Haier was successful in China because their CEO Zhang had a commitment to quality and brand image at time in China where cheap, mass production was the going trend. The Haier brand won awards for quality and commanded a 15% premium compared to other brands even during times of over supply and price wars. Haier discovered that consumer would be willing to pay a premium for a quality product that will last, as opposed to a cheaper product that won’t. After building a strong brand image in the booming refrigerator industry, Zhang decided to let Haier’s reputation speak for other products through diversification. Zhang and the Haier group expanded into the air conditioner and freezer industries buy purchasing two struggling companies. After being told they would not be able to get a loan for their new headquarters, Zhang made the decision to offer 43.7% of its company up in an IPO, a risky move that would have destroyed Haier if it failed. Zhang was willing to take risks to move Haier forward, and it paid off. With a focus on quality, Haier’s touch was gold to any industry they moved into, including following divisions of washing machines, kitchen and bath, tech equipment, and direct affiliates including communication and biological engineering. By 2004, Haier was the number one appliance company in China after successfully overtaking domestic rivals and defending its ground against international companies trying to export to China. As Haier became more diverse, the competition became increasingly tough because they were now running into specialist companies in each industry, and were worried if they would be able to compete. But their commitment to quality and ethical management helped them to defeat their biggest competitors who were not so ethical, in the case of Kelon, or as well run as Haier. Haier’s market advantages are that they can charge a premium and still lead industries in sales due to brand name, and that cannot be imitated. They also...
Please join StudyMode to read the full document