Haier - Taking a Chinese Company Global in 2011

To: Zhang Ruimin

From: Shrey Mehta

Date: 24th January 2018

Re: Strategies for International Expansion

Dear Zhang,

I believe the decision to customize washing machines in China was a master stroke. Incorporating the ability to wash vegetables and having a separate compartment for pickling kimchee helped Haier be the pioneers in an untapped market. Going forward, Haier should incorporate this strategy globally in other areas such as India and the European markets.

Haier has been struggling in India due to the presence of many small retailers and lack of an organized market. If Haier were to follow a similar strategy in India as they did in China, it would help differentiate them from their competitors, which would play a big role in winning market share from established players, such as Samsung and Whirlpool. Differentiation is important. For example, in 2010, Godrej launched a portable refrigerator weighing 8 kilograms and retailing at $69. It was energy-efficient, consuming half the energy compared to a normal refrigerator and targeted at rural customers. This builds on the Indian values of frugality and efficiency, which is equally valued in the urban market as well.

During my time in Mumbai, the largest city in India, I noticed people’s preferences for energy efficient home appliances, especially refrigerators and air conditioners, which would consume relatively large amounts of electricity. Customers were willing to pay a considerable premium for appliances that were more energy efficient than their competitors, as the cost savings in the electricity bills would compensate for the extra premium in a few months. Products that were innovative grabbed more eyeballs than their relatively basic counterparts, which in a way resulted in free publicity.

Considering these factors, Haier should launch refrigerators and washing machines that are innovative and aimed specifically at the Indian customer, in addition to being energy efficient. The case mentions the difficulty in finding ‘top 10’ chain stores in India. One way to fix this problem is to sell products to wholesalers, taking away Haier’s responsibility of finding the retailers. While this may result in Haier getting a lesser price for themselves, it will give the company the coverage and brand awareness it desperately needs at the moment. Once the company starts doing well and the brand establishes itself, Haier can cut the wholesaler and deal with retailers themselves to get a better price.