Tuesday, February 26, 2019
HaierÃ¢â¬â¢s Strategy for Global Success Essay
In 1920s China, a small mill opened in Qingdao, Shandong province, to comprise refrigerators. Though the Qingdao factory survived for more than sixty years, by the early 1980s, pathetic management and heavy debt nearly forced it to declare loser. At the kindred time, the opening of the Chinese economy to the inter field grocery saw an influx of foreign companies seeking investment opportunities. One much(prenominal) union was Liebherr Haushaltergte (Liebherr), a leading German appliance maker. Liebherr saw a burgeoning market for appliances, and proposed a partnership with the Qingdao factory, in which Liebherrs technology and manufacturing know-how would be exchange to the factory. In 1984, Qingdao Refrigerator Co. Ltd. was born out of this partnership. However, technology al one(a) was non enough to rescue the companion.That same year, CEO Zhang Ruimin, then the assistant omnibus of Qingdao citys base appliance division, arrived, bringing with him management technique s follow from Japan and the West, with a charge on haomaing a intemperate scar mention founded on quality products. Mr. Ruimins techniques were successful, and by 1991 the alliance had turned a considerable profit and diversified into other household appliances such as freezers, microwaves and air conditioners. Recognizing that the comp eachs shit was no longer athe likes of with its products and had a poor reputation from its prior history, Mr. Ruimin stubborn to take a new name.The guild adopted an abbreviation of the pho force outic spelling of Liebherr writ ten 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 phoners image. Capitalizing on its new management and brand, Haier change itself into the second largest home appliance come with in the world, and the good turn one such company in China. By 2010, Haier introductioned, manufactured and marketed over 15,000 pr oducts in 96 categories sold in over 100 countries passim the world. stigmatizationThe beginning of Haiers brand strategy is the stuff of corporate legend. In 1985, one of the companys customers brought back a refrigerator (still a rare luxury item in China at the time) because it did non work. Mr. Ruimin and the customer went through all the companys available stocktaking of refrigerators until they finally found a working model. Of the 400 or so finished refrigerators in the factory at the time, 76 were found to not be in working order. In response, he cal guide his employees together and request that all of the dud refrigerators be lined up on the factory floor. He then gave sledgehammers to the workers and ordered them to smash the refrigerators. Mr. Ruimin is reported to have told the workers break them If we pass these 76 refrigerators for sale, we will be continuing a drift that has all but bankrupted our company.This event brought the brilliance of quality products to everyone in the company, and Mr. Ruimin unhappy to them that quality products linked to a strong brand name were indispensable to the companys survival. With this new commitment to quality, the installation of new equipment and the transportation of manufacturing know-how from Liebherr, gross sales rose 83% in two years. With the companys reputation increasing, the name change to Haier created a new brand synonymous with quality cutting-edge technology that would inspire customer confidence and do away with any negative sentiments associated with the companys former name. evolution new products backed by intellectual property rights (IPRs) such as patents ensured that the brands success would continue and it would maintain a agonistical edge.The company and its customers also took pride in the ability of the Haier brand to successfully compete with more established foreign competitors. Haier knew that its brand was its most blue-chip resource, with brand image at the core o f its business identity and strategy, so its early branding strategy was to build a strong, leading national brand name. by dint ofout the 1990s, the company realized its vision, and made multiple acquisitions to radiate its product portfolio and the company brand quickly become ubiquitous throughout China. With its position in China profitable and secure, Haier embarked on a globose branding strategy.This strategy aims to position the company as a local anesthetic brand in different world markets in conjunction with heighten product competitiveness and strong corporate operations. The company focuses on localizing the design, manufacturing and sales processes, so it can truly become a local brand. The company is close to achieving its goal in important markets such as the join States and Europe, in which it has local production facilities. Its products are available in twelve of the top fifteen chain stores in Europe and in ten of the leading chain stores in the linked State s.Research and DevelopmentSince the companys restructuring in the early 1980s, innovating new quality products has been of central importance to its goal of building a ball-shapedly recognized brand name. Haier and its marcher companies constantly focus on innovating new products through research and training (R&D). One such technology the companys R&D efforts developed is its harmless attending technology, which it applies to appliances such as water heaters. Safe Care monitors wiring and electrical components of the appliance and gives a warning should any electricity leakage pose a risk to the consumer.This technology was introduced at the 66th International Electrotechnical Commission Conference in 2002, and products equipped with Safe Care went on sale in 2006. This is just one example of Haiers innovative capabilities through its R&D efforts. The R&D division is also responsible for developing all of the computer software that runs its products such as Safe Care, and this is an essential part of the companys R&D strategy. palpables, Copyrights and postsHaiers innovation and expansion has led it to be the owner of over 6,000 patents and over 500 software copyrights worldwide. To maintain its competitive edge, the company ensures that it secures protection for all of its intellectual property (IP). Haier is an avid user of the Patent Cooperation Treaty (PCT) system, and has made over twenty PCT applications. Because the company endeavors to build a global brand, trademarks are also an essential aspect of its IP strategy. As such, Haier has registered a trademark for its company name under the world-wide Madrid system. It has also made trademark registrations for its name in the fall in States with the coupled States Patent and Trademark Office (USPTO) and in Europe with the Trademark and Designs Registration Office of the European Union (OHIM).CommercializationHaier designs, produces and markets its products through its global network and busines s framework. As of 2010, Haier had fifteen industrial complexes, thirty afield production factories and bases, eight design centers and over 58,000 sales agents worldwide. In the municipal market, Haier focuses on four leading product categories refrigerators, refrigerating cabinets, air conditioners and backwash machines. Haier also has a significant consumer electronics division. For international markets, Haier has adopted a comical strategy to penetrate uncontrollable markets such as the United States and Europe. When it maiden entered the market in the United States, it identified two potentially paying(a) yet underdeveloped niche markets that of small sized refrigerators for dorm rooms, hotels, and the like and electric wine cellars.Haiers imports of these appliances, coupled with a strong design and development team, helped the company rapidly develop its brand, and by 2000 it was a major player in both product markets. The success of Haier in such niche markets has al lowed its brand name to become well known, which encouraged the company to target the higher-end full size refrigerator market in the United States. To do so, the company built its first manufacturing plant in the United States in Camden, South Carolina in 1999. In line with the companys goal of making its brand name local in international markets, this initiative was a resounding success. Haier has since undertaken similar initiatives in other markets such as the European Union and the Middle East.Business ResultsHaiers focus on building a strong brand has brought it from the brink of bankruptcy to one of the most successful appliance companies in the world. By 2010 the company had over 50,000 worldwide employees. It enjoyed an annual growth rate of 68% mingled with 1984 and 2005, with revenue in 2005 totaling 103.4 billion Chinese Renminbi (RMB). The company enjoys a 40% market share for household appliances in China and has successfully entered difficult markets such as the Unit ed States, and it is now the worlds number two refrigerator manufacturer, save second to Whirlpool.Despite the economic even off in 2008, Haier profits increased nearly 20% that year and enjoyed net profits of RMB 768 million. In 2004, Haier acquired a controlling stake in Haier-CCT Holdings, a joint venture which was listed on the Hong Kong Stock Exchange that same year. Haiers international success and well known brand name led to the company becoming an official sponsor for the 2008 Beijing Olympic Games. triumph Built on the Shoulders of BrandingKey to any companys success is its brand, and strong brands allow a company to not only grow domesticatedally but also internationally. Haier rode the wave of its strong domestic brand to enter new markets and expand into a fast growing multinational corporation. In March 2009, the Financial Times recognized Haiers success when it ranked it among the Top 10 Chinese World-class Brands. Through protecting its IP and brand names with tr ademarks, Haier has built up a powerful asset that has transformed the company and brought global recognition for its brand and products.