Born out of Qingdao Refrigerator Factory in 1984. the Haier ( marked “high-er” ) Group is China’s largest place contraption maker ( Wang and Ong 2007 ) . and the world’s 4th largest white goods maker ( Chen 2008 ) .
Haier was ranked first among China’s Top 10 Global Brands by the Financial Times in 2005 ( Haier’s company facts 2008 ) . It was besides graded 86th among the world’s 500 Most Influential Trade names by World Brand Lab in 2006 and is the lone Chinese trade name to be among the top 100 for three back-to-back old ages. ( Haier’s company facts 2008 ) .
Its Chairman and CEO. Zhang Ruimin who was appointed in 1984 as the manager has been credited for drawing Haier out of bankruptcy to go a planetary corporation ( Zhang Ruimin 2006 ) with one-year turnover of USD16. 2 billion in 2006 ( Haier’s company facts 2008 ) . Zhang was ranked 26th among World’s Most Respected Business Leaderships by the Financial Times in 2005 and 6th among Asia’s 25 Most Powerful Peoples in Business by Fortune magazine in 2004Haier’s key markets are China. Europe. USA. Japan ( Beebe et al 2006 ) and India ( Mumbai 2007 ) . It has over 240 subordinates and 87 trading companies. design centres and industrial Parkss and over 50. 000 employees worldwide ( Haier’s company facts 2008 ) .
HAIER’S PATH TO SUCCESSIn 1984. CEO Zhang Ruimin took over the about belly-up icebox mill ( Lin 2005. 1 ) . Today. Haier is known as a planetary trade name. How did it go such as a success ( Lin 2005. 1 ) ? Strong leading. client service. merchandise quality. invention. velocity. pricing. placement. localization of function of design. production and gross revenues. latecomer advantages and market entry scheme are among the top 10 factors for Haier’s success.
Strong LeadershipZhang Ruimin ( Zhang ) . Chairman and CEO of Haier is described as down-to-earth and a magnetic leader who has worked his manner up ( Chinaview Peoples: Zhang Ruimin 2003 ) . Zhang demonstrated out-of-the-box thought and risk-taking when he combined traditional Chinese doctrine with modern Western direction manner ( Chinaview Peoples: Zhang Ruimin 2003 )
and avoided following norms of the industry ( Wu 2003 ) .
“From the OEC direction theoretical account of “Never Leave Today’s Work Till Tomorrow” and “Daily Settlement Leads to Daily Improvement” to the market concatenation management” . Zhang’s alone direction thoughts have won congratulationss and is much of a treatment subject among direction specializers and top universities around the universe ( Chinaview Peoples: Zhang Ruimin 2003 ) .
Zhang’s aspiration for Haier to go a planetary trade name began during the early phase he took on the mill ( Liu and Li 2002. 701 ) With this aspiration. Zhang set clear aims and focal points in constructing the trade name. diversifying merchandise lines. traveling international and now constructing a planetary trade name name in different stages ( Haier’s development scheme 2008 ) .
In 2006. for the 4th back-to-back twelvemonth ( Haier debut 2008 ) . Haier was ranked foremost for overall leading among Chinese companies in the Wall Street Journal Asia’s one-year study of Asia’s 200 Most Admired Companies ( Areddy 2006 ) .
Customer ServiceHaier aims to supply first-class client service to derive an advantage over Western challengers who can be more self-satisfied ( Business in China: Double Star Group and Haier Group win without the advisers 2003. 14 ) . To accomplish this. Haier developed a customer-focused civilization by cut downing the distance between employees and clients necessitating all employees to sell merchandises. listen to clients and understand rivals’ merchandises on a regular footing ( Denison 2001. 222 ) .
Haier besides set up more than 11. 000 client service Centres in 160 states ( Yi and Ye 2003. 204 ) hiring and preparation locals to supply after-sale service to local clients ( Li and Chen 2007 ) . Haier’s dedication to client service has won the “Five Star Diamond Award” presented by the American Quality and Service Society ( Haier 1996 ) .
Product QualityZhang knows that the key to survival and future development is to set up and go on to better merchandise quality. To drive the importance of quality. Zhang ordered responsible workers to destruct 76 faulty iceboxs ( Xu et al 2006. 30-31 ) . As a consequence. Haier received the first of all time National Gold Medal Award in China’s icebox industry ( Haier 1988 ) and ranked foremost in China’s Top 15 Trade names by Forbes ( Kim 2003 ) .
InnovationTo better its engineering cognition and make advanced merchandises. Haier has been increasing investing in research and development ( R & A ; D ) ( Duysters et al 2008. 16 ) set uping an extended planetary R & A ; D and design web ( DiPaolo and Li 2007 ) . Its R & A ; D investing is significantly higher than the market mean – RMB6. 7 billion in 2006. equivalent to 6. 2 per centum of its gross revenues ( DiPaolo and Li 2007 ) .
Haier besides formed confederations with taking companies such as Liebherr. Philips. Mitsubishi and Toshiba to get fabrication and technological know-hows. spread out merchandise lines every bit good as enter foreign markets ( Duysters et al 2008. 11-12 ) .
The footing of China’s advantage is low-priced labor ( Zeng and Williamson 2007. 27 ) . Haier is take advantage of the cost advantage to supply high engineering. pick and customised and forte merchandises at low monetary value ( Zeng and Williamson 2007. 55 ) . Using cost invention. Haier gained trade name consciousness in the US by doing compact iceboxs and vino hair-raisers to the mass market ( Jain. Malik and Cruickshank 2006. 21 ) .
SpeedHaier understands that the velocity in conveying merchandises to clients to fulfill their demands before challengers is of import to win them over ( Wu 2003 ) . Since come ining US markets. Haier has gained one-third ( Lin 2005. 2 ) of market portion in the compact iceboxs for residence halls and offices and created the market for stand-alone vino ice chests ( Haley and Haley 2006. 46 ) .
PricingChinese merchandises are frequently viewed as low quality ( Xin and Yeung 2007 ) . Aware of the hapless image of Chinese merchandises. Haier monetary value its merchandises at a five per cent premium over its Korean challengers. LG and Samsung ( Chinese consumer lasting houses oculus a bigger piece of action 2008 ) so that its merchandises will be perceived as “top-of-the-line” ( Gupta 2006 ) .
PositioningHaier places itself as a premium trade name and aims to develop Haier as a reliable. high-technology planetary leader ( Gupta 2003 ) . Haier is non aiming at different categories of consumers alternatively “it wants consumers to experience that Haier is closest to fulfilling their needs” ( Haier’s Aim: “Develop Our Brand Overseas” 2003 ) .
Localization of function of Design. Production and SalesHaier set up local design. production and gross revenues installations. and industrial Parkss in US. Europe. Asia Pacific and Middle East and employs chiefly local people ( Haier Press Room 2008 ) . With localized operations. Haier is able to react more rapidly to altering customers’ demands ( Young and Nie 1996. 12 ) and to be accepted by the local community ( Haier Press Room 2008 ) .
Latecomer AdvantagesInstead of making a new concern theoretical account from abrasion ( Duysters et al 2008. 8 ) . Haier. as a latecomer. has the advantage of comparing and modifying its concern theoretical accounts against those of established challengers placing niches. for illustration compact iceboxs in the US ( Wu 2003 ) that larger challengers have overlooked ( Duysters et al 2008. 8 ) or do non hold the flexibleness to follow ( Bartlett and Ghoshal 2000. 139 ) .
Market Entry StrategyHaier started exporting to tough markets such as United States ( US ) and Germany as Zhang ( Wu 2003 ) believes that once it gained trade name acknowledgment in these markets. it will be easier for Haier to come in neighboring developing states ( Liu and Li 2002. 702-703 ) .
When come ining a new market. Haier introduced one merchandise at a clip. It foremost introduced iceboxs in the US market. Once the merchandise becomes successful. Haier began presenting rinsing machines lines and other merchandises capitalizing on the trade name consciousness ( Liu and Li 2002. 703 ) .
CHALLENGES AHEADChinese makers including Haier now face increasing challenges posed by “decrease in orders from abroad markets” ( Global recession hits China 2008 ) . deficiency of resources. negative Chinese trade name image. farther border squeezing and lifting costs.
Lack of R & A ; D InfrastructureAlthough Haier increased investing in R & A ; D. it can take old ages to catch up on the criterion of the research in the West ( Isaksen 2006 ) . One large obstruction that marketing research houses face in China is the deficiency of substructure to transport out studies ( Isaksen 2006 ) .
Lack of Qualified Human ResourcesManagers with experience pull offing an international operation are scarce ( Beebe et al 2006. 7 ) . This deficit can negatively act upon Haier’s planetary enlargement ( Liu and Li 2002. 703 ) . For illustration. directors from the Chinese and American operations find it hard to hold productive treatments due to linguistic communication barrier ( Liu and Li 2002. 703 ) .
Global Brand Awareness and ImageChinese companies including Haier deficiency planetary trade name consciousness in developed markets in the US and Europe ( Xin and Yeung 2007. 3 ) and suffer negative trade name image of inexpensive. hapless quality and undependable ( Swystun. Burt and Ly 2005. 3 ) . This negative image is farther weakened with the recent milk dirt ( Made in China 2008: The Challenge for Chinese Brands Traveling Global 2008 ) . Changing Western consumers’ perceptual experience requires old ages of selling attempts ( Liu and Li 2002. 704 ) .
Dominant Bargaining Power of BuyersHaier distributes its merchandises with retail giants like Wal-Mart who have big purchasing power ( Rosenbloom and Diane 1993. 78 ) . These retail giants prosecute mass selling schemes that emphasize low monetary values and low borders ( Rosenbloom and Diane 1993. 80 ) . With the planetary recession of 2008. retail merchants are likely to foster squeezing Haier’s borders ( Bhaskaran 2008. 2 ) .
Rising CostsThe increasing cost of labor. natural stuffs particularly steel ( Industry analysts forecast monetary value rise for white goods 2008 ) . oil every bit good as the strengthening of the kwai has greatly affected Haier’s borders ( Roberts 2008 ) .
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