Haier's Strategic Expansion into the US Market: A Case Study

This case study examines Haier's international expansion, specifically its entry into the US market in 1999 and subsequent developments. The analysis begins with an overview of the factors driving Haier's initial expansion, emphasizing the company's strategic vision and the support from the Chinese government. It then uses PESTEL analysis to assess the feasibility of further expansion into the US market, considering political, economic, social, technological, environmental, and legal factors. Porter's five forces are applied to evaluate the competitive landscape of the US white goods industry. The case study also explores the implications of Haier's acquisition of GE Appliances, discussing the potential benefits and challenges of this strategic move. Furthermore, it highlights the strategic implications for emerging Chinese multinationals and discusses the benefits of Haier's success in the US market, concluding with lessons learned and recommendations for future strategies. The study provides a comprehensive understanding of Haier's journey in the US market and its broader implications for international business and strategic management.

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Haier Case Study
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Table of Contents
Introduction......................................................................................................................................2
1. Factors behind Haier’s expansion to U.S. in 1999......................................................................2
1.1 PESTEL to analyze the possibility of expansion in U.S. in 2016-17....................................4
2. Porter’s five forces analysis on the U.S. white goods industry...................................................6
3. Haier buy of GE Appliances and after effect analysis.................................................................6
4. Strategic implications of emerging Chinese multinationals such as Haier..................................7
5. Benefits of Haier’s success in the U.S. market............................................................................8
Lessons Learned & Conclusion.......................................................................................................9
References......................................................................................................................................11

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Introduction
International expansion has mostly become popular with the advent of globalization.
Companies started to look into the different international market as a potential option to grow
further. Many companies in the past have attempted the same tom acquire a significant presence
in their selected international destinations. However, very few companies have been successful
in creating a successful image of theirs into the various international markets (Gatwiri et al.,
2014). However, international expansion has never been easier for multinational companies.
They had to face the different external challenges that had existed in the target country. The
political, social, economic, environmental and the different other factors have kept on deterring
such companies in their operation to international countries.
The current study is based on Haier and its expansion into the United States earlier in the
year 1999. The expansion has had happened because of the strategies that different Chinese
companies adopt. However, they had to face several challenges in their business into the United
States (Li, 2016).
The current study will briefly cover the expansion into the United States in the year 1999.
Moreover, the main purpose of this assignment is to analyze the different challenges that exist in
the United States and the feasibility of future expansion into the United States.
1. Factors behind Haier’s expansion to U.S. in 1999
The Chinese government is also aware of the benefits, which is why they support a
global expansion of the various local companies. Haier on the other hand had already realized the
importance to expand to a global market preferably into the United States. They were smart
enough to realize the importance of expansion into the US. The expansion according to the

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company will help them by supporting their business expansion with various services such as
product designing, production and marketing that are not possible in China (Wang, 2015). The
expansion of Haier into the United States in the year 1999 was because of various following
factors:
Change & change more times-
Haier is a rare innovative company that has already analyzed the importance of shifting
few of its operations to a potential international market. The company had analyzed that the
United States is a potential market because of the customers it has and the various resources
available in the country. Haier had realized that a business expansion will be of huge requirement
once there are plans for expanding the business. On realizing the fact the company had smartly
entered into the US market with a single product initially. The entry was acknowledged by the
US customers. However, the success could not be lived further because of few reasons such as
limited resources, negative effect due to the country of origin, uncompetitive experience of
international market and limited R & D capabilities. There are some more reasons such as
competition in the white goods industry and the lacking framework of China to understand the
international market (Shen, 2012).
Using creative ideas-
Creativity is the other asset that has encouraged the company for international expansion.
They were innovative enough to understand the requirement to have a global centre to support
the product designing and production in the nearing future. This is why the company has sensed
the potentiality in the United States. The company had to suffer mainly because of the limiting

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capabilities and the never dying competition from the other US giants such as Whirlpool,
Electrolux etc (Cardoza & Fornes, 2012).
International strategic objective-
Haier like some other companies in China was keen to expand to international platform.
The company was able to identify the US as a potential market. China itself has shown its
interest in supporting a global expansion to various large size companies of China. Haier was
involved in exporting one third of the entire production to other international companies. Haier
has opened up a R&D center in the United States. It also went ahead with the strategy to localize
the human resources. In course of the strategy, the company had mostly hired the American
employees. However, all such efforts di not pay off because of few reasons such as incapable
R&D and the expected competition from white goods industry giants in the United States (Ellis,
2017).
1.1 PESTEL to analyze the possibility of expansion in U.S. in 2016-17
Political- Politically the United States is good for business. The country is one of those few
nations where Press is mostly free to express their demand. Additionally, there is political
freedom to different business in the country. However, there are antitrust beliefs in the United
States for the Chinese companies (Lake, 2013).
Economic- The United States is one of the powerful economies in the world. Dollar is the
strongest economy in the entire world. The country is an open economy, which is good for the
different business. People living in the country are the most powerful in the entire world. The
economy of the country will prove to be the driving force for the economies of other Western
countries (Basu & Foley, 2013).

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Social- Customers are one of the most powerful in the world. Like other countries, ageing
population is a concern for the country. This will create shortage of labor in the country. This
will also enhance the tax rates in the nearing future. Education in the country is one of the best in
the world, which means an availability of educated customers. This is very important to
understand a product and judge that based on the different quality parameters (Antin & Shaw,
2012).
Technology- Technology has always remained an integral asset for the country. This has helped
the country and its economy. The country is facing stiff competition from rising economies such
as China. However, the country will believably retain its supremacy in technology. Information
Technology sector is another strength, which has catapulted enormous success to the country.
This will help the different home appliance companies in having an advanced set up for Research
& Development (R&D) (Lamoreaux, Sokoloff & Sutthiphisal, 2013).
Environmental- There is several challenges to the country environmentally. The country has
progressed tremendously in the Oil industry. This is on the other hand has supported the rise of
carbon emission. Additionally, the state government is very uncertain with its policies. One of
such example is of separation of the United States from the Paris Climate Agreement. This might
be a challenge to the home appliance industry. The different home appliance company needs to
be careful in practicing the sustainability features in order to have a healthy and unobjectionable
business (Jorgenson et al., 2013).
Legal- There is certain new regulations that the appliance manufacturing companies are needed
to face in the future ahead. They are needed to face some new regulations apart from ISO 9000
series (Greenman & Hall, 2013).

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2. Porter’s five forces analysis on the U.S. white goods industry
Competitive rivalry- The home appliance industry in the United States is very competitive. This
has already tested the capability of Haier in its earlier business in the United States. The industry
is hugely dominated by Whirlpool, AB Electrolux, GE Appliances and LG Electronics. Haier
will face tough competition from these giant companies (Patel, 2013).
Supplier power- This is also very low. Appliance companies have the dictating power with
them. They even force the suppliers for quality products. This simply means that establishing a
relationship with the suppliers will be comparatively easier for the Haier Company in the United
States (Patel, 2013).
Buyer power- This is very high. Customers are educated and they have high concerns for quality
products. Additionally, there will be pressure to produce environmental friendly products (Patel,
2013).
Threat of substitution- Threat of substitution is very low. There are not many options available
as alternatives (Patel, 2013).
Threat of new entry- Threat of new entrants is on a very low side. This is because the
profitability is not very secured in the appliance industry in the country. To be successful,
superiority in distribution network is required. Nevertheless, this is always challenging to a
company representing China due to the antitrust activity of the US people (Patel, 2013).
3. Haier buy of GE Appliances and after effect analysis
GE Appliances are expertise in manufacturing refrigerators, dishwashers, washing
machines, dryers and electric ranges. They are technically advanced. The buying of GE

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Appliances will be beneficial for Haier in its entry into the United States in the nearing future.
The buying will also avail integration to the US culture. The company had one of the best
workforces in the United States, which is why things will be more suitable to the Haier
Company. The company, which had once suffered a collaborative business with the industry’s
big names in last decade of the twentieth century, will now have better chances to gain success.
Nevertheless, Haier will now have better chances in the United States (Keupp, Palmié &
Gassmann, 2012).
The existing employees in GE Appliances will probably face no significant challenges in
working with the new owner company Haier. This is because Haier is one of few companies that
had already tried to integrate with the local culture of the United States. They will probably
pursue the same strategy because it is important for a Chinese Company to be localized with the
local culture in the US. Moreover, this is because of the antitrust beliefs in the United States for
the Chinese people (Keupp, Palmié & Gassmann, 2012).
The national and organizational culture is different. Haier belongs to China; however,
there will be very few challenges to the company in overcoming the cultural barrier that is
probable with the ownership of GE Appliances. They had already succeeded in overcoming the
cultural barriers that had existed in the United States in the last decade of the 20th century
(Keupp, Palmié & Gassmann, 2012).
4. Strategic implications of emerging Chinese multinationals such as Haier
The emerging Chinese multinationals such as Haier will not only bring happiness to the
different other Chinese multinational companies but this will also encourage others as well from
some other parts of world. Haier has tried to capture the market of the United States in the year

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1999 but they had to satisfy with an initial success. They had to then suffer from some strategy
related failure. The Haier expansion into the United States market will again be challenging. The
circumstances have not so far changed. However, there is something to cheer for. The buying of
GE Appliances might be helpful as the company has already impressed the US customers with
its wide range of home appliances. This means that Haier now in the year 2016-17 and in years
ahead will have the support of a reputed name, which it did not have in the year 1999 (Lewin,
Välikangas & Chen, 2017). Following will be the different strategic implications for the different
Chinese companies and for different other companies in the different parts of world:
 Their perspectives will be more positive for entering into the United States
 They will come to know that joint venturing with the local giant is indeed an effective
option provided if Haier succeed after the buying of GE Appliances
 Some other Chinese companies will be encouraged for entering into the United States
market because of the limitations of resources for the blue chip companies in the local
country (Ghemawat & Hout, 2016)
 This will also influence the Chinese government to have an effective framework for
governing the international business relations especially in the United States market
5. Benefits of Haier’s success in the U.S. market
Haier’s success in the U.S. market will not only serve its objective in the United States
but this will also infuse many strategic capabilities in the company, which will help Haier in
other international countries. Haier has planned to operate into the United States to enhance their
capabilities in product designing, production and marketing networks. The expected success in
the country will help Haier become efficient body in product designing, production and

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marketing networks. Such capabilities will provide following benefits to the Haier Company if
they succeed in the U.S. market (Ben-Jacob, 2016):
 The success will help the company move to other potential market across the globe
 An efficient product designing will mean a larger customer base in scope from across the
globe
 An improved marketing network will help the company reach to potential market and
leave a significant impact on the target market
 The company has so far not been able to dominate the white goods industry in the United
States; however, their success into the target country will mean a rebirth of the company
in the different parts of world
Lessons Learned & Conclusion
The current study has taught few important things, which are helpful for a global
expansion. The first thing it taught is never to give up. Haier could not succeed when it had
entered the US market in the year 1999. The company had kept on realizing their mistakes.
Consequently, they end up buying one of the leading appliance company GE in the year 2016-
17. The buying might be helpful for Haier in the US market in nearing future. This will also help
others to embrace into the global market. The second thing it taught is to give importance to
industry analysis in the local country. This will help to know the shortcomings in the respective
country. Moreover, this will also help in targeting a potential international market to enhance the
capabilities in the identified operational sectors.
Haier has had mixed success in its earlier venture into the United States in the year 1999.
This was mainly because of few issues such as incompetent R&D centre, incapable presence in

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the US market and a tough competition from the other market giants such as Whirlpool, AB
Electrolux, LG Electronics and GE Appliances. However, the joint venturing with the GE
Appliances might turn the table into the Haier’s favor. This will not only benefit the Haier’s
operation into the US and the other global potential markets but this will also open up ways to
other giant Chinese companies in the global market.

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