Haier Case Badm 449

Haier: Global Strategy

Kiko Lin

BADM 449 Section O

Haier is the largest home appliance maker in China and also one of the top in the world. It was ranked as the number-one company by the Asian Wall Street Journal in 2004, ranked third in white goods revenues, and was the second-largest refrigerator manufacturer. As can be seen from those financial statistics, Haier is taking the lead but with some declines in the domestic competition. In this environment, Haier is betting its future on global sales. They are trying to increase their expansions and global profits and become a multinational brand. Could Haier be able to achieve this goal, expanding into foreign markets, without losing its dominant position in China? This question is crucial to Haier’s survival as its profit margin dropped from 8.9% to 2.4%, ROE and ROA decreased from 15.7% and 11% to 6.7% and 5.1% respectively, from 2000 to 2004. In addition, the company was estimated to be 30% overcapacity in televisions, washing machines, refrigerators, and other major appliances.

Key factors analysis is important for Haier’s case because the company may incorrectly rely too much on its international market, hoping to shift pressure from domestic competition. The fact is that China is Haier’s largest market and it has already built up and promoted a positive brand image in the market and has been one of the major players for years. In addition, there are still a lot of chances and opportunities waiting for the Haier to beat its competitors, both local and foreign.

Key factors that tell us whether it is possible for Haier to secure its position in China and at the same time expand its dominance globally can be found by looking at its strategies for the Chinese market and the foreign market. In the Chinese market, Haier maintained a good reputation mainly because of its superior product quality and after-sale service. It also put a lot of efforts in studying and researching customer’s needs, and customizes products in accordance with its customer’s using habits. For example, Haier engineer modified the washer design to accommodate complain from a customer in rural Sichuan province. It therefore labeled its washing machines as “Mainly for washing clothes, sweet potatoes and peanuts” in that area, which successfully grabs itself more customers and boosts up sales. In addition, according to Haier’s financial statement, we can see that the company has high investments in R&D section, about 5-7% of revenue goes into this section. Such high market responsiveness and innovation makes Haier be ahead of its competitors in the market. Regarding its service, Haier has a service network with independent contractors at sales outlet. The company provides service to its customers that is equivalent or higher than Chinese government regulations, which is regarded as the company’s greatest competitive advantages.