REV: APRIL 21,2O1r
PANKAJ GHEMAWAT TI.IOMAS M- HOUT
Haier's f,r.S. Refrigerator Strategy
The obiectiue of most Chinese enterprises is to export products and earn foreign currency, exploing easier markets first like Southeast Asi1. . . Our purpose is to establish a branil reputation Ay , Tirit penitrating dfficult markets such as the United States. . . . All success relies on one thing in werseas iark*s---ereatingi
Iocalized U.S. brand instead of an imported Chinese brand. We see an-opportunity to compete against established, slotn moving companies thue by being more customer-focused than they ire. To win wei those customers ute haae twa approaches-speed and differentiation.
the original comPany was a collectively owned enterprise in the same northeast coastal municipaliiy that produced the popular-Tsingtao beer. Haier became a conglomerate electrical home appliance and consumer electronic products company. Its core businesJ was white goods-refrigerators and freezers-, ranges, and microwarru orru.s, bishwashers, and washing machinls and dryer!-and room air conditioners. Later, it diversified into mobile telephones, televiJion receivers, persbnal computers, and even financial services and pharmaceuticals. Overall it produced 96 different product lines comprising 15,100 different product specifications. It employed over 35,000 people worldwide.
Haier Groupl -Zhang The Haier Group was one of China's most accomplished and important companies, with estimated global sales n 2W7 of $16 billion. Founded in 1tS4 as the Qingdio Refrigerator Companp
Haier was one of the wotld's severr biggest home appliance makers-along with LG (Goldstar) Group and Matsushita headquartered in Aiia; Whirlpoot ana GE in America] and Electrolux and Bosch-Siemens in Europe. Haier was widely regarded as China's "Most Admired,, large domestic company and was rated as China's strongest domestic brand in a 2005 Financial Times siwey. It sold appliances in 162 countries and operated several overseas factories, easily the most of any Chinese
Haier held roughly a quarter of China's domestic appliance market, and its three closest competitors-Kelon Rongsheng, Xinfei, and Meiling-held anbther half. Haier Group's revenues had increased by a factor of six over the previous 10 years, in part from acquisitions, including 1s bankrupt smaller Chinese appliance companies, bui mostly from China's rapid domestic market growth and even higher growth in exports and overseas production. Haier entered the U.S' market with branded products in 1995, and 10 years later had an estimated in sales Its signature U.S- product line was compact refrigerators, where it !!ere._ had the leading position with a 21% share of market. No foreign brand hid ever pEnetrated the U.S. $250-$300 million
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Haier's U.S. Ref rigerator Strategy
white goods market so successfully, even if compact refrigerators was a category that US appliance leaders with the possible exception of GE largely ignored until recently. Haier also...