A. EXECUTIVE SUMMARY
1. This case analysis studies the globalization projects of one of the most successful companies in China, Haier, and a small appliance company. The case analysis focuses on Haier’s plans in the U.S. market to establish itself as a major brand. The case also gives information about the competition in the U.S. consumer appliance market and its structure, and the strategies adopted by Haier to overcome the obstacles.
The problems faced by Haier in the high-end market in the U.S. consumer appliance industry and future prospects of the company in the US market are also discussed. The case also provides information on the Chinese consumer appliances market (ICMR , 2003).
Zhang Ruimin, CEO of the Haier Group, announced in November 2004 that the main goal of the company was to continuously increase the volume of products sold in the United States, and to modify the company’s products to meet American demand. Although Haier had a good reputation in “white goods”, whereas “brown goods” the brand was still relatively new in the United States and the company faced a number of long-term decisions in order to build an American presence. Some of the decisions included (1) how to integrate itself with the locality and build brand recognition, (2) how to create the products that could meet American needs, (3) how to achieve the cost control needed to maintain its price advantage, and (4) how to continuously improve its services to build the trust of local customers. The main problem to be resolved for Haier was how to differentiate itself from General Electric, Whirlpool, Maytag, and Electrolux in white goods and from Sony, Panasonic, Philips, and LG in brown goods and thus achieve a winning competitive advantage in the U.S. market (Lu, Mockler, & Gartenfeld, 2010).
2. A solution to the problems would be to create customers: find a way to make their products better than their competition in order to have the competitive advantage. Find a way to lower costs on productions while focusing on maintaining its price advantage in the market.
Another solution is to continue to improve upon their customer service and build trust amongst its American customers. Haier’s could create a better marketing network than its competition but offering internet services to its customers something their customers were not currently doing.
B. THE SITUATION
The Haier Group started as a small appliance company, in Qingdao, Shandong Province China, in 1984. When the company originally started in 1984, it was on the verge of a financial breakdown. The company was a government-owned enterprise with imported refrigerator production technology from Germany. It subsequently engaged in technical innovation, scientific management, capital operations, mergers and acquisitions, and international expansion. Haier specializes in technology research, manufacturing industry, trading and financial services. By 2004, it had completed its long march from a small enterprise burdened with a debit of 1.47 billion RMB ($177,536) to its current position as the number one domestic electrical appliance producer in China (Lu, Mockler, & Gartenfeld, 2010). The Haier group currently has 70,000 employees around the globe. From the start, Haier wanted to be the number one white appliance dealer in China. Although business was good for Haier, the Chinese market was not all that great to them. Haier eventually took their company global throughout the US, Europe, Asia, and Japan.
In 1989, the company changed its name to Qindao Refrigerator Co. Ltd., and it was restructured with funds raised from banks and government agencies. The company again changed its name to Qindao Haier Group Co. During the mid 1990’s, the company went through several mergers and acquisitions. Within those acquisitions, Haier acquired seven companies and began exporting its goods and services to...