Haier Group: A Chinese Company That Created A Global Brand Essay

Haier Group (HG) is a leading Chinese international manufacturing business of tumid and small appliances, including refrigerators, freezers, conditioners, dishwashers and laundry products to cell phones and televisions. HG is non only kn feature around the world for quality and macrocosm but as an early mover outside of the Chinese grocery it was able to implement a market place strategy to take absent market share from large manufacturers on their own home-front.I.Haier Groups Global Brand dodgingA.Haier Groups Expansion Strategy It Was Time to Expand china joined the World Trade government activity (WTO) in December 2001 and became part of the international appliance marketplace. HG had a choice to maintain its current position as the leading manufacturer in China or to expand its operations into globular markets. HG faced stiff competition from domestic manufactures and multinational companies (MNCs) that were penetrating the Chinese market. Although HG maintained a mark et advantage based upon its forward-looking and rapid market response to customer needs, superior after-sales servicing and efficacious distribution centers, it would be only a matter of time forrader MNCs acquired similar resources through third-parties and adapted to local market needs (Palepu pp. 7-9).1 HG could face overcapacity within the Chinese market i.e., too some manufactures and not enough market share and lose the fortune to place upright its orbicular expansion to capture market share oversea. If HG have had kept the status quo, it may never have another opportunity to use gelt generated from its domestic sales to go head-to-head with large manufactures and develop its own brand.As early as 1997, HG had genuine a formal global expansion strategy (Id. at 10). It manufacture products for MNCs overseas and entered into joint ventures (JVs) to explore foreign markets (Id.). HG had acquired access to the latest technology from the U.S. and Europe and was able to leverage its knowledge to manufacturer a better product at a higher profit per unit. Its warlike advantage was two-fold (1) product note and (2) response speed (Id. at 15). HG was successful in China, because it focal pointed on organizing itself to understand what customers want and to take on those needs as quickly as possible. It also was able to issue brand new-sprung(prenominal) products or features that could be added to existing products to meet customers needs. trance most Chinese manufacturers marketed and sold products under an original equipment manufacturer (OEM) leaf node brand, HG was willing to endure the earlier costs of developing its own brand (Id. at 10). HG adopted an expansion strategy to start build its market share in developed markets and then go after emerging markets. It opined that many Chinese manufacturers would first export to southeastern East Asia where they had no strong dominate competitors HG would instead focus on the difficult and larger m arkets of the U.S. and Europe (Id. at 11). If HG could abide by in these markets it would have raised its competitive edge and could easily exposit in emerging markets (Id.). This logic makes sense since, because if the HG brand was widely accepted in the U.S. and Europe, it would break down widely accepted as a high quality product in emerging markets.With the support and rise of the Chinese government, HG sought the benefits of being an early-mover and manufactured niche products in developed markets neglected by large manufacturers. HG focused on compact refrigerators for college students and offices and wine coolers (Id. at 11-12). When others began to imitate, HG was equipped to add new features, such as mini-fridges that doubled as a computer desk (Id. at 12). HG did not directly compete with the large manufactures in the U.S. and European markets because it had to bridge the trust gap and shed the low-qualityreputation attached to Chinese manufactured goods. After establ ishing the quality of the niche products, HG was able to accession the attention of major(ip) retail chains and introduce standard products to the U.S.HG learned from the mistakes made by MNCs in China and entered into new markets by hiring the right people with knowledge of local markets. HG developed JVs on five different continents, thus spreading the risk, and its strategy allowing HG to leverage knowledge from its local partners. It gained competitive advantage by product differentiation and response speed. HGs large competitors were inflexible, dull moving and did not focus on the minor details of the customers needs. Customers felt as if HGs products were local brands rather than imported Chinese brands.Haier Group approach Risks with Global ExpansionHGs decision to globalize in developed markets faced risks if MNCs quickly learned from their mistakes in the Chinese market and started eating into HGs domestic market share, depriving HG of the profits necessary to expand gl obally. If MNCs did not underestimate HG, they could have tracked movement and competed directly against the niches that HG sought to fulfill before introducing its standard products to major retailers. HGs critical vulnerability was the Chinese reputation of manufacturing inexpensive quality goods, its harsh labor conditions and environmental practices. HG faced the risks that U.S. and European markets would reject out-of-hand the HG brand despite its innovation and high quality. China was fortunate to have HG lead the way in global expansion another early-moving Chinese manufacturer with lower quality standards and light market strategy could have resulted in failure and further setbacks for the Chinese governments going out policy.II.ConclusionIf HG chose to stay in its domestic market or sell its products under an OEM lymph glandbrand, it may have never been afforded an opportunity to develop its own global brand. MNCs invested millions into factories and distribution in Ch ina in hopes to prevent HG from employ its profits in the domestic market to support its advancement overseas (Id. at 15). HGs market strategy capitalized on MNCs failures in China and its knowledge of western technology. It was too risky for HG not to make its move into the global community. HG exploited MNCs slow response to customer needs, inattention to minor details and inflexibility to become a leading player in the global market. The risk of not expanding globally when faced with MNC competition in China outweighed the risks of being contented with its domestic market share.