Haier, Taking a Chinese Company Global

2341 Words Nov 28th, 2014 10 Pages
HAIER, TAKING A CHINESE COMPANY GLOBAL 1. SUMMARY
Haier (“the Company”) was China’s biggest white-goods producer and supplier in 1990s. In 1984, there was nearly 300 local producers in China market, most of which were producing poor quality goods. However, customers were willing to pay more for higher-quality products and reliable service. This need created an advantage for differentiation.
In Chinese market, demand was high. Haier being able to read customer need properly, focused on Product Quality, After-Sale Services and Brand Building. While there was oversupply in the market, with product differentiation Haier was able to raise its prices. Their target was to be a first-class brand.
In early 1990s, while the demand was
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He named the strategy as “Three Thirds”, with a long-term goal of generating revenues from three different categories of sales; 1. One-third from goods produced and sold in China. 2. One-third produced in China, and sold overseas. 3. One-third produced and sold overseas.
In other words, with this Global Strategy, Haier entered into international markets in 3 different ways; 1. It first exported to global markets, 2. Then established JV (“Joint Ventures”) with the local firms and, 3. Finally made investments and set- up production facilities overseas, in global markets.
Haiser entered into overseas markets as a contract manufacturer for multinational brands in early 1990s. First exported products to UK, then Germany, France and Italy. It also establisted joint ventures to explore the foreign markets; i.e. established a JV with Mitsubishi to set up China’s largest AC (“air conditioners”) production plant in 1994, in 1995 set up a JV with a local firm in India to produce refrigerators and ACs, in 1997 establised a JV with a Yugoslav company in Belgrade to produce ACs.
In line with the expansion strategy, Haier made a technology licence agreement with a German manufacturer Liebherr, realizing that the German goods are of higher quality. The Company initally observes and digests foreign technology and design, then

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