Universal Business School

Cardiff Metropolitan University

MBA 7005 Strategic Global Marketing Writ1 Assignment on
Haier Appliance Company
Submitted to: Professor Elora Basumatary

Submitted by: Alolika Dutta Roy

Batch: CMBA2Y3
Submitted by: Alolika Dutta Roy
Roll number: 1909
Batch:1 CMBA2Y3

Roll Number: 1909

 Table of Contents

1. Introduction------------------------------------------------------------------------------------------- 3
2. Haier foundation and its global presence--------------------------------------------------------- 3
3. Market entry strategy by Haier -------------------------------------------------------------------- 3
4. Why did Haier enter India? ---------------------------------------------------------------------- 4
5. PESTLE Analysis------------------------------------------------------------------------------------ 4
6. Porter’s Five Force Analysis ----------------------------------------------------------------------- 5
7. Strategies adapted by Haier before the expansion ---------------------------------------------- 6
8. Why Haier failed in India? ------------------------------------------------------------------------- 7
9. The marketing mix helped to reinforce the organisation’s position in the host country --- 7
10. Eric Braganza, the savior of Haier ---------------------------------------------------------------- 7
11. Conclusion-------------------------------------------------------------------------------------------- 8
12. Bibliography------------------------------------------------------------------------------------------ 9

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 “Every single social and global issue of our day is a business opportunity in disguise.”
-Peter Drucker

Introduction:
As it is correctly said by Peter Drucker in this 21st century every large or medium organisation seeks an
opportunity to enter the global market and dreams to become the world leader one day. To achieve this big
dream many companies have jumped into the global market without any proper pre-planned strategies and
failed drastically in the global market. The changes in culture, languages, symbols, tradition, habits vary
radically from place to place, country to country. There are some companies who have adapted the new culture
and wrote their own success story in a different manner. Taking an example of McDonald's when entered Indian
market their beef burger was not accepted in India as it is against the values of some community but they did
not grieve rather they came up with a new strategy and introduced McAloo Tikki Burger which was an instant
hit in India considering a large number of Indians are vegetarian.
As businesses grow internationally, their ability to align their internal business strategies and
management practices with the international market becomes essential to maintaining profitability and growing
market share. When decisions on international expansion are 'unaligned' with organisational structure, business
strategy, and administrative processes, businesses may lose market share and sales, incur increased costs and
inefficiencies, create frustration among customers and suppliers, create internal organisational tension and lose
strategic direction. Unanticipated foreign globalization provides some managers with exciting opportunities but
confuses others with the news regarding their roles, duties, and relationships.[ CITATION RON01 \l 1033 ]
Haier foundation and its global presence:
A global household appliances and consumer electronics company based in Qingdao, China, Haier
Group Corporation is. According to data released by Euro-monitor Haier, the number one brand in big
appliances worldwide is for 10 consecutive years from 2009–2018. In 2019 BrandZ also classified the Haier
brand as the world's most profitable IoT platform brand with a mark-value of $16.3 billion. In 2019 Haier Smart
Home ranked 448 on Fortune's Global 500 list, with revenues of $27.7 billion. Now Haier has spread in Asia,
North America, Europe, Africa, the Middle East, and the whole world. .The planet has 10 research and
development centers, 24 production parks, 66 innovation centers, and 108 developer plants. New brands
continue to join the Haier family, with Sanyo Electric, Fischer Parker, GEA, Candy becoming a Haier member.
Haier deals in premium range of home appliances products such as refrigerators, washing machines, Television,
air conditions, water heater, microwave oven and also commercial freezers as business appliance. [ CITATION
Hai19 \l 1033 ]
Branding is based on a broadly optimistic plan for business success. In formulating differentiation
tactics, Haier developed two approaches, including "going out, moving in and going up" along with the "three-
stage approach." They aim to win ground first in the mainstream global household appliance markets by
reaching emerging markets such as Europe, the United States, and Japan and then continue with the favorable
positions gained in those major markets. Next, take small retail outlets for national goods that satisfy urban
traditional consumer expectations and ultimately drive the high-end and creative goods sector. The top ten
networks in Europe and the USA had now generated sales in over 100 nations and territories. On average 125
consumers in other countries become Haier customers per minute.[ CITATION Hai15 \l 1033 ]
Market entry strategy by Haier:
Haier electronics group co Limited is now one of the top most appliances manufacturers in China. In the
global refrigerator manufacturing sector, Haier Group corporate husband has a market share of 5.3 per cent in
the entire world. Haier gained popularity by familiarizing the company with people and computing for a bigger
market share with the existing developed and older brands.[ CITATION Kri19 \l 1033 ]
Haier had the vision of becoming the world leader in the home appliances sector hence the entered the
Indian market in 2003. They had this big dream of becoming the number 1 home appliances company in India.
This dream soon shattered as Haier witnessed loss after starting operation in India. In an exclusive interview
then President of Haier mr T K Banerjee told haier electronics which is the china's top home appliances maker
is determined to become india's third largest home appliances and consumer electronics farm by 2010. 
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Why did Haier enter India?
In almost all the major countries, it has followed the 3 in one approach. Whereas in the smaller
countries, they were either assembled or imported. They made their entry strategy based upon the relationship
between firm’s competencies and commitment.
1. Haier entered India at a time when India was seeing high growth rate of its GDP as 7.9 in 2003 which
made India as one of the potential emerging market.
2. Then India was emerging as one of the biggest home appliances market in the world with an expected
growth rate of 20% for 2005-2010. [ CITATION Pal06 \l 1033 ]

The growth rate

of GDP and the
home appliances sector
Source: Haier in India: Building presence in a mass market beyond China (fppt.com)

3. India had favourable government policies for the business and the tariff and import tax rate was less
back then.
4. The situation of Indian market was different in 2003 than now. There were very low penetration in
Home Electronics and a huge scope as the purchasing power of the middle class people were gradually
increasing.
5. The rural India was huge scope for them to grow as they are gradually developing.

The market penetration of Television and Refrigerator in 2004

Source: Haier in India: Building presence in a mass market beyond China (fppt.com)

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PESTLE Analysis: Haier did detailed analysis of Indian market as well as other factors that could have
affected their business and hence a detailed PESTLE analysis was done by them to evaluate the factors such as
political, economic, social, technological, legal, environment.[ CITATION Son17 \l 1033 ]
1. Political
 India was politically stable.
 Industrial policy often changed with respect to the ruling party.
 India has international Stability.
 Reforms were often slowed down by political hassles.
2. Economic
 The primary interest of Haier to grow in India was its extremely high GDP growth rate.
 Collective income of the people was gradually increasing.
 High Inflation also contributed to high employee pay demands.
 There was high economic Reforms and globalization happening then.
 There were also issues like high tax rates as well as dual taxation.
3. Social
 Changing lifestyle has helped to increase demand for endurable for consumers.
 With the increasing income consumer durables were seen as status symbols.
4. Technological
 Technology was not a big concern as it could easily be imported by Haier.
 India did not follow global hardware-manufacturing requirements.
5. Legal
 India has stable Laws on hiring and employment.
 Disputes could be long-drawn due to slow legal process.
6. Environmental
 In India setting factory was challenging as pollution was a crucial problem.
 No environmental legislation had been in place especially for the industry of electronics.
Porter’s Five Forces Analysis:
Along with several analysis and
evaluation Haier did Porter’s Five Forces
analysis before entering Indian market.
As it is known that competitors, suppliers,
and customers are three pillars of any
business it is essential to analyze them
before entering any new market.
[ CITATION Bab16 \l 1033 ]

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 Porter’s Five Forces Model
Source: https://yourfreetemplates.com/porters-five-forces-template/

1. Bargaining intensity of providers:

 In the 1990s Haier created vertical incorporation for controlling its provisions.
 Haier has likewise settled a solid association and participation with its providers to make sure about their
size, amount, and offices help.
2. Bargaining intensity of clients:
 Haier advances its business to flexibly to the retailer for circulation.
 All of Haier's items were designed and fixated on after-deals administrations to make advertise
separation through imagination, quality, and cost.
3. Competitive competition:
 As with its huge capital, Haier's business has gotten tremendous, different organisations are battling
more to remain in the market.
 With the present downturn in the economy, most organisations will in general lower the catch costs.
4. Threat of substitutes:
 In 1984, China's showcase needed to manage 100 fridge makers. Presently, the number has enormously
expanded. Haier has incorporated the opposition and put more in R&D to improve and develop.
 Duplication of the products is a risk with the improvement of innovation.
5. Threat of new participants:
 The organisation had set the high passage boundary in this market, for example, setting up huge capital
for assembling, and development.
 The business additionally situated its image well globally and actualized effective showcasing
techniques to manufacture new section hindrances.
Strategies adapted by Haier before the expansion:
 Brand communication: They adapted a very simple brand communication strategy which proves that
Haier had the potential to become a global player. Haier believed in silent promotions instead of promoting
their products they promoted savings, family, performance, quality etc.
 Strategic alliances: To minimize the gap in communication with the country Haier decided to form
strategic alliances with Fedder Lloyd Corporation and gaining knowledge about the political systems,
competitive conditions, language, culture, and business systems of the host country. They also ensured
penetration into the new market by sharing the costs and risks of development with the local partner.
 Quality: Haier has always believed in the strength of their quality products. They were the number one
in China with respect to quality of their products.[ CITATION LIU02 \l 1033 ]

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 Strategies implied by Haier in changing years
Why Haier failed in India?
For Chinese company Haier Inc, the world's biggest retailer of large appliances, joining India as a global
emerging market is like getting a double-edged sword. Its global presence gives it credibility to sell more
sophisticated goods that warrant a premium price, but the ability of Indian consumers to accept its high-priced
China-made goods has yet to grow. Sales remained sluggish and market share marginal seven years into its
India Company endeavors. The business then made a dramatic shift in pricing strategy and revamped its
marketing system in order to save its share.
Strategies that did not work in Indian market:
 Output began by outsourcing; later company began operations by purchasing Anchor Daewoo
Electricals.
 Custom style to suit local needs.
 Marketed as a locally manufactured product.
 Every company set the expected revenue amount while entering a new market but failed to achieve the
revenue targets set.
 Produced locally at Pune factory
 Just panels were being imported for the LED TVs and water heaters.
 Investments made by the stakeholders were not paying off and the operations needed revision.
 Heavy tax policies have
resulted in a decline in the profit
margin which has resulted in a
decrease in demand.
 They could not create a good after
service reputation. Lack of
communication led to less after sales
customer care which decreased
retaining customer.
 They primarily focused on premium
product strategy hence leading into
low market share

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The marketing mix helped to reinforce the organisation’s position in the host country:
Product:
o New innovative products had been launched that tailored to the needs of Indian consumers.
o As one of the main reasons of their downfall was poor after sales customer service to recover the
situation they increased the number of service centers
o Product portfolio was further diversified to reach a wider audience and cater to different markets.
Price:
o Haier tried to reposition itself in the mid and high-end segment market. (Value for money)
o Pricing strategy was changed in such way that it tailored to keep the price below foreign competitors'
prices and above the local competitor’s prices. (Better products with low premium)
Place:
o The network of Haier Experience was expanded in centers to showcase all products under one roof.
o Diversification of the distribution Network to support the entire Product Portfolio
o Dealership network was extended to tier 2 and tier 3 cities.
o They started using digital media for e-tailing.
Promotion:
o They increase their focus on
digital media for display and promotion
(previously it was5% of total
market)
o Sales promotional schemes
was done in regular intervals to both
customers & dealers (exchange offers, easy
EMI, extended warranty, high margin
to dealers.)
o Increased marketing expenses to
improve brand visibility and
awareness.
 Eric Braganza, the savior of Haier:
“I look forward to being a part of the company in these challenging and exciting times. I hope to utilise my
experience in the sector to develop a strategic roadmap for propelling the Haier brand forward in India.” -were
the first words of Eric after joining Haier as president. He saved the declining revenue and made it what it is
today.[ CITATION The09 \l 1033 ]
 In the existing segments, Eric introduced 25 high-end products such as LED TVs, deep freezers,
washing machine dish washers, etc. He also introduced many small home appliances such as blenders,
juicers, tea kettles and toasters in the small appliances segment, contributing about 3-4 percent of the
total revenue.
 Haier invested 100 Crore in 2010 and close to Rs 50 Crore in 2011 to expand its refrigerator production
capacity at its Ranjangaon plant in Pune to increase output by 2014 from 10 to approximately 20 lakh
units.
Some major Innovations of Haier by Eric:
 The 3-door convertible refrigerator & the bottom Mounted refrigerator
 He brought in John Abraham as Haier’s Brand Ambassador and led aggressive campaigns like “You
Inspire Us”.
Today Haier is one of India's biggest home appliances firms. In Economics Times of November 17,2019
Haier claimed to have captured thirteen percent of the refrigerator market with seven percent of the air
conditioner and nine percent of the washing machine market in India.[ CITATION Lay19 \l 1033 ]

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 The gradual increase of CAGR of Haier in India from 2010-2014
Source: Haier in India: Building presence in a mass market beyond China (fppt.com)

Conclusion:
Global expansions are subjected to decrease the gap between cultures, traditions, languages, and the
social distance between the host and the home country of any company. Any company that understands the
strategies to remove this barrier succeeds in Global market. Whether a company has profit retention or profit
improvement strategy to enter any country it is essential to adapt the culture and economic conditions of the
host country. Similarly there were detailed research done by Haier before entering Indian home appliances
market but they overseen few factors such as prices of their products were higher than the brands already
available in the market but gradually the pricing strategy was changed and they emerged into Indian market and
came out as winners. With dedication and determination Haier proved this saying by Max McKeown true “All
failure is failure to adapt, all success is successful adaptation.”

Bibliography:

1. Baburaj, Y. & Narayanan, V.K., 2016. Five Forces Framework. The Palgrave Encyclopedia of
Strategic Management.

2. Club, T.A., 2009. HAIER APPLIANCES INDIA, APPOINTS ERIC BRAGANZA AS

PRESIDENT. [Online] Available at: https://theadvertisingclub.net/news/haier-appliances-india-
appoints-eric-braganza-as-president/ [Accessed 3rd May 2020].

3. Haier, 2015. Introduction to Haier's Overseas Market. [Online] Available at:

http://www.haier.net/en/about_haier/haier_global/OverseasMarket/ [Accessed 30 April 2020].

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 4. Haier, 2019. Haier of the world, Our Haier, Your own Haier! [Online] Available at:
https://www.haier.com/in/about-haier/haier-brand/?spm=in.28907_pc.header_92845_20190530.2
[Accessed 3rd May 2020].

5. Krishnan, A. & V, R., 2019. An Empirical Study On Customer Satisfaction Towards Haier
Electronics In Selvam Home Appliances, Poonamallee. THINK INDIA JOURNAL, 22(4).

6. Layak, S., 2019. Haier disrupted the Indian refrigerator market with a bottom-mounted unit, and
hasn't looked back since. Inside Haier's plans to shed reticence and get aggressive in India by
Economics Times, 17th November.

7. LIU, H. & LI, K., 2002. Strategic Implications of Emerging Chinese Multinationals: The Haier Case
Study. European Management Journal, 20(6), pp.699-706.

8. Palepu, K., Khanna, T. & Vargas, I., 2006. Haier: Taking a chinese company global. Harvard
Business School, 9.

9. RONDINELLI, D., ROSEN, B. & DRORI, I., 2001. The struggle for strategic alignment in
multinational corporations: Managing readjustment during global expansion. European Management
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10. Song, J., Sun, Y. & Jin, L., 2017. PESTEL analysis of the development of the waste-to-energy
incineration industry in China. Renewable and Sustainable Energy Reviews, pp.276-89.

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