Haier Case - University of London University College London MSIN 0061
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MSIN 0061
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MSIN 0061
MSIN0061 Global Marketing Strategy
Assignment 1
Haier CaseExecutive Summary
Haier, founded in Qingdao China in 1958, is a company that designs, manufactures and
sells electronics and home appliances ranges from washing machines, refrigerators to mobile
phones and so on. Outside China, Haier ...
, Executive Summary
Haier, founded in Qingdao China in 1958, is a company that designs, manufactures and
sells electronics and home appliances ranges from washing machines, refrigerators to mobile
phones and so on. Outside China, Haier has entered the top ten chain channels in Europe and
USA with its market in over 100 countries and regions. By 2017, Haier accounted for round
10.5% of the major household appliance sales globally.
Haier’s international business framework encompasses a global network of design,
procurement, production, distribution and after-sales services. Haier has always been quick on
acknowledge the market changes it faces. In the future, with its focus on product innovation,
Haier needs to spend time on improving product quality and marketing its brand positioning in
favor of consumers outside of China. In the long term, in order and maintain and gain
international market share, product quality is the center selling point alongside with affordable
pricing. If the company decides to reduce its overreliance on the Chinese market, meeting the
demands and expectations of international customers is top priority.
Evaluation of Haier’s International Expansion Strategy
In the early 1980s, with China opening up to world markets, Zhang – Haier’s CEO –
decided to partner with Germany’s refrigerator company Liebherr and entered a joint venture
contract. Haier was able to develop its technological capabilities through the observation of
foreign technique, the imitation and the independent design process. As a result, by the end of
1990s, Haier stabilized its company position as one of China’s brand leaders. This innovative
collaboration between Western and Chinese management was the first step of Haier going
global (Steenkamp, 2013).
Meanwhile in China, home market conditions – price wars – resulted in decreasing
profits for Haier and China’s entry into World Trade Organization (WTO) further increased
domestic competition. In order to continue its success, Haier needed to create a global brand
with international sources of innovation and overseas manufacturing facilities. Fortunately,
Chinese government supported Haier’s global expansion plan with interest-free loans, export
subsidies and tax exemption.
Entry Modes
Haier Group’s international expansion strategy can be summarized into three phases:
seeding, rooting and harvesting. Specifically, this means partnering with local sales agencies,
building manufacturing plants and establishing R&D facilities. In Ansoff’s Model of International
Expansion, Haier’s strategy includes both product diversification and market penetration.
In US, Haier entered as a wholly-owned subsidiary of Haier Group. This gives Haier fast
market entrance and local market knowledge. In order to dominate the market share in the US,
Haier diversified its product lines by introducing value-priced compact refrigerators, affordable
wine chillers, and refrigerated beer keg dispensers and so on. The common characteristics
between these products is that they were all designed to favor American consumers’ lifestyle
and taste. Haier then grew its share through niche market penetration as US competitors paid
little attention to these product segments (Steenkamp, 2013).
In Europe, Haier’s strategy of entry to competitive and standard business segments is a
combination of exporting, joint ventures and acquisitions. It exported refrigerators to Germany
with low risk and helped it get up the experience curve. Meanwhile, establishing a joint venture
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