What are the main features of Haier’s internationalization strategy since early 1990s and how does it differ from the pattern of international typical of Western enterprises? How successful has Haier’s internationalization strategy been and why? What are the principal features of Haier’s management system? In what ways do Haier’s principles and methods of management differ from those deployed by Western companies? What lessons might be drawn by a) other Chinese companies and b) by Western enterprises? – Haier Group Internationalization Strategy and Management System (below).
Key text: Grant, R (2016). Contemporary Strategy Analysis.
Haier Group’s Internationalization Strategy and Management System
Introduction
Haier Group is a multinational company that manufactures and markets home appliances and consumer electronic products. Simply referred to as Haier, the group started off as a small bankrupt company called Qingdao General Refrigerator Factory before growing to become a global leader in the production of house hold appliances. Today, the company markets its products in well over 100 countries across the world (Haier UK 2014). While the company has its global headquarters in Qingdao China, it has a number of regional headquarters (including Paris and New York) to serve its clients in the respective regions. There is wide agreement among business experts and scholars that Zhang Rumin contributed greatly to the growth and success of Haier. As CEO of the company, Zhang saw the company transform from the bankrupt Qingdao General Refrigerator Factory to the highly successful and leading brand that it is today. Under his leadership, the company focused on producing high quality products and began applying a management system that was customer centric with product development focusing greatly on fulfilling consumers’ needs. The company also began and greatly advanced its internationalisation journey under Zhang’s leadership. Haier’s internationalisation strategy and management methods have been a subject of great praise and admiration worldwide given their contributions to the Group’s success. However, they have also been criticised by pundits who feel that the strategy was not as orderly and not as integrated as it should have been. Questions have also been raised regarding the cohesiveness of the strategy and its rationale especially considering its uneven performance in different markets. These criticisms notwithstanding, there is wide consensus that the strategy was a success and that it presents important lessons for companies that wish to internationalise. This paper discusses Haier’s internationalisation strategy and the Group’s management system as established by Zhang Rumin. More specifically, the paper answers the questions: What are the main features of Haier’s internationalization strategy since early 1990s and how does it differ from the pattern of international development typical of Western enterprises? How successful has Haier’s internationalization strategy been and why? What are the principal features of Haier’s management system? In what ways do Haier’s principles and methods of management differ from those deployed by Western companies? What lessons might be drawn by a) other Chinese companies and b) by Western enterprises?
The Main Features of Haier’s Internationalization Strategy and How the Strategy Differs From the Pattern of International Development Typical of Western Enterprises
Companies can expand beyond national markets through internationalisation. An internationalisation strategy is basically the strategy that a firm applies to sell its products in foreign markets. It involves applying one or more modes of international business (Chryssochoidis and Clegg 1997). Some of the modes of international business include exporting, licensing, franchising, partnering or strategic alliance, acquisition, establishing new, wholly owned subsidiary, and joint venture (Shaker et al. 2000; Azuayi 2016). In different situations, Haier applied different modes of international business. To enter the U.S. market, for example, the company initially exported manufactured products to the country and relied on a strategic partner (Wellbilt Appliances) to distribute the products. To market its products in the Netherlands, Germany, and Italy, the company exported its products under the Haier brand (Grant 2016). In countries such as Malaysia, Indonesia, and Philippines, the company formed joint ventures with local companies and relied on them to produce and sell products such as refrigerators and air conditioners (Grant 2016). For Haier, the goal behind its internationalisation was to build a global brand and to become an internationally competitive brand, rather than merely to exploit China’s low manufacturing costs (Grant 2016). In addition, the company sought to create the famous brand of China in the world through its internationalisation. Furthermore, it was aimed at challenging the company to raise to word-class level its standards of marketing, customer service, manufacturing, and product development (Grant 2016). The internationalisation strategy applied by Haier had certain key features which will be discussed in the following sections. Read more …
One key feature of Haier’s Internationalisation strategy was its focus on entering and tackling difficult or more sophisticated markets first before tackling easy or less developed ones. As noted by Yan and Guanli (2011), in the process of internationalisation, companies have two modes or options. Continue …
Contents
- Introduction
- The Main Features of Haier’s Internationalization Strategy and How the Strategy Differs From the Pattern of International Development Typical of Western Enterprises
- The Uppsala Model in Relation to Haier’s Internationalisation Strategy
- The Success of Haier’s Internationalization Strategy
- Principal Features of Haier’s Management System
- Haier’s Principles and Methods of Management
- Lessons that can be Learnt from Haier
- Conclusion
- References