Managing Performance at Haier (B)

The threat of globalisation, in particular, the technological catch up pursued by Haier to improve product quality translated itself into an opportunity of internationalization. A feature of Haiers global strategic formulation and implementation was the opening of a $30 million factory in 2001, located in South Carolina, USA. The vision to increase production capabilities in the US faced a number of challenges, where the companys initial strong ethnocentric management orientation resulted in some conflict between the Chinese management and American workers, as a result of country-specific contextual factors not being recognised. Haiers Chinese Performance Management (PM) system was developed over time to provide a competitive advantage through employee motivation, and was a cornerstone of its success. It was created in an environment that recognised the impacts of national culture on organisational culture (Hofstede 2001), and was set in a high collectivist culture where power distance inequalities are the status quo (Hofstede 2001). This is the complete opposite to the US, where high individualism exists and power distance inequalities are considered against the American proposition of freedom and equal rights (Hofstede 2001).
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