Haier today, what happens tommorrow?

In just one day I’ve come across at least three different articles on Haier, the Chinese consumer durables manufacturer. The last time I’d seen their name this often was back when they were attempting to bid for Maytag, which Whirlpool finally bought.

In April 2006, Qingdao Haier (Qingdao, China) became the first Chinese household appliance brand to win an iF Product Design Award in the history of the competition for the A-003 air-conditioner.

Then there this piece which says,

Haier Group Corp., China’s largest maker of home appliances, is focusing on expansion in developing markets overseas to offset sluggish sales at home.      

"We are expanding in developing markets, which we classify as Southeast Asian, South Asian and African markets, where it is easier to expand business and earn high profits,” Haier Group President Zhang Ruimin said in an interview in Beijing yesterday.         
The handset business posted a loss of HK$157 million last year from a profit of HK$19 million in 2004, while sales fell 48 percent to HK$1.63 billion.

And finally ‘breaking news‘ today, where Haier officially enters the Indian mobile handset market.

Before I start to connect the dots, I decided to take a look at Google news to see if there was anything in the news. Look what I found,

China’s 500 Most Valuable Brands in 2006 released by World Brand Lab (WBL) on June 16 shows that Haier, with a brand value reaching 63.989 billion yuan, keeps the first place, followed by Lenovo, China Mobile, CCTV, with a brand value exceeding 60 billion yuan respectively.

So what do we see here?

  • Winning very prestigious international design awards
    • (yes, it could be a one time fluke)
  • Number one on the China 500 most valuable brands list
    • (yes, that means nothing but Haier is also one of only 6 Chinese brands in the Global 500 most valuable brands list, the US has 246)
  • Looking for new and emerging markets in Asia and Africa to boost flagging sales
    • (particularly where gaining mindshare and building a brand would be much easier than in a mature market, especially for consumer electronics.)

Develop your design capabilities. Build a brand. Enter emerging markets.

These three, often concurrent, steps have been followed by every other global corporation. But for one key difference, the time it took for the first movers to achieve this, the lessons they learnt along the way, the mistakes they made.

The Korean brands like LG, Samsung, Hyundai et al demonstrated the validity of this approach with their successful forays into India and South East Asia within the past decade. They also believe in manufacturing their own products.

At the moment it seems to me that while the Koreans localize their products for each market, particularly in India (which I’ve been digging into of late), the Chinese are attempting to leverage their low cost manufacturing base. Established global brands on the other hand have only now turned to understanding their customers needs rather than relying on the strength of their brand equity.

What happens next?

This entry was posted in Business, Design, India/China/Asia. Bookmark the permalink.

2 Responses to Haier today, what happens tommorrow?

  1. Haier has definitely done some good things, but it is still essentially a government owned company and the more successful it becomes, the more the government (I believe it is mostly the government of Shandong province) seems to want to intrude. It remains to be seen how this will impact Haier going forward.

  2. niti bhan says:

    Ha! thanks, I didn’t know they were a state owned organization. Pros and cons right there, aren’t they?

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