HAIER Case Study Report: Challenges Faced by MNEs in FDI and Global Strategy Adopted

Running head: ASIA PACIFIC BUSINESS PERSPECTIVE
HAIER case study report
Name of the student
Name of the university
Author Note:

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Table of Contents
Introduction......................................................................................................................................3
HAIER as a producer of White goods.............................................................................................4
Major Challenges faced in USA......................................................................................................5
Does MNE’s usually face such challenges in FDI..........................................................................6
CAGE Problems..............................................................................................................................8
Global Strategy Adopted by HAIER to adapt to the problems.....................................................10
Exporting...................................................................................................................................11
Foreign Direct investment (FDI)...............................................................................................12
Conclusion.....................................................................................................................................13
Recommendation...........................................................................................................................14
References......................................................................................................................................16
Appendix........................................................................................................................................18
Appendix 1.................................................................................................................................18
Appendix 2.................................................................................................................................18
Appendix 3.................................................................................................................................19
Appendix 4.................................................................................................................................19
Appendix 5.................................................................................................................................20
Appendix 6.................................................................................................................................20

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Introduction
HAIER Group Corporation is a Chinese multinational company that specializes itself in
the manufacturing of consumer electronics and different types of home appliances.
Headquartered in Qingdao, China, the company designs, develops, manufactures and sells
different kind of electronic products that are needed for our daily use (haier.com 2018). The list
of products that are manufactured and sold by the organization includes the likes of refrigerators,
air conditioners, mobile phones, televisions, microwave and many other such different electronic
products of similar ranges and similar uses. The company is listed to be the largest shareholder
of white goods in the global market (haier.com 2018). The following report that lists the
company to be the most preferred brand globally proves its technical and service capability. The
Company is listed in the Chinese stock exchange and also in the European International Stock
Exchange of Frankfurt. The main reason behind the listing of the company in the European Stock
Exchange is to ensure its swift presence in the European Union market to make an easy and
efficient trade. The company has been able to get hold of the largest portion of the global market
because of the implementation of a number of effective strategies. The company though had a
very decent beginning gradually started to establish itself by diversifying its range of production
line and thus specializing in the manufacturer of televisions, micro ovens, air conditioners and
most recently established itself as the manufacturer of modern smart phones. The following
report will be highlighting the clear picture of the company as a major producer and the largest
market share holder of the global white goods.
HAIER as a producer of White goods
There is a common feeling of the majority of the western world that the manufacturers of
the main electronic goods brand that are used by the consumers are mostly produced by
companies like General Electronics, Whirlpool, Bosch or LG. However least number of people
has the idea that the largest producer of the white goods in the globe is HAIER located in China.
In the last 34 years the company has transformed itself from a local worn out factory of China to
a multinational company with a market share of more than 10.2% globally. The company
employs more than 60,000 people with each of them curves out a single step to the success of the
company globally. As mentioned earlier the company has been leading the charts of the largest

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producer of White Goods in the globe. In more specific words, the company has been leading the
charts of the largest white goods producer for consecutive 9 years starting from the year 2009.
This helped the management of the organization to strengthen the foothold of the company and
also earn the recognition of being the largest producer of consumer appliances globally by share
in the market. The data released by euro monitor international revealed that the volume of sales
of HAIER in major household electronic appliances accounted for more than 10.3% in the last
year. On the other hand the global revenue of the organization increased by more than 20% year
to year and now stands close to 250 billion Yuan that amounts to more than 40 billion US
Dollars. The company has ten different brand name subsidiaries that are present in the different
names and are allocated with taking the care of different types of business units of the company.
The company takes the help of the names of the subsidiaries and in turn manufactures and also
distributes a large number of commercial products in the HVAC and the refrigeration markets.
Apart from this there are other white goods including the likes of refrigerators, washers,
televisions, color TV sets, LED TV’s and other consumer electronics (Buckley and Hashai
2018). Apart from this there are also different kinds of other electronic appliances produced by
the company that also falls under the White Goods. This includes the likes of the washing
machines, water heaters, electronic kitchenware, sterilizing cabinets, baking ovens, steamers,
dishwashers and much other such similar kind of appliances deemed to be fit for the use as
kitchenware (haier.com 2018).
The main aim of the company is to ensure the creation of new and innovative home
appliances that generally anticipates the fast changing needs of all the different consumers
around the world (Avendano Melguizo and Miner 2017). The company is an independent and
leading global provider of business intelligence on the industries, countries, consumers all
around the world. One of the major reasons behind the success of the company can be attributed
to the responsiveness of the management to the market and satisfying the different needs and
demands of the customers over the products manufactured by the company. The management of
the company generally keeps a close eye on the feedback of the customers after using their
products and necessarily changes or adds new specifications and innovative features to make
sure that the products are always the smartest and the most innovative. This in turn increases the
revenue of the company and makes it capable of being the leader in the global market of white
goods. The technical expertise of the company is believed to be unmatched as it often does a

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thorough market research and finds out the advantages and the disadvantages if any of a product
with the customers and then tries to find the best solution available and innovates a product
according to a new specification to fit the demands and mitigate the problems of their customers
(Bakir and Brennan 2016). An example in the following regard can help to determine the
innovative capacity of the organization. During its early years when the company used to
manufacture only refrigerators, the marketing team of the company observed that majority of the
students in the college dormitories placed wooden boards across the two refrigerators to save
space in the cramped rooms where they lived (Bradshaw 2017). The report submitted by the
marketing team of the company mentioned this problem of the students and ask the organization
to come up with a bright and effective solution to ensure the benefit of the customers (Bakir and
Brennan 2016). The report of the marketing team was taken up quite seriously by the
management and thus within a few months, the research and development team of the
organization came up with a small yet compact a new kind of refrigerator that would save ample
space for the students in their clogged rooms without compromising any amount of refrigerator
space. The changes in the production, development and innovation of these white goods by the
company had not just happened in a day but took a large time to complete gradually. These
changes combined together to create the success story of the organization at present.
Major Challenges faced in USA
As already mentioned earlier the HAIER Group is the largest manufacturer as well as the
market holder of White goods in the globe. The stiff local industry competition in the early
1990’s due to the country’s inclusion in the World Trade Organization. The competition in the
domestic market grew fierce due to the growth of new and small firms and also the entry of a
large number of major western firms to take advantage of the super cheap labor of the country.
The management of HAIER however, took a completely innovative step to ensure the
sustainability in the market (Bende-Nabende 2018). The company decided to diversify the range
of products and turn it into a multi production company for white goods.

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Does MNE’s usually face such challenges in FDI
According to, Bradshaw (2017) there is an increasing recognition that understanding the
forces of different types of economic globalization requires looking at the foreign direct
investment first by different types of multinational corporations during the time the firm is based
in other countries by means of the acquiring or establishment of production facilities. There is a
huge importance of FDI and multinational Corporations in the economy of the globe. As the
present world economy has shifted its base to the developing countries of the world the focus of
the MNC’s have naturally shifted on these countries. The population of the globe has
transformed its needs from just basic needs to a more consumption oriented needs (Hermelin
2015). The following tendency has created a proper environment for more and more ne
consumers of different types of new and innovative products and services across the different
types of emerging markets. The main focus countries of the multinational companies are India,
China, Mexico and Brazil. These countries have shown a sudden and huge increase in the
economic growth. Thus such a growth has been the main reason for the companies to invest in
the countries as these strategic investments will prove to be a success in the near future (Bende-
Nabende 2018). The other reasons behind FDI in these countries are the political, cultural,
sociological transformations of the company. However the changing scenario of world economy
has forced the management of these companies to rethink of their investment plans in overseas
countries.
As said by Bradshaw (2017) the MNE’s having operations in the emerging markets have
great scope to formulate, grow as well as sustain because these type of markets are generally
growing stronger and better year after year. The MNE’s must never forget that the following
markets are highly risky and less predictable, unstable, and very much less profitable in nature.
The main challenges that are faced by the organization are as follows;
 Globalization is one of the most important challenges that are faced by the organizations
as because the increase in the globalization forces has brought certain changes to the
shared value and institutionalized practices (Brennan 2015). It helps to bridge the gaps in
global governance systems are among the most important challenges faced by the
policymakers and the corporate leaders alike.