Haier Globalization Case Study

This version: 16 January 2006

This version: 16 January 2006

ACCELERATED INTERNATIONALIZATION BY EMERGING MULTINATIONALS: THE CASE OF WHITE GOODS

ACCELERATED INTERNATIONALIZATION BY EMERGING MULTINATIONALS: THE CASE OF WHITE GOODS

Andrea Goldstein OECD Development Centre 2, rue André Pascal 75775 Paris Cedex 16 France Tel. [phone] Email [e-mail] Federico Bonaglia OECD Development Centre 2, rue André Pascal 75775 Paris Cedex 16 France Tel. [phone] Email [e-mail] John Mathews Macquarie Graduate School of Management Sydney NSW 2109 Australia Tel. [phone] Email [e-mail] Submitted for a focused issue of the Journal of International Business Studies entitled “International Expansion of Emerging Market Businesses”.

We thank Alice Amsden, Lucia Piscitello, and seminar participants at MIT and Centro D’Agliano for useful comments on earlier drafts. The usual caveats apply. In particular, the opinions expressed are the authors’ ones and do not reflect the views of the OECD, the OECD Development Centre and their members. Submitted for a focused issue of the Journal of International Business Studies entitled “International Expansion of Emerging Market Businesses”.

1

2

Abstract

1. Introduction
The emergence of a “second wave” of developing-country multinational enterprises (MNEs) in a variety of industries is one of the characterizing features of globalization in the most recent years. These new

Outward foreign direct investment (OFDI) enables both small and large MNEs to
MNEs did not delay their internationalization until they were large, as did most of their predecessors, and often become global as a result of direct firm-to-firm contracting. Many grow large as they internationalize; conversely, they internationalize in order to grow large. This is a striking pattern which, if confirmed, indicates that enterprises from developing countries have pursued distinctive approaches

References: Andersen, P.H., Blenker, P. and Christensen, P.R. (1997) ‘Generic routes to subcontractors’ internationalization’, in I. Bjorkman and M. Forsgren (eds.) The Nature of the International Firm, Copenhagen Business School Press: Copenhagen. Bartlett, C.A. and Ghoshal, S. (2000), ‘Going Global Lessons From Late Movers’, Harvard Business Review, 78(2): 133-142. Berrondo Avalos, L. (1999) ‘On Teams and Industry Competitiveness’, interview with H. Lane, M. Brehm Brechu and David T. A. Wesley, Academy of Management Executive, 13(3). Chen, J.C.H., Lin, B. Li, L. and Chen, P.S. (2004), ‘Logistics management in China: A case study of Haier’, Human Systems Management, 23(1), 15-27. Deng, P. (2004), ‘Outward investment by Chinese MNCs: Motivations and implications’, Business Horizons, 47(3): 8-16. Enberker, P. and Ergin V. (2003), ‘Building a New Corporate Image at Arçelik’, case, Boğaziçi University. Encarnation, D.J. (ed.) (1999), Japanese Multinationals in Asia. Regional Operations in Comparative Perspective, Oxford UP: Oxford. Fischer, W.A., Li, L. and Ge, J. (2000), ‘Building market chains at Haier’, Teaching Note IMD-3-0939-T. Gereffi, G. and Sturgeon T.J. (2004), ‘Globalization, Employment, and Economic Development: A Briefing Paper’, MIT IPC Working Paper, No. 04-006. Gereffi, G., Humphrey J. and Sturgeon T. (2005), ‘The Governance of Global Value Chains’, Review of International Political Economy, 12(1): 78-104. Huchet, J-F. (1999), ‘Concentration et émergence des groupes dans l’industrie chinoise’, Perspectives chinoises, 52. Hunger, J.D. (2003), ‘U.S. Major Home Appliance Industry in 2002: Competition Becomes Global’, in T. Wheelen and J. Hunger (eds.), Strategic Management and Business Policy, Prentice Hall. Johanson, J. and Vahlne, J.-E. 1977. The internationalization process of the firm: A model of knowledge development and increasing foreign market commitment, Journal of International Business Studies, 8(1): 23-32. Kumar, K. and McLeod, M.G. (eds) 1981. Multinationals from Developing Countries, Lexington Books: Lexington, MA. Lall, S. (1983), The New Multinationals: The Spread of Third World Enterprises, Wiley: Chichester. Lee, B.-H. (2001), FDI from Developing Countries: A Vector for Trade and Development, OECD Development Centre: Paris. Liu, H. and Li, K. (2002), ‘Strategic implications of emerging Chinese Multinationals: The Haier case study’, European Management Journal, 20 (6): 699-706. Liu, X., Buck, T. and Shu, C. (2005), ‘Chinese economic development, the next stage: Outward FDI?’, International Business Review, 14: 97-115. Mathews, J.A. (2002), Dragon Multinationals: A New Model of Global Growth, Oxford University Press: New York. Mathews, J.A. (2006), ‘Dragon multinationals: New players in 21st century globalization’, Asia Pacific Journal of Management, 23: 5-27. Mathews, J.A. and Cho, D.S. (2000), Tiger Technology: The Creation of a Semiconductor Industry in East Asia, Cambridge University Press: Cambridge. Memedovic, O. (2005), Global Value Chains and Production Networks, UNIDO: Vienna. Nichols, T. and Cam S. (eds.) (2005), Labour in a Global World: Case Studies from the White Goods Industry in Africa, South America, East Asia and Europe, Palgrave Macmillan: London. Nichols, T. and Sugur N. (2004), Global Management, Local Labour: Turkish Workers and Modern Industry. Nichols, T., Sugur, N. and Demir, E. (2002), ‘Globalised management and local labour: the case of the white-goods industry in Turkey’, Industrial Relations Journal, 33(1): 68-85. Nolan, P., Sutherland, D. and Zhang, J. (2002), ‘The challenge of the global business revolution’, Contributions to Political Economy, 21: 91-110. OECD (1997), Globalisation and Small and Medium Enterprises, OECD: Paris. Ozkan, S. (2003), ‘More global than ever, as local as always: internationalization and shopfloor transformation at Oyak-Renault and Tofas-FIAT in Turkey’, mimeo, University of Wisconsin-Madison, Industrial Relations Research Institute. Paba, S. (1986), ‘‘Brand-naming’ as an Entry Strategy in the White Goods Industry’, Cambridge Journal of Economics, 10(4): 305-18. Paine, L.S., Harold F. Hogan Jr., and Benqing Gui, J. (1999), ‘Haier Hefei Electronics Co. (A)’, Harvard Business School Case, No. 9-300-070. Palepu, K., Khanna, T. and Vargas, I. (2005), ‘Haier: Taking a Chinese Company Global’, Harvard Business School Case, No. 2-706-401. Root, R. and Quelch, J. (1997), ‘Koç Holding: Arçelik White Goods’, Harvard Business School Case, No.9-598-033. Sachwald, F. (ed.) (2001), Going Multinational: The Korean Experience of Direct Investment, Routledge. Shrader, R.C., Oviatt, B.M. and McDougall, P.P. (2001), ‘How new ventures exploit tradeoffs among international risk factors: Lessons for the accelerated internationalization of the 21st century’, Academy of Management Journal, 43(6): 1227-1247. Sobrero, M. (1994), ‘The Co-Evolution of Technology and Structures: The European Major Home Appliance Industry, 1945-1992’, WP Sloan School. Sobrero, M. and Roberts, E.B. (2002), ‘Strategic Management of Supplier-manufacturer Relations in New Product Development’, Research Policy, 31(1):159-182. Sori, E. (2005), Merloni. Da Fabriano al mondo, EGEA, Milan. Sturgeon, T.J. (2002), ‘Modular Production Networks: A New American Model of Industrial Organization’, Industrial and Corporate Change, 11(3): 451-496. Teece, D. (2000), ‘Firm Capabilities and Economic Development: Implications for Newly Industrializing Economies’, in L. Kim and R.R. Nelson (eds.), Technology, Learning, and Innovation. Experiences of Newly Industrializing Countries, Cambridge University Press: Cambridge and New York. UNCTAD (2005a), World Investment Report. Geneva: United Nations Conference on Trade and Development. 33 34 UNCTAD (2005b), ‘Turkish outward FDI,’ mimeo, Paper prepared for Experts Meeting, Geneva. December 2005. UNCTAD (2005c) ‘Chinese outward FDI,’ mimeo Paper prepared for Experts meeting, Geneva, December 2005. UNCTAD 2005d. Case study on outward FDI by Mexican enterprises, Paper prepared for Experts meeting, Geneva, Dec 2005. Vietorisz, T. (1996), ‘Transcultural Foundations of Success in Joint Ventures: The BestPractice Case of MABE-GE’, Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies, Working Paper, No. 96-12. Wells, L. (1983), Third World Multinationals: The Role of Foreign Direct Investment from Developing Countries, MIT Press: Cambridge, MA. Wu, H.-L. and Chen, C.-H. (2001), ‘An assessment of outward FDI from China’s transitional economy’, Europe-Asia Studies, 53(8): 1235-1254. Zhang, R. (2005), ‘Haier, Already a Success, Aims Higher’, interview with Michael Useem and Marshall W. Meyer, http://knowledge2.wharton.com.cn//index.cfm?fa=viewArticle&Articleid=1111. 35