Haier Goes Wider

HAIER was founded in 1984 inQingdao City, Shandong Province. Under the leadership ofits CEO Zhang Ruimin, the"white goods" manufacturer launchedits transnational operation in late 2005,and based on the success of this modelit established 29 manufacturing bases,eight comprehensive research and development centers, and 19 overseas tradecompanies throughout the world. Its staffof 60,000 include Haier’s marketing,R&D and manufacturing divisions whosenetworks are scattered across China, theUnited States, Italy and Thailand.refrigerators and washing machinesalso rank first in terms of global marketshares. In such fields as integration ofhome automation, network electric appliances, digitization, large-scale integratedcircuit, and new materials it has also advanced worldwide.

In March 2008, for the second timeHaier was selected by the Financial Timesas one of the top ten world-class brands.The Forbes list of the top 6oo global enterprises released in June 2008, placedHaier 13th, making it the foremost Chinese enterprise on the list. In the selectionof the top 200 Asian enterprises orga

Increasing Market Competitiveness

According to data released by Euromonitor, a world-famous consumermarket research institute, in December2009, Haier ranked first among whitegoods brands worldwide, and this markedthe first time a Chinese white goods brandadvanced to a global first rank. Haier’snized by The Asian Wall Street Journal inJuly 2008, Haler ranked first for the fifthyear in a row, in terms of comprehensiveleadership among the enterprises on theChinese mainland. Business Week of theUnited States named the world’s top 5oinnovative enterprises in April 2010, andHaler was the only Chinese home electricappliances manufacturer on the list. By2010, the Haier brand was valued at RMB85.526 billion, and for nine years in a row(since 2002), it was deemed the mostvaluable brand in China.

Haier has firmly established its marketing, logistics and service networks onthe global market. It has set up 2,500community outlets in major Chinese cities, 5,000 county-level franchise stores,24,000 township-level outlets, and70,000 village-level liaison stations. Haier logistics stations have been establishedin more than 2,500 counties in China,with 1,700 after-sale service points.These networks support Haier’s domesticmarket to realize "sales to villages, doorto-door delivery, and household servicecalls," and "immediate response to everyconsumer demand." International brandsare interested in conducting resourceexchanges with Haier, thanks to the diligence of their marketing, logistics andservice networks. In parts of the domesticmarket, some international brands, suchas GE home electric appliances and HPcomputers, are piggy-backing on Haier’smarketing network.

From Importing Technologies toExporting Standards

At the end of October 2OLO, Haier applied for lO,214 patents, including3,o57 patents of invention, another firstrank status among Chinese home appliances manufacturers. In the first half of2010 alone Haier applied for 476 patents, including 258 patents of invention,averaging two patents of invention perworkday.

Haier is the home electric appliancemanufacturer that has participated in thecreation and articulation of the largestnumber of international standards, Chinanational standards, and industrial norms.The company has put forward 51 international standards altogether. Of these, 27standards, such as those for powderlesslaundry and safe care technologies, havebeen adopted as international standardsand are now implemented worldwide.From January to October 2010, Haiersubmitted 18 drafts to the InternationalStandard Organization (/SO), and sixhave been. promulgated as internationalstandards. Haier has led or participatedin the drafting of 262 national standards,of which 238 standards are operative. Inaddition, Haier has won 12 awards for itsinnovative contribution to Chinese standards, and is the home electric appliancemanufacturer with the largest number ofsuch honors. The Haier Group also hasseats on four technical committees fornational electric appliances services andreliability, and the secretariat position ofthe work group, assuming the lead in revision work to national standards in thesefields. Haier represents the only developing country to enter the decision-makinglevel of the International ElectrotechnicalCommission (IEC).

"Man and Order,Two-in-one" Model

Haier’s OEC (Overall, Everyone, Everything, Everyday, Control, Clear) method,explored in its initial period, provided thefoundation of its management theory. Inthe era of the Internet, in order to quicklyrespond to client’s needs, Haier exploredits "man and order two-in-one" businessmodel. "Man" refers to employees, andorder refers to the market goals. All employees, in the process of creating valuefor clients, realize their own values, andachieve a win-win situation for both clients and employees.

Marshall Meyer, a professor at theWharton School of Business of theUniversity of Pennsylvania, has beenconducting a follow-up study of Haier’sbusiness model for many years. Hesaid, "Haier’s management model hastranscended the agency theory in theWest to create a new model for the ’super team’." Michael E. Porter, knownas the "father of competitive strategy,"said after talking with Haier CEO ZhangRuimin, "Haier’s strategy is very clear,and its practice is very competitive,very innovative, and very attractive."Gary Hamel, world-class strategist andauthor of The Future of Management,spoke highly of Haier’s innovative business model: "It is a challenge for enterprises throughout the world and a challenge for the management circle to letthe entire staff of an enterprise face the market and serve its clients. At present,very few enterprises have conductedsimilar innovations in management andthere is no case of success, but Haier’sinnovation is the most advanced and Ibelieve it will succeed." The Institute ofManagement Accountants of the UnitedStates is interested in Haier’s policy ofproviding a statement of revenue contribution made by every staff member.They hold that Haier’s policy is a breakfrom traditional models of managementaccounting.

At present, Haier’s stock turnover averages 5 days and accounts receivablesturnover is 4 days, only a fraction ofother enterprises in the same sector, andits turnover time for circulating fundsclocks in at negative 10 days. During the11th Five-year Plan period (2006-2010),Haier’s compound growth rate of profitreached seven times its compound growthrate of revenues. In the first three quarters of 2010, Haier’s profits increased 67percent year on year.

Corporate Social Responsibility

In 2008, Haler was the only whitegoods manufacturer .in the world to become a sponsor of the Beijing OlympicGames, and on the day the Games opened,Haier Group launched the "one goldmedal, one Hope School" plan; donationshave built 129 Hope Schools to date. Datais incomplete, but Haier’s contributionsto the public good have already exceededRMB 5oo million.