MARKETING MANAGEMENT

Case 3: Haier Brand

Haier is the world’s 4th largest white goods manufacturer and oneof China’s Top 100 electronics and IT companies. Haier has 240 subsidiary companies and 30 design centers, plants and trade companies and more than 50,000 employees throughout the world. Haier specializes in technology research, manufacture, trading and financial services. Haier’s 2005 global revenue was RMB103.9 billion (USD12.8 billion).

Guided by business philosophy of CEO Zhang Ruimin, Haier has experienced success in the three historic periods — Brand Building, Diversification and Globalization. At the 21st anniversary of founding of the Haier Group December 26, 2005, Haier announced its 4th strategic development stage of Global Brand Building. In 1993, Haier brand was officially recognized as a famous brand and in 2005 valued at RMB70.2 billion. Since 2002, Haier has consecutively been ranked first in the row of China’s most valuable brands for manufacture of 15 products, including refrigerators, air-conditioners, washing machines, televisions, water heaters, personal computers, mobile phones and kitchen integrations. Haier was ranked first of China’s Top 10 Global Brands by China State Bureau of Quality and Technical Supervision (CSBTS) for refrigerators and washing machines. On August 30, 2005, Haier was ranked 1st of China’s Top 10 Global Brands by the Financial Times.

Haier has been widely recognized as a leader of 9 products in terms of domestic market shares and the 3rd player of 3 products in the world market and world-class company in the fields of home integration, network appliances, digital and large-scale integrated circuits and new materials. Haier has long attached significance to innovation in satisfying the demands of worldwide consumers and realizing win-win performance between Haier and clients. Haier has currently obtained 6,189 patented technology certificates (819 for inventions) and 589 software intellectual property rights.

Haier  has  hosted  and  taken  part  in  modification  of  about  100  China’s  technological standards. Haier invented technology, incorporated in the Safe Care water heaters and dual- drive washing machines, has been proposed to the IEC Criteria.

Haier’s “OEC”, “Market-chain” and “Individual-goal combination” management performances have been recognized worldwide. Haier’s experiences have also been introduced  into  case  studies  of  business  mergers,  and  to  financial  management  and corporate cultures of many foreign educational institutes, including Harvard University, University of Southern California, Lausanne Management College, the European Business College and Kobe University. Haier’s “Market-chain” management practice has also been recommended   to   the   EU   for   Case   Studies,   and   its   “Individual-goal   combination” management concept has been recognized by worldwide management researchers as a feasible solution of commercial over stocks and accounts overdue.

Facing fierce global market competition, Haier has launched the global brand building strategy and updated the spirit, “Create resources, worldwide prestige” and work style “Individual-goal combination, swift action and success”, with an aim to gain global recognition and sustainable development.

Haier is an example of how an Asian company can build a brand and take it beyond its national market. Haier brand which is built on quality and a commitment to offer innovative products at a competitive price, exports to over 150 countries around the world, has 13 factories spreading from Philippines to Iran to the US and recently became the no. 1 refrigerator maker in the world, overtaking Whirlpool.

Haier  traces  its  history  back  to  the  Qingdao  General  Refrigerator  factory,  which  was founded in 1958 as a cooperative to repair and assemble electric appliances. Till Chinese entrepreneur Ruimin Zhang took charge of the factory in 1984, the company struggled with its quality and incurred huge losses. Haier attracted tremendous publicity when Zhang smashed faulty refrigerators with a sledgehammer, to send out a message about his commitment to quality. Today, Haier commands approximately over 30% share of the Chinese market in white goods and had revenues of US $9.7 billion as of 2003.

True to that event, Haier has built its brand on quality. Haier’s strategy has been to establish a leadership position in the domestic market before venturing into global markets. Unlike most players who concentrate on the low end of the market by offering cheap products, Haier has focused on offering innovative products at a competitive price and the brand is starting to see results. A case in point is that Haier is the leading brand in the US in mini- refrigerator category.

Haier’s commitment to quality and innovation is evident by the 18 international product design centers that it has established in Los Angeles and Tokyo which are in turn supported by production facilities in US, Japan and Italy.

Though it is common to see charismatic CEOs such as Sir Richard Branson, Steve Jobs and Bill Gates leading the brands in the western world, it is hardly the case in Asia. Many Asian executives shy away from publicity. Ruimin Zhang has set an example to many Asian companies about how the CEO can take charge of the brand and be the chief brand ambassador. Zhang’s aggressiveness to build his brand, his commitment to quality and his business acumen has attracted much deserved global accolades.

Ruimin Zhang was placed nineteenth among the twenty-five most powerful people in business  outside  the  US  by  Fortune  magazine  in  2003  and  Haier  was  ranked  the  most admired Chinese brand in 2004 by a Financial Times/ Pricewaterhouse Coopers survey.

Questions:

1. Analyse the Haier case and identify significant issue

2. Discuss Haier’s branding strategy.