Haier Group - Internationalization Strategy

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CASE ANALYSIS
Haier Group - Internationalization Strategy
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1. The main features of Haier's internationalization strategy since the early 1990s
Internationalization is a process that is evolutionary as well as sequential in which the
foreign commitments build up over time which emphasizes on establishments of subsidiaries
overseas, production and manufacturing units set overseas, no exports or exports through
independent agents (Johanson and Mattsson, 2015). The initial internationalization of Haier
began in an unorganized manner. The organization targeted overseas markets in South-East Asia,
US, Germany, the Netherlands, and Italy. The strategy employed in the Philippines, and
Malaysia was the joint venture, in the US it employed sales agents through Welbilt Appliances
and Walmart, in Germany it employed Liebherr. The aim of expanding overseas was not to take
advantage of the manufacturing cost in China but to establish a global brand. As a result of this,
the organization raised the standards of manufacturing, development, marketing as well as
customer service so as to meet the international standards. In order to venture into the
international market, the strategy adopted by Zhang was to create the local brand. In doing this,
the company employed “locally designed, locally made, locally sold” slogan and implemented
the seeding- to use local distributors as well as sale agents to build brand recognition, rooting- to
set up manufacturing plants and get a market share and harvesting techniques-R & D and full
range activities in international market. Instead of concentrating on the near markets with similar
economic development, Haier focused on challenging markets. The strategy was to use people
with local thinking and skills based on the target market. They use the experienced executives
with knowledge of leading appliance companies to head the foreign establishments with
expatriates from China as technical employees (Thai and Chong, 2013).
In US, they used Jemal from Wellbilt Appliances whose leadership Haier allowed the
company to penetrate niche markets. They positioned and specialized on small refrigerators for

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clients in offices, student’s dorms as well as wine coolers. Through this strategy, the organization
became a leader in this market segment and thus expanded to window air conditioners as well as
full-size appliances and used the same pricing strategy as those of the competitors (Sui and
Baum, 2014). After capturing the market, they opened a manufacturing plant and used product
differentiation via the innovative design targeting particular need of customers (Osuna, 2014). In
order to augment the market penetration and to fully enter into the entire US market, they created
four market segmentation as follows; 22 years to 30 years, 18 years to 25 years and 35 years to
55 years. They designed products with focus on each of these segments. In 2012, they created an
R & D center in order to enhance its capacity in US and later the company became a Haier
Group established subsidiary in 2013 and Adrian Micu became Haier America’s CEO. In
Europe, the company began by the establishment of sales office in Varese and later employed
acquisition strategy to obtain Meneghetti Equipment in order to take advantage of its distribution
network and the refrigerator plant. The company shifted from positioning itself on low price
brands to middle segment of the market through the use of product aesthetics and design (Vahlne
and Johanson, 2017). The company utilized the design center situated in Varese as well as
German R & D center located in Frankfurt with an emphasis in three-door models. In 2015,
Haier Europe was led by Nick Fierling who was from Whirlpool. In venturing into the Asian
market, Haier Group utilized joint ventures strategy owing to the fact that the company can gain
the local market and use the resources from the partner (Ramsey and Bahia, 2013). Additionally,
acquisition strategy was employed in 2012 where the company acquired Sanyo’s domestic
appliance section despite the Sanyo’s employee challenges of Haier’s management system of
individual responsibility as opposed to Sanyo’s collective responsibility. On the other hand, the
company acquired Fisher & Paykel in New Zealand specializing in washing machines, cookers

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and dishwashers in order to take advantage of its wide network spread over Italy, US, Mexico,
Thailand and Australia.
2. Haier's internationalization strategy in Comparison of typical of Western enterprises
The internationalization strategy employed by Western organizations starts immediately
after they have created a solid foundation and penetration of product brand in their local market.
In respect to the fact that penetration and development in international market being a difficult
one, these corporations quite often employs domestic strength for global capabilities (Hessels, J.
and Parker, 2013). This is because penetration into a new country is just like getting started in
business from scratch where there is no knowledge of the market, sales and lack of marketing
infrastructure. The western organization treats this as an incremental source of revenue for the
available services and products. These organizations pursue the international market with a focus
on risk and investment minimization; employ a sale push approach instead of market-driven
approach and a focus on top-line obsession with a view of growing the revenue instead of profits
(Johanson and Mattsson, 2015). It is apparent that international sales in a norm for
internationalization in western organizations. In a number of these organizations, they employ
indirect channel of a local independent distributor or agent instead of using a directly controlled
marketing subsidiary (Hamel, 2012). It is through the use of local independent distributor or
agent where big organization does not know the costs as well as their operating profitability in
that country (Young et al., 2014).
In comparison, Haier Group began its internationalization in what was a haphazard
fashion by entering a number of overseas markets through established joint ventures with local
companies in South-East Asia; sale under a retailer’s brand under Walmart and Welbilt
Appliances in US; and sales agent and distributor in Germany and Italy. Even though the