Haier aims for Europe and 'Made in China' upgrade

Chinese appliance and electronics giant Haier is aiming to expand into Europe with higher-end products, helping to upgrade China's reputation for churning out mostly cheap, low-quality goods.

However, experts say that even if Haier succeeds the country still has much to do before it emulates the transformation by neighbours Japan and South Korea over recent decades so that their top brands are now synonymous with class.

Haier already has the biggest share of the world's appliances and electronic goods market. Its revenues were 150.9 billion yuan ($23.7 billion) last year, giving it a 7.8 percent share of the global market in that sector.

But 70 percent of its sales were in Asia, where a low cost is often the key selling point. And it is now looking to take on competing brands such as South Korean giants Samsung and LG in becoming a household name in Europe.

To showcase its products and technology, the firm, which has 70,000 employees in 165 countries, recently invited European journalists to visit its headquarters and factories in the eastern port city of Qingdao.

Haier is seeking a five-percent market share for washing machines and refrigerators in Europe by 2015, up from three percent today.

To get this it needs to "develop products that speak to European tastes", said Rene Aubertin, who heads Haier's European office.

To help do this, he said the firm had opened up a research and development operation in Nuremberg, Germany.

Among the innovations Haier is hoping will attract European customers are fridges equipped with an external camera and tactile screen to record what goes on in the kitchen. The video can then be sent over e-mail.

Haier has also started to introduce European-standard sales and marketing techniques in China, so that the company is set for the new market, according to Yannig Gourmelon, a Shanghai-based business consultant with Roland Berger.

Gourmelon said one of these standards was a promise to deliver products in China within 24 hours of purchase.

He said Haier's business practices were already being noticed in Europe.

"Five or six years ago we knew nothing about Haier in Europe but today when I give a class (at the prestigious French Business School HEC), everyone knows what I'm talking about," Gourmelon said.

With China yet to develop consumer brands with reputations for making top-quality goods, Haier is still cautious of promoting the "Made in China" label.

"We never emphasise that point," said Li Pan, managing director of Haier's overseas division. But, he added: "We don't deny it. We don't believe 'Made in China' will bring any negative impact to our business."

Haier's rise to become a global player began from the ashes of a badly managed, state-run business in Qingdao that made fridges for the Chinese market in the dour mid-1980s.

The company says some of its success can be attributed to its philosophy of "innovate or die". Noticeboards in its headquarters proudly list the names of staff who have contributed fresh ideas to improve its products.

However, Michael Pettis, a professor at Peking University's Guanghua School of Management, said the Chinese economic system did not generally encourage such innovation.

Pettis said Chinese companies typically succeeded because they had good relations with government officials and could get favourable bank loans, not because they were great innovators.

"(In China) there are companies that have climbed up the value chain, but it's really been driven by cheap capital, not by innovation," Pettis said.

"Of course, every manager in the world will tell you that he wants to be innovative and move up the value chain and create higher value-added products, but not everybody does so."

Without the conditions that promote innovation, Chinese firms will continue to struggle in making higher-end products for the global market, according to Pettis.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • High spirits battle: Asia tycoons vie for cognac maker Louis Royer

    * Louis Royer valued at about $150 mln - sources * Suntory selling cognac maker as part of portfolio reshuffle * Asia cognac demand seen rising 13 pct in 2015-19 -Euromonitor (Adds graphic link) By Denny Thomas and Khettiya Jittapong HONG KONG/BANGKOK, May 30 (Reuters) - Thai billionaire Charoen Sirivadhanabhakdi is considering buying cognac maker Louis Royer, people familiar with the matter said, potentially locking horns with a Philippine tycoon for the French firm amid a forecast …

  • OIC asked to complete review of peace pact with MNLF
    OIC asked to complete review of peace pact with MNLF

    The Philippine government is asking the 57-nation Organization of Islamic Cooperation (OIC) to finally complete the tripartite review process of the implementation of the 1996 peace agreement with the Moro National Liberation Front (MNLF). The review – snagged  for several years as government had its hands full with the peace process with rival faction Moro Islamic Liberation Front (MILF) – tackles how the 1996 peace pact with the MNLF has been implemented and centers on the three remaining …

  • Alleged Binay dummies appear in Senate probe
    Alleged Binay dummies appear in Senate probe

    Eight of the resource persons ordered arrested by the Senate finally attended the 21st public hearing of the Senate Blue Ribbon subcommittee into the alleged anomalies involving Vice President Jejomar Binay, but the proceedings turned out to be a review of matters previously presented. For over three hours, the subcommittee heard presentations regarding the alleged hidden assets of Binay and the issue regarding the supposed P200 million in kickbacks he received from a deal between the Boy …

  • DOJ wraps up Mamasapano probe
    DOJ wraps up Mamasapano probe

    The Department of Justice (DOJ) is wrapping up its investigation into the “massacre” of 44 members of the Philippine National Police Special Action Force (PNP-SAF) in Mamasapano, Maguindanao last Jan. 25. A joint team of prosecutors and NBI (National Bureau of Investigation) investigators is about to finish the second part,” Justice Secretary Leila de Lima has told congressmen. She was responding to questions raised by former senior police officer and now Rep. Samuel Pagdilao of party-list …

  • APEC meet in Bataan seen to boost tourism
    APEC meet in Bataan seen to boost tourism

    BALANGA CITY, Bataan – More than 2,000 delegates of the Asia-Pacific Economic Cooperation (APEC) and international media outfits are expected to enjoy the splendid coastline of Bagac town, which faces the West Philippine Sea, as they converge for a workshop in this province next month. …

  • DOST opens P54-M research facility
    DOST opens P54-M research facility

    A P54-million research and development facility of the Department of Science and Technology (DOST) was recently opened in Bicutan, Taguig for scientists and researchers to develop technology and techniques to allow Filipino fashion and clothing designers and manufacturers to produce more mainstream products from local, tropical fabrics like piña, banana and abaca. Science Secretary Mario Montejo said the Innovation Center for Yarns and Textiles (ICYT) is the DOST’s flagship effort at reviving …

  • DFA worried about alleged violations of convicted Pinoys’ rights
    DFA worried about alleged violations of convicted Pinoys’ rights

    Philippine embassy officials in Doha have raised their concern with Qatari authorities over coercion and human rights violations in the alleged forcing of three Filipino workers convicted of spying to provide information and confess to the crime. Speaking to reporters, Department of Foreign Affairs (DFA) spokesman Charles Jose yesterday said the embassy has raised the matter during several high-level meetings with Qatari officials and the national human rights committee in Qatar. “Our embassy …

  • US affirms ‘ironclad’ promise to defend Phl
    US affirms ‘ironclad’ promise to defend Phl

    US Defense Secretary Ashton Carter told his Philippine counterpart on Wednesday that Washington’s pledge to defend the Pacific nation remains “ironclad” and called for an end to land reclamation in the South China Sea, officials said. In talks in Hawaii with Voltaire Gazmin, Philippine secretary of national defense, the Pentagon chief “reaffirmed” the strong ties between the two countries and discussed territorial disputes in the contested waters of the South China Sea, where Beijing has been …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options