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Haier Case Study: Making Quality Products and Reliable Services

5 pages
1243 words
Sewanee University of the South
Type of paper: 
Case study
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Manufacture of high-quality refrigerators and offering of reliable services was the stepping stone for Haier group in the China electronic market. Haier group started as a Town and Village enterprise when the refrigerator industry in China was facing challenges. The municipality appointed Zang as the director who took the problem reluctantly to revive a failing company. Zang believed that the consumers would be willing to pay more for a high-quality refrigerator. At the time no other company among the 300 refrigerator manufactures in China were producing quality products. Zang as the new director had to emphasize on the quality of products that Haier produced. He used his network to import Freezer and air condition lines from Denmark and Sanyo of Japan. This to make sure they produced refrigerators that were not produced by other manufacturers. The company borrowed technology and designs from Japan Mitsubishi and Italy's Merloni to make quality refrigerators that were acceptable to the market. Zang did not take any chances on quality, at some point he even broke and destroyed refrigerators that were not manufactured up to his standard. This emphasized his seriousness on high-quality products among the employees. The company also hired talented employees who were able to come up with products that stood out among other products in China.

Offering After Sale Services

Haier group was the first to set up a digital service center in Qingdao to tack their customers. The people of China recognized Haier Company because of its concern to customers by offering after-sale services. China people were not accustomed to after-sale services; therefore Haier stood out as a good company among many customers. The company could receive phone calls to obtain the customer's views and challenges they faced from the Haier group products. The company also provided repair services for broken refrigerators they produced to their customers. This was a marketing tool for Haier group which made the company emergence successful in the 1990s in China.

Ability To Diversify

Haier wanted to keep the leadership position in China in the electronics industry, for this to be the company decided to diversify their production. They identified companies in line of air-conditions and general freezer factory. Haier invested in these two stumbling companies and transformed a 15 million of these two divisions into profits. This was acquired through the introduction of new air conditioners, and general freezers Diversification enabled the company to stay at the top of the Chinas electronic industry. In the 1990s, Haier acquired about 15 companies including companies that manufactured telecommunication equipment and washing machines. They introduced their management skills in the factories and made them successful. Haier focused on diversity and grew in the whole of China.

Good Management

Haier group had a proper management which ensured that all the requirements to make the company a top leader in China. Zang as a leader did not take chances on the progress of the company; he had a vision for the growth of the business. His longtime lieutenant Miss Yang Mianmian who was named the company's president was a visionary manager who sought ways to make the company a global leader. The leadership of Haier took risks in everything; they were willing to take unexpected risks to oversee the success of the business in China. When they adopted Qingdao air conditioner and general freezer factories, they transformed them into profitable plants. The management was also innovative and valued the services of customers. There is no satisfactory company without visionary leaders and managers. The management system was not entirely centralized, information and communication were comfortable across the management.

Core Competencies That Make Haier Successful Outside China

Staffing With Locals

While entering a new market, Haier group first identified itself in the local markets of their venture country by employing staff that is familiar with the local needs. They identified locals that had worked with top brands preferably white goods. They placed experienced managers to oversee their overseas operations. Yang recognizes that they needed information to venture into new markets; they used locals to get the consumer needs and satisfy them. The best way for information was through local staffing. However, they placed their employee to oversee the entire marketing and progress in foreign countries to get information on the needs of domestic consumers. This helped Haier to focus on the tiny details that made their products unique among other competitors

Establishing Credibility By Venturing Into Difficult Markets

Haier first invested in developed countries which was difficult for them to establish their brand. They were able to compete with high brands such as Phillips and others in Europe and America which gave them credibility. Unlike other companies that ventured into secure markets, they were able to acquire competition skills that enabled them to venture into the Asian countries because they had established the credibility of their brand. Haier saw difficult markets as a way of raising standards of their products which would be acceptable in any other market. This was a unique way of investment which had not been tried by other companies. This made Haier more successful beyond the borders of China.

Impact Of Pressures On Local Responsiveness And Cost Reduction To Haier

Haier had to adopt new marketing and manufacturing strategies to cope with these pressures. The pressures made Haier more innovative and ventured into new manufacturing skills to cater to the consumer needs. They were forced to venture into new global markets where they faced competitions from already established brands. However, they had to respond to these pressures. Through the demands, they incurred new costs of production, like in the USA they learn of a new consumer preference on the refrigerator which prompted them to manufacture refrigerators with video recording devices where messages would be left instead of written notes.

Strategy Adopted In Response To Market Pressures

Haier adopted a transnational strategy among the four other strategies to respond to the market pressures. The company used both localization and globalization at the same time to meet the consumers and the market standard. Haier used the local staffs to communicate with its head office to understand the consumer needs as well as ensure a global standard product which was accepted internationally. This strategy has helped Haier respond to pressures from cost reductions and locally responsive. They have opened subsidiary factories in countries where they have established their brand to minimize costs while they manufacture products according to the consumer preference and taste.

Examples Of Pressures

In America when Haier moved its operations there, it was faced with challenges where the local customers could not buy the Haier refrigerators because they were not different from the locally produced refrigerators. Haier did research and made the refrigerators according to the consumer preference, for example, they added a separate ice cream compartment with different temperature on their refrigerators. The American market also did not like freezers with deep compartments since it was not easy to reach. Therefore Haier had to respond by building a two model compartment with drawers.



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