Asia Pacific Business Perspective: Haier's International Operations

This report delves into Haier's international business operations, examining the company's strategies for navigating global markets. It provides a company profile, highlighting Haier's evolution from a small refrigerator company in China to a global appliance giant with manufacturing facilities and r...Read More

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Asia pacific business perspective
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Introduction
More and more business organizations from the developing countries are entering in the
international market in the recent times. Business organizations from the developing economies
such as India and China are rapidly gaining brand identity due to their few competitive
advantages. One of the key competitive advantages possessed by them is their low cost of
production due to the fact that the cost of resources in the developing countries are much lower
compared to the developed countries (Panizzolo et al., 2012). Thus, with their cost effective
products, they are rapidly emerging as potential challengers for the established players in the
market.
However, in entering in the global market, various aspects should be determined by these
organizations in order to effectively cater to the market. One of the key factors is cultural aspect,
which is different in different regions. Organizations have to adhere with different cultures in
operating in the global market (Vaara et al., 2012). Differences in political and economical
differences are also key determining factors for the organizations. This report will discuss about
the determining factors being faced by Haier in operating in the international market. Moreover,
the challenges being faced by them in investing in different countries will also be discussed in
this report.
Company profile
Compared to its market competitors, the operational history of Haier is much less due to
the fact that is was being originated only in 1984. Haier was being originated in China as a small
refrigerator company. However, with the change in time, they have initiated aggressive
innovation strategy to foster their growth in the market. Their rapid generation of innovative

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ideas helped them to enter in various market segments of customer appliances such as television,
Air conditioners, mobile phones, washing machines and vacuum cleaners (Haier 2017). This
helped them to topped the list of most valuable brand of China for several years. However, in
their initial stage, Haier had only operated in their home country of China. In the early nineties,
they have initiated the policy of international business. In 1990, they had started to export their
products to South-East Asia. Afterwards they have entered the western countries. Currently, they
have 28 manufacturing facilities around the world along with catering to the customers from
more than 58000 retail outlets in more than 160 countries. Thus, currently they are truly a global
organization with having diverse product portfolio and presence in different countries around the
world.
Strategy initiated by Haier to deal with CAGE issues
According to the CAGE framework, there are four key challenges that should be
considered by the organizations in operating in the international market. The first aspect is the
cultural differences in different countries (Dunning 2012). Due to this reason, Haier has initiated
of having the manufacturing facilities in the host market. This policy helped them in effectively
determining the requirement of the local market and offering the products accordingly.
Moreover, having the manufacturing facilities in the host country had helped them in employing
the local human resources, who will have more knowledge about the local cultural aspects.
The next aspect in this framework is the administrative aspect. This factor talks about the
distance in administration due to the vast market area in the international business along with
different political scenario. To cope up with this challenge, Haier has implemented the
centralized management approach for all of their manufacturing facilities around the world

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(Fischer, Lago and Liu 2013). Thus, all the operation facilities in different countries of Haier
adhere with the local rules and regulations along with complying with the centralized
management objectives of them from the home country.
The next factor is geographical distance. In the international business, the market area is
so large that it covers several times zones, climates and natural environments. Thus, the products
of Haier are being customized according to the local scenario (Wang et al. 2014). For instance,
they offer computer-controlled refrigerators for the American market and products having less
energy consumption in Italy. Moreover, the approach of centralized management style is also
helping them in geographical barriers with the help of updated communication technologies.
The last aspect is the economical distance. Haier operates in different countries ranging
from high income to low income economies. Thus, their products also cater to different
customers segments with having diversified product portfolio. In addition, the sourcing of low
cost components from their home country is helping them in reducing their cost further. This is
due to the reason that, China is having low cost of human and other business resources. Thus,
sourcing of the cheap components from China long with utilizing the natural resources in the
host country is helping them in effectively driving their operational activities. Thus, by
implementing these strategies, Haier is dealing with he issues stated in the CAGE framework in
their global operation.

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Reference
Dunning, J.H., 2012. International Production and the Multinational Enterprise (RLE
International Business).
Fischer, B., Lago, U. and Liu, F., 2013. Reinventing Giants: How Chinese Global Competitor
Haier Has Changed the Way Big Companies Transform. John Wiley & Sons.
Haier, (2017). [online] Available at:
http://www.haier.com/mediakit/companyprofile/201502/t20150210_260980.shtml [Accessed 21
Sep. 2017].
Panizzolo, R., Garengo, P., Sharma, M.K. and Gore, A., 2012. Lean manufacturing in developing
countries: evidence from Indian SMEs. Production Planning & Control, 23(10-11), pp.769-788.
Vaara, E., Sarala, R., Stahl, G.K. and Björkman, I., 2012. The impact of organizational and
national cultural differences on social conflict and knowledge transfer in international
acquisitions. Journal of Management Studies, 49(1), pp.1-27.