refrigerators, living as they did in congested houses. Recognizing the Shanghai residents' need for smaller refrigerators, Haier designed models specifically for that market. This sensitivity to customer preferences allowed Haier to shore up its sales in the city. Another example of Haier's receptiveness to customer preferences was seen in rural China. Haier's employees discovered that people in the rural areas used washing machines for cleaning vegetables, apart from laundering clothes...

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The Globalization Efforts

Haier began exploring the global markets in the mid-1990s but the company's activities were largely restricted to exports. In 1996, Haier entered the Indonesian market through a joint venture (JV) route. This was the company's first JV outside China.

In 1997, Haier entered Malaysia and the Philippines through the greenfield mode of investment. These efforts in the Southeast Asian region focused on building volume and gaining international experience. Haier's first major effort to globalize was in 1999, when it made a Greenfield investment worth $30 million in Camden, South Carolina, US. Haier's decision came at a time when the US home appliance industry was on a downturn and most appliance manufacturers in the US were moving their manufacturing bases to China, Mexico, and other low-cost countries. Analysts were, therefore, surprised when Haier decided to set up its own manufacturing facilities in the US...

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