1. Why Was Haier So Successful in China?

A.

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2. Was Haier's decision to globalize into developed markets early on a good
strategy?

A. es, I think it’s a good strategy to go into developed markets first. Haier
globalizes the company with 3 phases, 1) focus on social awareness of the Haier
brand name; 2) localize design, production and sales; 3) pull in local resource of
capital and human talent. To improve the awareness of Haier’s brand name,
they decided to enter the global market by “first the hard, then the easy”
approach, which getting into the market with tougher entry requirement first,
and then the easy entry market. Because Haier believes that it’s relatively easy
to export to those developing countries, but the influence of the company’s
brand name is limited. Also, if Haier had built its brand name in the developed
markets, it would be easier to sweep the easy market.

Haier’s ultimate goal is to go globalized and become a multinational like GE.

Haier’s CEO, Zhang Ruimin introduced “three thirds” strategy, out of all Haier
products, one is made and sold domestically, another one-third is made
domestically but sold overseas, and the their one-third is both made and sold
overseas.  With this strategy, Haier being easy to find the improvement areas in the
developing market to achieve globalization. However, it limited Haier on one
particular market, and it might lose sight of other markets, which Haier would pull
out the resources from greater potential markets in order to achieve 1/3 revenue.
 3. Can Haier build on its success in niche products to become a dominant global brand in high end
white goods?

A. Haier followed the strategy of entering developed markets with a few models to test the waters and
steer clear of major competitors. E.g. in US they decided to manufacture compact refrigerators for
students and offices

• With minimal competition, these niche products brought in high margins, and also got the attention of
major retail chains like Walmart

• Once they were successful in this segment, they decided to launch regular products like the standard
refrigerators and washing machines.

• However, when the company decided to move beyond niche markets and introduce its full line of
products in US, it faced certain challenges

• Though people were ready to buy Haier refrigerators, they could not recognize it as a prominent brand
for other appliances

• With its niche products, the company was able to meet customer satisfaction and attract more
customers under the brand “Haier”.It may leverage the success in this segment to become a dominant
player in the white goods market. If the demand of their unique product increases, it will lead people to
know their brand more. This increased brand visibility could help to increase the sales of their core high-
end white goods

4. Is Haier's "three-thirds" strategy a viable or wise approach?

A. I believe that this strategy is a viable approach because it allows Haier to utilize their core
competency in their ability to innovate to fulfill specialized demand based on the specific
markets. By producing niche products that are tailored towards Chinese markets vs overseas
markets such as the US and India, Haier is able to fulfill specific consumer needs based on the
geographical location. Consumers in the US have different needs than China and India and
Haier’s three thirds approach allows them to fulfill personalized demand based on the
geographic market. When it comes to implementing the strategies as well, Haier’s three thirds
approach allows them to utilize different global expansion strategies based on the overseas
market. We see in geographic markets such as India that there is a heavy reliance on products
and brands that are locally known so Haier’s approach to first infiltrate the market by utilizing
local staff and getting in with locals to understand consumer needs and common brands they
are competing with they were able to tailor a strategic global expansion approach towards that
country. The three-thirds approach allows Haier to produce individualized products based on
the geographic market as well as a tailored strategic approach to entering that market and
expanding globally. The strategies that produce in China and sell in China as well as produce
overseas and sell overseas allows for quick distribution and market responsiveness. If there is a
new product that is popular in a country, producing in the same country allows them to respond
to that trend quickly, innovate and produce their products to match customer needs and
respond quickly to demand while delivering products speedily as well. The other approach
where they produce products in China and sell them in overseas allows for efficient operations
in their home country where they are already used to operating but leads to longer delivery
times and slowed responsiveness