海尔国际化策略

海尔国际化策略（英文）

Introduction of Haier Group

Haier Group is China's ambassador to appliance stores worldwide. Once named Qingdao Refrigerator Plant, the company climbed from the verge of bankruptcy to establish itself as a world-renowned brand. China's largest appliance company manufactures refrigerators and freezers, air conditioners, dishwashers, microwaves, televisions, vacuums, mobile phones, computers, and more under more than 90 product categories. Haier Group exports goods and sells them to more than 100 countries. Since pulling itself up by its bootstraps, Haier has been busy inking joint ventures to branch out into other markets. Haier Group was named one of the world's 100 most recognizable brands in a global name-brand list edited by the World Brand Laboratory. The only Chinese brand on the list, the firm was ranked 86th after such household names as Google, Wal-Mart, and Microsoft, which were the top three.

Success of Hair Group

? The brand strategy

The company set out to establish itself as the country's leading brand, focusing upon reliability and product quality. Diversification would also allow Haier to spread out its risk among various product lines. So, in 1995 Haier bought out its chief rival in Qingdao, Red Star Electric Appliance Factory. In 1997, the company moved into television manufacturing with the acquisition of Huangshan Electronics Group. By the end of the 1990s, Haier was the most recognized brand in the country with products ranging from mobile phones to computers; it had also captured a dominant market share in its core white goods division

? International expansion

Its place in the domestic market secure, Haier moved onto the international stage with the goal of building a global brand name. Haier's move into the U.S. market was cautious at first; it focused upon two niche markets in compact refrigerators and electric wine cellars. Both markets were underdeveloped, but Haier believed that they both had growth potential and were being largely neglected. The company's sales figures soon proved this belief correct, allowing Haier to firmly establish itself in its US niche.

With this success, Haier looked to make further inroads in the North American market by moving into the full-sized refrigerator category. This would bring it into direct competition with established American giants: GE, Whirlpool, Frigidaire, and Maytag. As part of its strategy, Haier decided to build a production facility in the United States at Camden, South Carolina, opened in 2000.

Haier continued its expansion into other international markets as well. Production facilities were constructed in Pakistan in 2002 and Jordan in 2003, greatly strengthening its position in the_ middle East market. In Africa, Haier has plants in five countries.The company also purchased a factory in Italy, as part of its continued drive into the European market. Haier has been successful in placing its products in most major European retail chains, either under its own brand or under OEM agreements with foreign partners.

As of 2008, Haier has surpassed rival Whirlpool as the world's top refrigerator producer Its market

share reached 6.3% globally.[5]

Summary of Haier Strategy from start in 1984 to 2004[1]

Domestic growth

Positioning of Haier from the beginning onwards:

- High quality product

- Localised products, adapted to customer needs

- Good service

Since Haier doesn’t want to compete on price, but on the quality of its product, it will have to build a brand name of quality. With these extra values (quality, products adapted to customer needs, and good service) it can demand a premium price.

Inside the company, to realize this, Haier has realized:

- have a strong relation between knowing what the market wants (customer needs) and translating this into new products (or just small adaptations with large impact)

- good management

- smart distribution method (one distribution network for all its products) àfaster delivery and lower costs

Haier has first built its brand in China, only for refrigerators. Once it had established a strong brand in refrigerators, it used the brand name also for other products, starting with air conditioners, other white products and later also black good products.

As for the service part, Haier has a repair service, that comes to your house on short notice, either repairs the refrigerator directly, or gives you a replacement refrigerator, and repairs it offline. The cost of repair service are reasonable.

Since Haier originally didn’t h ave the technology to produce high quality refrigerators, it also took an OEM role in order to first learn and later use the experience to develop fridges themselves.

In 2001 with the admission of China to the WTO competition from international companies coming to China increased. Haier realized it should get expertise on level of foreign companies in order to survive. International expansion was the way to get this expertise.

International expansion

Haier decided that the key in its overseas expansion was not to go to the emerging markets first, but to the developed countries (markets). Their strategy was the following:

- challenge the company to meet the highest quality standards (= developed countries) - choose a niche in which that is not served by the big competitors in order to create a reasonable opportunity (in the US market, this was the small refrigerator market for dormitory

students)

- be successful in this niche and thus create a reputation

- use this reputation to

n get into the big retailers (WalMart etc in the US) where Haier could also sell their other products.

n get better entry (with a good reputation and high brand name) to the undeveloped countries

To be successful overseas, Haier again applied its strategy of localization. For the overseas ventures they typically hired a local experienced person from a big competitor, who would set up the country business. In this way they would buy in local market knowledge, as well as local thinking, a key success factor. When a overseas office is successful, Haier finds it important to place their own (Chinese) people in those locations as well, in order to get better market intelligence.

Evaluation of strategy w.r.t. concepts learnt in class

- Don’t focus on price (war) but on value of product. Haier has decided and consistently kept to this strategy to stay out of the commodities, but to differentiate itself, in order to accept higher margins.

- Product is more than just the product, customer needs go beyond: in the case of Haier, most white goods are quite similar (they almost tend to become common goods) so more value is created for the customer by adding a good (repair) service.

- Know your customer needs, and apply these in the product. Haier is very successful at adaptation of products to local needs. This creates value (and differentiation) and thus a higher price can be asked.

- What is happening with your product? Haier finds it very important to know what is happening with their products, how they are used, and to feedback this information in the design and promotion of their products. (e.g. the example that in some areas people used the washing machine also to clean sweet potatoes. In the marketing in this region, the washing machine was consequently also advertised for this usage). It has institutionalized this by a system where salesmen are encouraged (incentivized) to contact a manager with their insights, who is then bringing these insights to the R&D group. This is a very strong asset.

- Keep a relation with your customer (both information and power value): Haier keeps a huge database with all its customers for repairs. Customers can call a Haier number in case there is a defect, and Haier will send local repairmain.

- Know what is happening in your market (both information and power value): positioning of local Chinese Haier employees in overseas locations in order to make sure that the information is well gathered.

- Grow your brand: the focus of Haier in niche market of students in dormitories might work out very positively in long term. These students will one day be owners of houses and in need of a refrigerator. They already know the company Haier then, and positive experiences as a student may translate into sales in a later phase of their life as well. (Product is Communication as well!)

- Good repair service at reasonable price: this is not only value for the customer, but also is a way of promotion of the product. Or in other words, an alternative form of advertising. And often customers that have been well helped with a broken product, are more satisfied with the company (total of product + service) that those of which the product didn’t break at all!

- Choose your fight: Although Haier choose to go for the developed (challenging) market, it chose its fight very well: a niche market (dorm fridges) that was not very well served, and didn’t have any of the major US competitors. In this way it could build up experience and sales, without getting into a fight with the big and powerful companies who would defeat them right away on their main markets.

- Tao of Marketing – look at product through the eyes of the customers and their needs. E.g. the alternative usage of sweet potatoes and the good service (including replacement fridge!), as well as the product differentiation based on local or specific group needs. And most important: the system to flow customer information to R&D.

- Outside marketing is reflected in inside: by being a quality brand, and putting high emphasis on quality (as the founder has done), as well as good management, this attracts also good people, that will further enhance the quality of the brand.

III SWOT Analysis on the Haier:

1. Strength:

a) Good reputation of Brand: As the leading China brand, Haier brand is quite valuable to the customers. Obviously this advantages can make customer decision making easier, reduce the risks, gain the respect and create the preferred reality. Meanwhile the good quality of Haier products and services make the Haier brand rich and famous. Some customers purchased the Haier products for the past good experiences on the logistic and installation.

b) The market leader position in Household Appliances: In the market segment of refrigerator and wash machine ( usually called as white household appliance) Haier has dominant market share and can have huge impact on the market. And in the other product portfolio such as television, telecommunication, computer and finance, Haier is growing faster and become an important market players in China.

c) Diversified business including of household appliances, computer, mobile phone, healthcare and finance:: With the support of local government and huge retained earning, Haier

entered the many business sector to expand business and lower the risk. Meanwhile the brand value of Haire was increased during this investment process.

d) Innovation as the key competence: Haire’s innovation is focused in not only product R&D, but also the process reengineering and enterprise culture. Haire defined each employee as the SKU (strategic key unit) to maximize the production capacity.

e) Strong marketing and sales team and network: The success of Haire black household appliance can be contr ibuted to Haire’s strong sales and market team. And Haire has strong dealership network around the country. The wide spread dealership network gave the Haire advantage to collect the real time information from market and give the feedback spontaneously.

f) Wide located customer service centre: Haire’s service centres are located into every county and town in the China (some of them belong to freelance). This gave customers huge confidences and the service benchmark in the domestic household appliance industry.

g) Call centre: Haire has huge customer database from the previous purchaser and potential purchasers. So the Haire call centre can do the compliant handling and presales consulting at the same time. In this way the call centre has shifted from a cost centre to the revenue centre.

h) Quality control system on product and service: Haire’s QTM system is quite famous. So many customers can link haire brand to safety and good service.

2. Weakness:

a) Strong in tactics and weak in strategy: Haire is very strong in the marketing tactics. Its previous success can prove it. But its strategy is not so clear or well known. If Haire targeted to be

a respectable MNC, it should stress on the strategy from now on.

b) Di fferent positioning in different product portfolio: Haire’s refrigerator and wash machine is positioned as the high end product in China. But its television, mobile phone and computer is positioned as low end or_ middle end. It is comprehensible that Haire is too weak to compete with the giants in these industries such as HP and Nokia. But different positions can confuse the customers and destroy the brand value.

c) No experiences on diversified business model, esp. on pharmaceutical and finance business: Haire has no experiences on these special industries. And different position and promotion can confuse the customers and arouse complaints.

d) Lack international manager:Haire is entering the North American and other market. It is unrealistic to train the domestic employees for the overseas market in short time. If Haire hired many American manager, it is questionable whether so many new recruited manager can merge into t he Haire’s culture. And the shortage of qualified international managers can lead to difficult culture management in different countries.

3. Opportunities:

a) China has more impact on world economy in the financial crisis: it gave Haire good opportunities to enter the international market and merge the other countries companies. And it also provides an opportunities to purchase a mature brands in developed countries as sub-brand. b) Haier brand product can be Counter-cyclical: The product of Haire telecommunication, computer and television is very cost-advantages and can have good sales among the budgeted purchasers. Even the white household appliances which are expensive in China are not as expensive as the foreign brand. So the financial crisis can be an opportunity for Haire.

c) Consume upgrading in China: With the home income increase and the development of

real estate, more China family purchase new house or apartment which bring the upgrade consumption of the household appliance.

d) More consumption in the countryside and west part of China:With the support of Central Government policies, the consumption upgrade is obvious in countryside and west part of China. The government will sponsor the sales of household appliance in the countryside with annual government budget.

4. Threat:

a) International rivalries: More MNCs will have the face-to-face competition with Haire. These MNCs have more marketing experiences and good brand. So Haire must convince the end users the unique value from Haire.

b) Rivalries in other industries: When Haire enters the pharmaceutical and banking industry, Haire will face the different competitors. And the Haire brand in these new areas is quite weak.

c) The price war will erode the profit and damage the brand of Haire. More competitors will cut prices as the survival. Haire is facing the dilemma whether to follow this strategy. The cut price has negative effect on the Haire brand. But maintaining price means losing the market share.

d) Large PR activities and advertisement means huge investment and cost: As the licensed sponsor of Olympic Game, Haire spend a lot in the Public Relationship activities. And this sponsorship will conquer part of market budget of the daily marketing activities.

Recommendations

In oversea market Haier as a Chinese brand it is extremely difficult to overturn the “bad quality, low technology” perceptions. Although Haier did lots of effort to make people think it was local brand by made in U.S., people still have emotional rejection on the company they’ve never heard of. Through acquisition Haier could buy many local brands with history and also create the

sub-brand to get rid of the bad Chinese image. Using different brand to focus on different segments set up ad campaign to promote the new local brand. Make everyone understand they are still buying U.S. brand appliance with better quality and service. Haier had done well on niche market especially university students, Haier should set up CRM system, send students product to experience through their different life cycle needs, convince them Haier have different product line which have same quality and service as what they have in university. Following new demographic research, the generation who use computer as daily routine will become the major decision maker for home appliance purchase. Product combine white goods with information technology become important, Haier is very competitive on its technology innovation, it should get the chance to produce “intelligent” refrigerator which might allow you to check food expiration date, healthy recipe and short message. By increasing its budget on product R&D, Haier also need put money on its marketing R&D, encourage innovation on marketing such as why not paint the white appliance into pink. Haier needs not only smart engineering talent to build the fascinating product but also need marketing genius to add more value on simple appliance. Because of corporate structure complexity, Haier need to empower enough to its brand manager on both budget and human resource. Make brand managers having enough resource and space to process their marketing tests. Reset the award standard for sales and marketing department not by sales per capita but by profit contributed.

On the distribution channel, Haier could establish relationship with local real estate developer or home rental service agent, make sub brand under Haier become the major brand house owner or tenant could found on the house show room, information leaflet and even dis_count coupons. To manage its retail chains like Wal-Mart and Best Buy, it could give sales promotion like once bought one Haier appliance, the second piece appliance will be offered in discounted. These sales promotion attracted customers which make retail could not afford the risk of losing Haier. Such tricks only use to balance the power between Haier and increasingly powerful retailers.

In the matured the market which other brand already take major market share, Haier should re-think its value and only emphasis its value to the customer. Not only give the customer reason to buy Haier, but also give the customer no reason to not buy Haier. Haier could talk more on the value. What’s the refrigerator’s value to the customer and how do Haier apply these values to the customer. For example if refrigerator’s value is providing food to customer continuously, customer don’t want refrigerator be empty when they open it. For this value proposition, Haie r could even arrange food deliver to follow customer’s daily purchasing pattern by forming partnership with local food supplier. Or the refrigerator should look like a piece of art, if this is the value to the customer, they should use oil painting or different skin texture even fur, if that can work.

In domestic market, Haier’s competitive advantage like distribution, good quality and service will finally be caught up by other international competitors. The only way to sustain the success and survive was s till the same tricks which used millions of times, take customer’s perspective and give them the value they need. Haier could build some appliances that price is cheap but look expensive, usage is really simple but could fit the needs of different family size. There is still emerging market for some far away rural area in china. For these place quality and service is extremely important but because of the operation cost international company usually skip these areas. But by fast pace in urbanization trend, these market would become mature market, the emotional relationship between the customer and Haier could last for a very long time and word by mouth effect could also save expensive ad campaign on TV.

Fast response was the most powerful weapon Haier had, with the expensive information infrastructure Haier build it could share the data efficiently internally. But the more complex the information systems Haier build the more difficult for Haier to share data with its distributors who don’t want to invest mone y to upgrade their information system. The only solution Haier could do is helping the channel to equip the information sharing platform, but not give to distributor for free, Haier could rent the facilities to channel members for free if they could reach some sales target and agree on some exclusive sales issues or other clauses to protect the other brand’s channel invasions. By efficient sharing data on the same platform, Haier get to know the new market trend and customers’ feedback which are important i nformation for company to take second move especially for Haier test its new marketing approach in small locations. Also these functions build channel’s dependency on Haier, Haier better help channel integrating information system which only compatible to Haier’s platform. Haier established its absolute power through these effort and it can punish the distributor by withdraw the platform which push Haier to the godfather position in its distribution channel, although to reach this step Haier still have long road to go through and huge money to invest, but when Haier look back on its concrete throne, the money may worth.

For brand image in China, Haier is famous domestic brand comparing to its brand awareness overseas. Haier should focus on protecting its brand from intellectual piracy, many brand imitated product with terrible quality and service do hurt the customers feeling. Even they finally find out that is the counterfeit product, but emotional relationship could be built which is difficult to remove. More over domestic news could be easily spread out through the internet or other media which set blocks to Haier’s international expansion.

For domestic market, sub brand strategy should also be used for segment differentiating purpose. Also sub brand could be used for different product line, Haier now also approach on small digital appliance such as laptop, cell phone. The digital product brand image is small and personalized which make conflict with white goods as refrigerators which is bulky and used by everyone in the family. Sub brand could be the best solution to break such connections, Haier’s sub brand digital product could be very tiny and cute with multiple colors beside boring white.

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[1] Based on HBS Case: Haier: Taking a Chinese Company Global