Haier Group Introduction

Haier Group Introduction On an Innovative Way to a World-famous Brand - A Brief Introduction of the Haier Group People first learned about Haier 17 years ago when Qingdao Refrigerator Plant (the predecessor of the Haier Group) introduced a refrigerator production line from the German Liberhaier Company. Then the plant received attention of new media again when inferior quality refrigerators were smashed just after they went off the production line. This event precluded the construction of an innovative road from the verge of bankruptcy to a world-famous brand. 17 years later, even a foreigner knows that China has an enterprise called Haier, whose products are exported to more than 160 countries and regions. Over the past 17 years, the Haier Group has undergone a period of substantial progress: over 4,000,000 sets of Haier household electric appliances have been sold on international markets while every year 10,000,000 sets of various electric appliances are bought by Chinese households. Haier's development over the past 16 years can be summarized in the following figures: The sales volume rose from RMB 3,480,000 in 1984 to RMB 60,200,000,000 in 2001, an increase of over 17,000 fold. The 2000 pre-tax profit reached RMB 3,000,000,000 and tax payment had amounted to RMB 5,200,000,000 since 1995. The number of employees increased from 800 in 1984 to 30,000 in 2000, an increase of 37.5 fold. The 2000 brand value was RMB 30,000,000,000, 7.8 times as many as that of 1995. The variety of products has been enriched from one model of refrigerator in 1984 to the current 69 items in 10,800 varieties, including white-, black- and cream-colored household electric appliances. Products have been sold in over 160 countries and regions and more than 38,000 sales outlets have been established across the world; since 1998, the value of foreign currencies generated from exports has been increasing at a rate of 100%; the 2000 value of export-generated foreign currencies reached US$280,000,000. The past 16 years have witnessed the development of Haier into a world-famous on an approach of business diversification and internationalization. Every step forward has been made through overcoming difficulties. Inspired by the spirit of "Committing Yourself to the Motherland by Pursuing Excellence", Haier has accomplished outstanding achievements and won recognition from home and abroad. In 1997, a list of the world fastest-growing household electric appliance manufacturers was published by an American journal Household Electric Appliances; Haier ranked first, exceeding GE and Siemens. The British newspaper Financial Times reported on November 30th 1998 that Haier ranked seventh in a rating for the most reputable companies in the Asia-Pacific region, the only Chinese enterprise within the list of the top ten. In a rating for the world best businesses, published by an American management consultant company Kolny and the Fortune magazine on May 19th 2000, Haier was the only one listed in the Asia-Pacific region. Over the past 16 years, Mr. Zhang Ruimin, CEO of the Haier Group, has earned good comments and praises from home and abroad with his new ideas and practice in the field of corporate management. From the OEC management model to the "market chains", Haier has developed from a stage of borrowing ideas from advanced management methods to entering a leading position to establish its own ways of management. On March 25th 1998, Mr. Zhang Ruimin was invited to give an lecture at Harvard University; the case of "Haier's Culture Activated a Shocked Fish" was written in the university's textbooks; On October 7th 2000, Mr. Zhang Ruimin gave an lecture on Haier's management and innovation at Lausanne International Management Institution; On December 7th 2000, the British newspaper Financial Times published a list of the World 30 most prestigious entrepreneurs; Mr. Zhang Ruimin ranked the 26th. Since 1984, Haier has maintained a high growth speed under fierce market competition. The secrecy for this success is innovation. Innovation is the core of Haier Culture; every Haier staff member should think about innovation in his work. Haier is aimed at creating a world-famous brand and entering the rank of the world top 500. When Zhang Ruimin mentioned this to the Chinese President Jiang Zemin during his visit to Haier on June 25th 1999, Mr. Jiang was pleased and said, "I think you can!" Haier History Haier is a super-large Chinese enterprise, which started out as the Qingdao Refrigerator Factory, founded in 1984 with imported refrigerator production technology from Germany. Armed with the brand name strategy initiated by Zhang Ruimin, Haier has actively engaged in technical innovation, scientific management, capital operations, mergers and acquisitions, and multinational expansion. It has completed its long march from a small enterprise burdened with 1.47 million yuan in debts to reach its present position as the No 1 domestic electrical appliance producer in China. When it was founded, the company had only one product and 800 staff. Now more than 20,000 employees are making over 13,000 products in 86 categories Starting out with imported technologies, Haier now has the advanced technology and depth of expertise required to set up production facilities in Europe and Southeast Asia. Technology exports to some developed countries in Europe signify a major breakthrough. Haier's development can be divided into three stages: Building a brand name (1984--1991): seven years to build up a strong brand name in refrigerators through a well-planned TQC (total quality control) system. Diversified development (1992--1998): seven years diversifying the product catalogue to avoid having all the company's eggs in one basket. Going multinational (since 1998) With the aim of building an international brand name, Haier now has 62 distributors and more than 30,000 outlets around the world. The company's target for the beginning of the next century is to enter the top 500 list of Fortune magazine. Major awards and honor of Haier Group 1. In 1994, Haier was awarded the ISO9001 certificate for product quality. 2. In September 1996, Haier received the ISO14001 environment certificate. 3. Haier has gained TUV and VDE certificates from Germany and a CSA certificate from Canada for safety and energy efficiency, as well as a UR certificate from the US for safety and quality (Haier was the first Chinese enterprise to join the UL list under its own name). 4. In January 1998, Haier ranked among the top ten light industry enterprises by the State Federation of Light Industries. 5. In December 1996, Haier's energy-saving and environmentally friendly refrigerators won a State second prize for scientific and technological progress. 6. On December 16, 1994, Haier won the State prize for modern enterprise management. 7. In April 1989,Qingdao Refrigerator Factory won a prize for enterprise reform and innovation. 8. In May 1998, Haier was named the "Flower of China's National Economy" by MOFTEC (Ministry of Foreign Trade and Economic Co-operation). 9. In 1990, Haier won the State Golden Horse Award for enterprise management. 10. In December 1997, China's Customer Satisfaction Movement Congress presented Haier with the Customer Satisfaction Cup. 11. In 1990, Haier won the State prize for quality management. 12. Haier refrigerators won first place in a German contest for refrigerator quality worldwide. 13. In 1998, Haier won the State prize for quality. 14. In August 1998, Haier won the Torch Enterprise prize from the Ministry of Science and Technology. 15. In 1996, Haier won a special prize for quality and efficiency and was named as an Advanced Enterprise for Quality and Efficiency. Both of these honors were given by the State's Quality Management Association. Inspection visits by State leaders 1. November 15, 1995 Premier Li Peng accompanied German Chancellor Helmut Kohl on a visit to Haier. 2. July 9, 1991 Then-vice- Premier Zhu Rongji visited Haier. 3. January 9, 1999 Vice President Hu Jintao visited Haier. 4. April 13, 1997 Shandong Provincial Party Secretary Wu Guanzheng visited Haier. 5. April 5, 1997 Li Nanqing, vice premier, visited Haier. 6. April 9, 1997 Vice Chairman of NPC Tian Jiyun visited Haier. 7. November 14, 1990 Former Vice Premier Zou Jiahua visited Haier. 8. October 9, 1995 Vice Premier Wu Bangguo visited the Haier Industrial Park. 9. June 19, 1990 CPC Political Bureau member Li Tieyin visited Haier. 10. May 28, 1995 Li Chunting, governor of Shandong Province, visited Haier and challenged it to make world-class products. 11. October 16, 1995 Former Top Army General Liu Huaqing visited Haier. 12. 1997 Party Secretary Zhang Huilai talked with CEO Zhang Ruimin at a ceremony to mark the 13th anniversary of the founding of Haier and the sixth anniversary of the founding of the Haier Group. 13. August 5, 1998 Director of the State Economic and Trade Commission Shen Huaren visited Haier. 14. April 7, 1990 CEO Zhang Ruimin posed with State leaders after receiving the State award of Best Entrepreneur. 15. Qingdao's Mayor Wang Jiarui accompanied Li Rongrong, vice director of the State's Development and Planning Commission, on a visit to Haier. 16. December 6, 1998 prime minister of Morocco visited Haier. 17. Yu Zhen, vice director of the State Economic and Trade Commission, visited Haier. 18. July 9, 1998 Jin Renqing, director of the State Bureau of Taxation, visited the Haier Industrial Park. 19. June 20, 1998 Chen Shineng, director of the State Bureau of Light Industries, visited Haier. 20. December 18, 1997 CEO Zhang Ruimin talked with Tung Chee-hwa, chief executive of the HKSAR at an award ceremony honoring the top Chinese entrepreneurs in Asia. Inscriptions by State leaders 1. November 15, 1995 Li Peng: Scientific management, technical innovation, maintaining one's honor and striving to be the best. 2. April 5, 1997 Li Nanqing: Breaking new ground, strengthening R&D efforts, reinventing and reforming, maintaining high quality and credibility, striving to be top-class and bringing honor to China. 3. October 9, 1995 Wu Bangguo: Creating an international brand name. 4. February 25, 1993 Chi Haotian: Breaking new ground and scaling new heights. 5. September 8, 1993 Tian Jiyun: To look further into the distance, we have to climb more floors. 6. November 17, 1990 Zou Jiahua: Never stop making improvements. 7. October 1995 Shi Guangsheng: Increase exports and earn foreign exchange for the country. 8. October 26, 1995 Liu Huaqing: To be even better 9. September 5, 1995 Li Chunting: To be top-class 10. December 14, 1992 Yang Shangkun: Going out into the world and bringing honor to the motherland 11. August 14, 1990 Peng Chun: Be innovative to stay ahead in the world 12. August 1991 Zhang Siqing: Reform, innovation and development 13. October 1990 Li Guixian: Never stop making improvements 14. October 1994 Yu Zhen: Keep reforming and opening up, break new ground, make innovations, try to achieve economies of scale, build a strong brand name and develop steadily. 17-Year-Miracle of Mr. Zhang RuiMin From 1984, the fame of Mr. Zhang RuiMin, Chairman of BOD of Haier Group, has been growing day by day. This entrepreneur, whose brain is full of modern management principles and Chinese ancient philosophy, continued to harvest many glory, including the front page image of Forbes and giving lectures in European business schools, etc. Mr. Zhang’s charisma came from his Haier Group. In early 80s, Mr. Zhang “hammered” the brand of Haier Refrigerator when he was 36 years old. Its high quality and service image is bringing huge profit to this collective-owned enterprise now: in 2001, the global revenue of Haier Group surpassed 60 billion RMB, 50% higher than the previous year. Further more, during the previous 16 years, its year-to-year revenue increase is nearly 80%. Its while home appliance counts for a quarter of China market. The market shares of its refrigerator and washing machine rank second and third among international brands respectively. As your know, Haier is only one of many home appliance manufacturers in China. From 2000, when Haier began its mass marketing, the competition became ever fierce. While earning more profit through its large sales channels, Haier had to find new way to decrease its product cost, which Mr. Zhang directed to overseas market. Depending on the brand effect accumulated during 17 years, Haier adopt a strategy different from other enterprises: building up its own manufacturing center in countries with different living standard, and adapting to the preferences of local customers. In domestic market, Mr. Zhang rejected price wall with other home appliance manufacturers. Instead, through innovation, he customized his products with high-new tech and many specifications according to sales order. On the other side, Chinese consumers are willing to pay Haier products at a higher price for its well developed after sales service network. Owing to Mr. Zhang’s wisdom, Haier kept a high sales increase in 2001. However, Haier encountered challenges on its future core competence. The margin of domestic home appliance market is becoming more and more narrow, so Mr. Zhang tried diversification in 2001 in Haier Group. Besides of its key business such as refrigerator, TV, air-con and washing machine etc Haier made great effort in cellular phone and computer: in 2001, Haier sold out more than 1.5 million mobile phones. In 2002, Haier has invested in 55 venture capital project, involved in many industries such as integrative circuit, software, etc. In 2001, Haier diversified into finance business, which was claimed one of the future potential development by Mr. Zhang. Within no more than one year, Haier has taken majority share-hold of Qingdao Commercial Band, Anshan Trust Co., and Changjiang Security Co., and has established an insurance agency company and a corporate capital company. Cooperated with New York Life Insurance, Haier formed a life insurance joint venture. Though admitted that involving into finance business means some risk, Mr. Zhang think it very important to Haier’s future: ”From the point of development, the combination of manufacture and finance can not insure the success of international company, however, international company must do it, and among the Fortune 500 in the world, 80 percent has successfully combined manufacture and finance.” Mr. Zhang hopes to synergy different businesses through investing in financial enterprise, thus to strongly facilitate Haier’s development. Anyway, Haier’s future has been tight with Mr. Zhang closely. Haier now is still a collective-owned enterprise, and Mr. Zhang take a little return from Haier. As he said, he is not willing to take the risk of improper operations, which might destroy the whole plan. It is well known that one of those enterprises encouraged by each level government targeting the world top 500. This is also the most important goal of Mr. Zhang. Projected on the current increase declared by Haier, Mr. Zhang is probably achieve this target in 2002, and Haier would be the first domestic non-SOE enterprise in this list which is operated according to market principles.