Haier, a household name in China, is one of the top home appliance manufacturers in the world. The girl in this photo retrieves an ice cream bar from a Haier-brand freezer. PHOTO BY TOM CHRISTENSEN.
As the leading home appliance company in China, Haier has become a common household brand name. The incredible business turnaround and advanced management strategies of the Haier company are often used as case studies and examples in major business magazines and business schools. Haier continues to grow stronger in today’s increasingly competitive world market.
Haier is China’s major home appliance company, located in Qingdao, Shandong Province. The company has more than 240 subsidiary companies, not including design centers, manufacturing bases, and trading companies in more than thirty countries. More than fifty thousand Haier employees work in the areas of science and technology, the home appliance industry, foreign trade, and finance. In 2006 the global revenue of Haier was about $15 billion, and the brand name “Haier” was estimated to be worth more than $11 billion.
In 1985 Haier was a desperate refrigerator factory with a huge debt and more than eight hundred employees waiting for their pay. Now Haier is one of the top four home appliance manufacturers in the world, and the brand name “Haier” is a household word and referred to as a miracle example by Fortune, Finance Times, and the Wall Street Journal.
This business miracle was not accidental. When industry focus was on quantity instead of quality twenty years ago, Haier CEO Zhang Ruimin smashed seventy-six defective refrigerators with a hammer in front of the factory’s workers to show a new focus and an iron-strong determination: Quality was going to be the key for the factory. Zhang’s hammer drove home his point: In 1993 Haier was awarded the “Chinese Famous Brand” accolade, and in 2006 Haier had a 25.5 percent market share of home appliances in China.
But in this rapidly changing world quality is not enough to guarantee the sustainable success of an enterprise, and innovation has become another key factor. Haier is not only solid but also flexible. In addition to being dominant in the home appliance market, Haier has entered into cutting-edge technology. In 1998 Haier developed on average one new product and applied for two patents every day. In the same year 236 research results developed into products. Haier owns more than seventeen hundred patents, which ranks it number one among Chinese enterprises.
Zhang Ruimin knows not only how to smash refrigerators with a hammer but also how to manage his complex corporation. Advanced management strategies are used in every procedure. New ideas are also introduced. Indeed, Haier’s management is a good case study in textbooks at Harvard and Oxford Business Schools.
Haier was born in China but has developed internationally. Globalization has presented Haier with more opportunities. Because of its strict quality control Haier has received market access to Europe and the United States (Haier passed international certification in forty-eight countries, including the UL certificate in the United States, the CE certificate in the European Union, the ISO 90001 certificate for quality, which is issued by the International Organization for Standardization, and the ISO 14001 certificate for environmental protection). Haier’s products have been exported to more than eighty countries in Europe, Japan, the Middle East, Southeast Asia, and the United States. In addition, Haier has forty-nine overseas franchisers and an international logistics center in the Middle East and Germany. The “Three One-Third Principle” shows Haier’s globalization: One-third of its products are produced and sold at home; one-third of its products are produced at home and sold overseas; and one-third of its products are produced and sold overseas.
Where will Haier go in the next twenty years? Its officers and employees hope that, to invoke the company’s slogan, it goes “Haier and higher.”
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