Haier: Taking a Chinese company global
Group- 9
Mrityunjay Basak, 17/094
Pragati Srivastava, 17/104
Pratyasha Burman Ray, 17/106
Sweta Satpathy , 17/118
Venkatesh Balakrishnan, 17/124
HAIERS DEVELOPMENT
BRAND-BUILDING
PHASE(1984-1991)
Focused primarily on
refrigerators,
technology licensing
agreement for higher
quality products
Accumulated
business and
management
experience
Able to command
premium on products
because of
commitment to
quality, distinguished
itself from other
Chinese companies
DIVERSIFICATION
DEVELOPMENT
PHASE(1991-1998)
Diversifies into
freezer, air conditioner,
washing m/c, TVs and
Telecommunication
equipment
Total number of
acquisitions made=15
Internally, restructured
operations, Groupwide Development
divisions
GLOBALISATION
PHASE(1998-2005)
Entered foreign
markets through
licensing, JVs and
exports
Established wholly
owned subsidiariesHaier America, Haier
India and Haier
Europe
GLOBAL BRAND
BUILDING
PHASE(2005present)
Introduction of a full
line of products under
the Haier brand name
Moving from niche
markets and breaking
into the major leagues
International strategy
phase to global brand
strategy phase
National Advantage
Political Stable, Pro-Industry, Against Labour
Formal Institutions, Regulatory- Weak IPR, Limited control over MNCs
Informal Institutions, Culture Frugality, growing consumerism
Factors of Production
Has cheap, easily controllable labour
Easy to acquire land with government support, except
in urban areas like Shanghai
Rich in natural resources
Capital is available from both local, and especially
foreign sources
Since 1980s, there is rich infrastructure, but still tough
to reach beyond coasts
Demand Conditions
Large domestic demand- but easily accessed
areas are saturated and rural areas are tough
to profit from
Nature of demand is stable and growing
CHINA
Firm Strategy, Structure and Rivalry
Chinese firms generally focus on low cost
Mass production is preferred
Low emphasis on quality
Orientation is towards export
Related and Supporting Industries
There are vast industrial complexes
There is huge support from raw material and capital
goods industries
Logistics are tough due to differential laws, vast
distances and disparate terrain
International Business Level
Strategy
Haier has leveraged all components of
national advantage
It has used cheap and timid labour,
preferential access to resources well
However, unlike most Chinese firms it has not
used a low cost strategy and sold at a
premium
It has used its local experience with its huge
network and logistics
The image of Chinese products as cheap is
hurting Haier national disadvantage
The limitations imposed on MNCs in China is
helping it maintain control
Need for Global Integration
International Corporate Level
Strategy
Global
Strategy
Transnational
Strategy
Multidomestic
Strategy
Need for Local Responsiveness
Haiers Choice Of Strategy
MULTIDOMESTIC
-Strategic and operational decisions are decentralised
to SBUs(Haier America, Haier Europe and Haier India)
-Each unit tailors products to the local markets eg:
refrigerators for students, beer dispenser for the American
markets(paying attention to the local clienteles needs)
-Staffing consists of the locals itself to increase local
responsiveness and understand the local market
-Competition restricted by geographical boundaries
-Need for global integration and standardisation is low.
This is because Haier wanted to be seen as the brand of the
country in which it wanted to operate. This shall have two
advantages
1)Being perceived as an indigenous firm
would enable higher sales(a local Haier brand)
2)It will help Haier get rid of the low cost and
quality image associated with Chinese products
Entry Into International
Markets
EXPORTING:
-First started with exporting refrigerators to Germany
-Ventured as a contract manufacturer for multinational brandsexporting to the UK, France and Italy
-Continued OEM production till 1999, after which focus shifted to
selling Haier branded products
JOINT VENTURES
-Used JVs with Mitsubishi to set up air-conditioner plant for export to
Japan
-JV with Indonesian firm and European firms for manufacturing
washing m/c s and refrigerators, later several more JVs for
developing countries
-Haier America formed as a JV with Welbilt appliances, Haier Europe
and Haier India also established
-Engaged in JVS primarily to share risks and resources and acquire
localised knowledge
ENTRY INTO INTERNATIONAL
MARKETS
HAIER Home market
High
Contende
r
92
Dodger
After 92
Pr. to Globalization in
industry
Abroad
Defender
84-91
Extende
r
After
92
Low
Competitive assets
High
COMPETITIVE STRATEGY
Haier concentrated on 1)Product differentiation and 2) Response speed
COST
BROAD
MARKET
COST
LEADERSH
IP
NARROW
MARKET
FOCUSED
COST
LEADERS
HIP
DISTINCTIVENE
SS
DIFFERE
NTIATIO
N
FOCUSED
DIFFERENTI
TATION
Initially,
Haier avoided direct
competition with US giants like
Whirlpool and GE and concentrated on
niche
markets,
manufacturing
differentiated products, however, the
future goal of Haier is to build brand
equity and create a full line of
differentiated and innovative offerings
The main aim of Haier is to build a
brand
throughproduct
differentiation,
mainly
through
personalisation(design centres) and
service differentiation
Haiers high quality & high
pricing strategy can strength its
customer loyalty and attract more
CHALLENGES
Recognition of Haier as a brand
Moving beyond specific markets to
more mainstream products
Maintaining its superior position at
home in response to competition from
multinationals
Securing human resources to maintain
rapid growth and manage foreign
markets
SOLUTIONS
1)RECOGNITION OF HAIER AS A BRAND
-use differentiation as a means of gaining recognition
1)Product differentiation
2)Service differentiation
-glocal strategy i.e. think globally and act locally. e corporate
level shall give global strategic direction while local units focus
on the individual consumer differences across global markets.
-adapt their prices, products, and promotions to meet the
unique needs of each areas targeted customers
-Follow localisation
-design the products to meet local consumers needs
-manufacture the products in the local market
-market the products in local ways
SOLUTIONS
2) MOVING BEYOND SPECIFIC MARKETS TO MORE
MAINSTREAM PRODUCTS
- It is the strong backing for Haier to enter the international markets as
Haier owns more than 26.2% of the total Chinese home appliance market
-3 third goals: Sales of goods in 3 categories
1/3rd from goods produced n sold in china
1/3rd from produced in china and sold overseas
1/3rd from produced n sold in overseas
- Enter the most stress and most critical markets to occupy a commanding
height, and then can easily access other market. enter the foreign most stress
and most critical markets to occupy a commanding height, and then can easily
access other market
-Market development should precede production plants. Exports products to
this
market at first, and then have a joint research and development with a local
Company, and finally a build design center, manufacturing and trade
company there
-Choose the most excellent and well-established product to enter the market
first(refrigerators and Air conditioners for Haier). Thus the leading product will
be used to build a strong brand reputation
SOLUTIONS
MAINTAINING ITS SUPERIOR POSITION AT
HOME
-Maintain in depth knowledge of the Chinese
consumer
-Maintain high quality and good service with the
customer
-Continue to pursue innovation to satisfy domestic
demands
-Strengthen distribution and logistics channels
-Transform itself from a manufacturer to a service
provider which means putting more emphasis on
marketing, logistics, and responding faster to the
market needs by offering personalized services to
THANK YOU
