Haier, an international icon: Success Factors and Market Challenges Essay

Born out of Qingdao Refrigerator Factory in 1984, the Haier (pronounced high-er) free radical is mainland mainland chinawares largest home appliance manufacturer (Wang and Ong two hundred7), and the areas fourth largest white goods manufacturer (Chen two hundred8).Haier was ranked set-back among mainland mainland Chinas Top 10 orbiculate markings by the Financial measure in 2005 (Haiers company facts 2008). It was also ranked 86th among the worlds 500 intimately Influential Brands by World Brand science laboratory in 2006 and is the only Chinese mail to be among the top snow for three consecutive years. (Haiers company facts 2008).Its Chairman and CEO, Zhang Ruimin who was appointed in 1984 as the director has been credited for pulling Haier out of bankruptcy to function a global corporation (Zhang Ruimin 2006) with annual turnover of USD16.2 billion in 2006 (Haiers company facts 2008). Zhang was ranked 26th among Worlds Most Respected traffic Leaders by the Financial T imes in 2005 and 6th among Asias 25 Most Powerful mickle in business concern by Fortune magazine in 2004Haiers mark trades are China, Europe, USA, Japan (Beebe et al 2006) and India (Mumbai 2007). It has over 240 subsidiaries and 87 trading companies, aim centers and industrial parks and over 50,000 employees worldwide (Haiers company facts 2008).HAIERS PATH TO SUCCESSIn 1984, CEO Zhang Ruimin took over the n proterozoic bankrupt refrigerator pulverization (Lin 2005, 1). Today, Haier is known as a global brand. How did it become such as a success (Lin 2005, 1)?Strong leadership, customer operate, product property, innovation, speed, pricing, positioning, localisation of design, deed and sales, latecomer prefers and market entry strategy are among the top ten factors for Haiers success.Strong leadershipZhang Ruimin (Zhang), Chairman and CEO of Haier is described as down-to-earth and a charismatic leader who has worked his way up (Chinaview People Zhang Ruimin 2003). Zhang demonstrated out-of-the-box view and risk-taking when he combined traditional Chinese philosophy with modern horse opera care style (Chinaview People Zhang Ruimin 2003)and avoided fol commencementing norms of the industry (Wu 2003).From the OEC management representative of Never Leave Todays Work Till tomorrow and Daily Settlement Leads to Daily Improvement to the market chain management, Zhangs unique management ideas have won praises and is much of a discussion topic among management specialists and top universities around the world (Chinaview People Zhang Ruimin 2003).Zhangs aspiration for Haier to become a global brand began during the early stage he took on the factory (Liu and Li 2002, 701) With this ambition, Zhang set enlighten objectives and focuses in mental synthesis the brand, diversifying product lines, going international and now building a global brand name in distinguishable phases (Haiers teaching strategy 2008).In 2006, for the fourth consecutive year (Haie r origin 2008), Haier was ranked first for overall leadership among Chinese companies in the rampart track journal Asias annual survey of Asias 200 Most Admired Companies (Areddy 2006).Customer ServiceHaier aims to puke excellent customer aid to gain an advantage over Western rivals who can be to a greater extent complacent ( calling in China Double hotshot Group and Haier Group succeed without the consultants 2003, 14). To achieve this, Haier intermited a customer-focused culture by trim down the distance between employees and customers requiring all employees to sell products, listen to customers and understand rivals products on a regular basis (Denison 2001, 222).Haier also set up more than 11,000 customer service centres in 160 countries (Yi and Ye 2003, 204) hiring and training locals to provide after-sale service to local customers (Li and Chen 2007). Haiers dedication to customer service has won the Five Star Diamond honor presented by the American feature and Serv ice Society (Haier 1996).Product QualityZhang knows that the key to survival and future development is to establish and continue to advance product prize. To drive theimportance of quality, Zhang say responsible workers to destroy 76 defective refrigerators (Xu et al 2006, 30-31). As a result, Haier received the first ever National Gold Medal Award in Chinas refrigerator industry (Haier 1988) and ranked first in Chinas Top 15 Brands by Forbes (Kim 2003).InnovationTo improve its technology knowledge and create innovative products, Haier has been increasing investing in research and development (R&D) (Duysters et al 2008, 16) establishing an extensive global R&D and design network (DiPaolo and Li 2007). Its R&D investment is importantly higher than the market average RMB6.7 billion in 2006, equivalent to 6.2 percentage of its sales (DiPaolo and Li 2007).Haier also formed alliances with leading companies such as Liebherr, Philips, Mitsubishi and Toshiba to acquire manufacturing a nd proficient know-hows, expand product lines as intumesce as enter foreign markets (Duysters et al 2008, 11-12).The basis of Chinas advantage is low-cost labour (Zeng and Williamson 2007, 27). Haier is take advantage of the cost advantage to provide high technology, choice and customised and specialty products at low price (Zeng and Williamson 2007, 55). apply cost innovation, Haier gained brand awareness in the US by make pack refrigerators and wine chillers to the mass market (Jain, Malik and Cruickshank 2006, 21).SpeedHaier understands that the speed in bring products to customers to satisfy their needfully before rivals is important to win them over (Wu 2003). Since get into US markets, Haier has gained one-third (Lin 2005, 2) of market share in the compact refrigerators for dormitories and offices and created the market for stand-alone wine coolers (Haley and Haley 2006, 46).PricingChinese products are often viewed as low quality (Xin and Yeung 2007). Aware of the poor image of Chinese products, Haier price its products at a five per cent premium over its Korean rivals, LG and Samsung (Chinese consumer durable firms midriff a bulkyger piece of action 2008) so that its products will be perceived as top-of-the-line (Gupta 2006).PositioningHaier positions itself as a premium brand and aims to develop Haier as a dependable, high-technology global leader (Gupta 2003). Haier is not targeting at different classes of consumers instead it wants consumers to feel that Haier is closest to satisfying their needs (Haiers cause Develop Our Brand Overseas 2003).Localisation of Design, Production and SalesHaier set up local design, production and sales facilities, and industrial parks in US, Europe, Asia pacific and Middle East and employs mainly local people (Haier Press room 2008). With localised operations, Haier is able to respond more quickly to changing customers needs (Young and Nie 1996, 12) and to be accepted by the local community (Haier Press in habit 2008).Latecomer AdvantagesInstead of creating a new business model from scratch (Duysters et al 2008, 8), Haier, as a latecomer, has the advantage of comparing and modifying its business models against those of established rivals identifying niches, for example compact refrigerators in the US (Wu 2003) that larger rivals have overlooked (Duysters et al 2008, 8) or do not have the flexibility to adopt (Bartlett and Ghoshal 2000, 139).Market admittance StrategyHaier started exporting to tough markets such as United States (US) and Germany as Zhang (Wu 2003) believes that erstwhile it gained brand recognition in these markets, it will be easier for Haier to enter neighbouring ontogenesis countries (Liu and Li 2002, 702-703).When entering a new market, Haier introduced one product at a time. It first introduced refrigerators in the US market. Once the product becomes boffo, Haier began introducing washables machines lines and other products capitalising on the brand awareness (Liu and Li 2002, 703).CHALLENGES AHEADChinese manufacturers including Haier now organization increasing challenges posed by decrease in orders from overseas markets (Global deferral hits China 2008), neediness of resources, negative Chinese brand image, further gross profit margin quench and rising costs.Lack of R&D InfrastructureAlthough Haier increased investment in R&D, it can take years to catch up on the standard of the research in the West (Isaksen 2006). One galactic obstacle that marketing research firms face in China is the deprivation of infrastructure to carry out surveys (Isaksen 2006).Lack of Qualified Human ResourcesManagers with exist managing an international operation are scarce (Beebe et al 2006, 7). This shortage can negatively influence Haiers global expansion (Liu and Li 2002, 703). For example, managers from the Chinese and American operations find it difficult to have productive discussions referable to language barrier (Liu and Li 2002, 703).Global B rand Awareness and ImageChinese companies including Haier lack global brand awareness in developed markets in the US and Europe (Xin and Yeung 2007, 3) and suffer negative brand image of cheap, poor quality and unreliable (Swystun, Burt and Ly 2005, 3). This negative image is further weakened with the recent draw scandal (Made in China 2008 The Challenge for Chinese Brands going away Global 2008). Changing Western consumers perception requires years of marketing efforts (Liu and Li 2002, 704). preponderant Bargaining Power of BuyersHaier distributes its products with retail giants like Wal-Mart who have large acquire power (Rosenbloom and Diane 1993, 78). 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