Haier’s Strategy for Global Success
Haier
Background
In 1920s China, a small factory opened in Qingdao, Shandong province, to manufacture refrigerators. Though the Qingdao factory survived for more than sixty years, by the early 1980s, poor management and heavy debt nearly forced it to declare bankruptcy. At the same time, the opening of the Chinese economy to the international market saw an influx of foreign companies seeking investment opportunities. One such company was Liebherr Haushaltergäte (Liebherr), a leading German appliance maker. Liebherr saw a burgeoning market for appliances, and proposed a partnership with the Qingdao factory, in which Liebherr’s technology and manufacturing know-how would be sold to the factory. In 1984, Qingdao Refrigerator Co. Ltd. was born out of this partnership. However, technology alone was not enough to rescue the company. That same year, CEO Zhang Ruimin, then the assistant manager of Qingdao city’s household appliance division, arrived, bringing with him management techniques adopted from Japan and the West, with a focus on building a strong brand name founded on quality products.
Mr. Ruimin’s techniques were successful, and by 1991 the company had turned a considerable profit and diversified into other household appliances such as freezers, microwaves and air conditioners. Recognizing that the company’s name was no longer synonymous with its products and had a poor reputation from its prior history, Mr. Ruimin decided to take a new name. The company adopted an abbreviation of the phonetic spelling of Liebherr – written as Lieberhaier – to become the Haier Group Corporation (Haier). This name change marked the birth of a new brand name and the revitalization of the company’s image. Capitalizing on its new management and brand, Haier transformed itself into the second largest home appliance company in the world, and the number one such company in China. By 2010, Haier designed, manufactured and marketed over 15,000 products in 96 categories sold in over 100
Background
In 1920s China, a small factory opened in Qingdao, Shandong province, to manufacture refrigerators. Though the Qingdao factory survived for more than sixty years, by the early 1980s, poor management and heavy debt nearly forced it to declare bankruptcy. At the same time, the opening of the Chinese economy to the international market saw an influx of foreign companies seeking investment opportunities. One such company was Liebherr Haushaltergäte (Liebherr), a leading German appliance maker. Liebherr saw a burgeoning market for appliances, and proposed a partnership with the Qingdao factory, in which Liebherr’s technology and manufacturing know-how would be sold to the factory. In 1984, Qingdao Refrigerator Co. Ltd. was born out of this partnership. However, technology alone was not enough to rescue the company. That same year, CEO Zhang Ruimin, then the assistant manager of Qingdao city’s household appliance division, arrived, bringing with him management techniques adopted from Japan and the West, with a focus on building a strong brand name founded on quality products.
Mr. Ruimin’s techniques were successful, and by 1991 the company had turned a considerable profit and diversified into other household appliances such as freezers, microwaves and air conditioners. Recognizing that the company’s name was no longer synonymous with its products and had a poor reputation from its prior history, Mr. Ruimin decided to take a new name. The company adopted an abbreviation of the phonetic spelling of Liebherr – written as Lieberhaier – to become the Haier Group Corporation (Haier). This name change marked the birth of a new brand name and the revitalization of the company’s image. Capitalizing on its new management and brand, Haier transformed itself into the second largest home appliance company in the world, and the number one such company in China. By 2010, Haier designed, manufactured and marketed over 15,000 products in 96 categories sold in over 100