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Analysis Of Haier Group's Expansion Into China

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The Haier Group is one of the world’s largest whitegoods manufactures with over 50 000 employees worldwide. The group was founded as “Qingdao Refrigerator Co.” in 1984 in Qingdao, Shandong Province, China. Haier Group has become a multi-billion dollar multinational with presence in over 100 countries (The Haier Group, 2007).

Throughout the course of Haier Group’s history, the firm has pursued an aggressive globalization strategy. Over the past twenty years, the group has expanded from its origins in China to regional markets in Europe, and North America, and Southeast Asia.

The Haier Group’s internationalization efforts can be broken down into a segmented timeline which extends from the late 1980s to present.

1984-1992

During the early 1990s, Haier Group began its internationalization efforts by expanding into Europe. It chose Germany as its primary destination and, in 1990, shipped its first batch of refrigerators. A year later, in 1991, it adopted its global brand name “Haier” from a German appliance maker that supplied technology to the company in its early days (Landler, 2000). The new name, replacing “Qingdao Refrigerator Co.”, provided the group with a recognizable name which could be marketed internationally.

1992-1998

After becoming certified with the ISO 9001 certification in 1992, The Haier Group launched an initial public offering on the Shanghai Stock Exchange under “Qingdao Haier Refrigerator Co.” which raised over 370 million RNY (Reminbi). (The Haier Group , 2007) The capital raised was predominantly used to fuel further expansion into emerging markets.

Simultaneously with the IPO, The Haier Group expanded into the Middle East Market and began exporting products in OEM form to the United States in 1995. The group planned to roll-out OEM products to the USA to assess the markets potential before exporting Haier branded products. By 1996, Haier Group expanded its product base to include commercial air-conditioners and front-loading washing machines. Annual production of washing machines reached 1 million units by 1997. (The Haier Group , 2007)

1998-2002

The late 1990s and early millennium were pivotal in The Haier Group’s internationalization efforts. In 1999, the group launched its first overseas industrial complex вЂ" Haier (America) Industrial Complex South Carolina, USA. (Reference for Business, 2007) The new complex solidified The Haier Group’s commitment to competing in the U.S. market with whitegood leaders such as Whirlpool & G.E.

By late 2000, Haier’s products sold in the USA were carrying “Made in America” tags. It was a marketing effort to connect with the local market and to avoid consumer perception that Haier Group products were low-quality exports from China.

In 2001, Haier expanded its operations in the European market by acquiring an Italian plant belonging to Meneghetti Equipment. Italy became the headquarters for the Haier Group’s European operations. (The Haier Group , 2007)

2002-2006

Haier Group’s aggressive globalization strategy continued throughout the new millennium. In 2002, Haier products entered the Australian and New Zealand Markets and production began at their plant in Pakistan.

Shortly after, The Haier Group expanded into the Middle East Market. In 2003, the first “Made in Jordan” Haier washing machines were rolled out. The Haier group also expanded its product base in the same year by entering the home computer market. (The Haier Group , 2007)

The above timeline illustrates The Haier Group’s rapid expansion into virtually every corner of the globe. The firm’s internationalization efforts were quite successful and can be attributed to a number of key strategic decisions which are described below.

Expansion beyond China: Developing a Standard Global Brand

The Haier Group adopted a very unique expansion strategy which ultimately led to a successful internationalization campaign. The strategy differentiated itself from the majority of Chinese corporations by striving to create a genuine global brand. Most Chinese corporations purchase resources overseas and market goods under foreign labels; however, The Haier Group marketed its brand name to build a global reputation.

Mr. Zhang Ruimin, CEO of The Haier Group, stated “The objective of most Chinese enterprises is to export products and earn foreign currency. This is their only purpose. Our purpose in exporting is to establish a brand reputation overseas.” (McKinsey & Company, 2005)

Expansion beyond China: Exploring Developed Markets First

Another strategy The Haier Group used in its internationalization efforts was to expand into developed markets before entering local emerging markets. The rationale behind this strategy was its biggest competitors were located in markets such as the United States and Europe. According to Mr. Ruimin “The United States and Europe are the home markets of our largest global competitors, and we believe that if we can succeed there we can succeed in easier markets”. (McKinsey & Company, 2005) This was uncommon in China and most Chinese enterprises began with “easier” markets; however, Haier’s track record over the past decade solidified their unique efforts as a success. As

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