Internationalization Process Of Haier Case Study

4.1.3 Internationalization Process of Haier

• The first phase – the beginning of internationalisation

Zhang Ruimin established an internationalization foundation at the initial stage of Haier’s development. After being appointed president of the nearly bankrupt Qingdao Refrigerator Co., he immediately introduced the installation of new refrigerator technology and manufacturing equipment from Liebherr, Germany, in order to be able to produce high quality refrigerators (Lasserre, 2012). He also actively encouraged extensive cooperation with Liebherr by manufacturing refrigerators based on its standards. Those refrigerators were exported to the German market under the brand name Liebherr. After that the president realized that OEM is a quick method

If a company can gain foothold in the tough markets with fierce competition (i.e. European market, the U.S.A, Japan), then the company can easily expand from a strategically advantageous position into other easier markets (developing countries) with the brand reputation already established.

According to the strategy, entering the American market is a very important step of Haier’s internationalization plans. The U.S.A is the world’s superpower, which has a mature and competitive market. If Haier could successfully penetrate the American market, it could be a real multinational company. Haier started to export refrigerators to America in 1994. Initially, it was OEM manufacture which was successful. Then Haier developed their own brand step by step. In 1999 a production subsidiary “the Haier Industrial Park” was opened in South Carolina (Yi and Ye, 2003). After one year, the first refrigerator with label “made in the U.S.A” was off the assembly line. Over the past few years, Haier America has successfully established retail and service networks across the United States with a strong sales force, selling products nationwide and throughout Canada (Yi and Ye, 2003). The achievement of Haier in America is significant, as it means Haier is a real multinational company. Developed countries usually have high quality, energy and safety standards, and consumers

Customers in developing countries usually do not doubt products and brands, which are well accepted by consumers from developed countries. The firm, which fulfills the wishes of the world’s most demanding consumers, is more successful in dealing with customers from developing countries. When Haier began to expand in Pakistan and Bangladesh, local officials linked Haier’s presence there to its performance in the United States (Liu and Li, 2002). Its U.S and European experience was also beneficial to convince emerging market retailers to carry Haier products (Palepu et al., 2006). The internationalization process of Haier is illustrated below: Figure 4.1: Path of Haier’s Internationalization Source: Own illustration, adapted from Liu and Li, 2002

To date, in spite of a few failed FDI projects, Haier’s internalization strategy has been on the whole successful (Liu and Li, 2002). As one of the pioneers of Chinese companies going global, Haier sets a valuable example for other Chinese