HAIER IN INDIA: BUILDING

PRESENCE IN A MASS MARKET

BEYOND CHINA 

M. Shahbaz Khan
Agenda

■ Background of Haier
■ Presence in India. Why did Haier enter India
■ Haier’s entry strategy
■ Haier’s localization model in India and other market
■ Landscape of India’s consumer electronics market
■ Korean companies strategies
■ A way forward…
HAIER - Background
■ In short 25 years, Haier Inc had emerged from being a small refrigerator factory to the worlds biggest
appliance seller by retail volumes
■ USP: Built it’s success on the basis of good premium quality products, innovation and servies.
■ One of the top 10 brands in China-1991
■ Adopted “Three-in-One” Localization strategy
■ Started from the High-end-markets US and Europe including Italy, the United Kingdom, and France, it
stretched over even to the Asian market and opened its first manufacturing facility in Indonesia
■ Haier Launched in India in 2004. T.K. Banerjee, an industry veteran appointed as president of Indian
operations.
■ Mission In INDIA: HAIER to become a top-three home appliance brand in India.
■ Performance started to detoriate –
■ ERIC BRAGANZA was appointed as the new president to look into problems. He revamped the system,
which resulted into a higher market share and overall revenue.
WHY INDIA?

Favourable market:
- Rising disposable income group,
- Rapid economic growth,
Change in Indian government
- 8.3% GDP in 2003-04 period, policy: A series of policy changes in
- low entry barrier in the white goods the 1990s definitely opened the doors
market, and set the environment that made it
possible for Haier, a foreign
- Low penetration in Appliance
company, to enter the Indian market.
market, making it more appealing
21.3%: Penetration level of color TVs
16.1%: Refrigerators
WHY
INDIA?

House Appliance sector was

growing between 11% to 14%
and projected growth was 20%
(2005 ~ 2010)
Haier’s entry strategy in India

Global Branding Strategy - Inspired

Living
Adapt Localization Strategy
Establish Global
Brand image Delivery good quality products,
innovation and premium pricing
Target Market : High Income Premium class

Product Line: Refrigerator, AC, Washing Machine, Heaters, & Color TV. Bottom mount refrigerator was became one of
the most demanding and popular product.

Price – Premium Price Strategy (5% premium on products)

Place – Establish Haier Experience zone, Retail expansion

Promotion – Inspired Living.

Brand Communication: Global Player

Overall Haier strategy to be a global player, indulge in Value wars and not Price wars, Provide premium quality goods
with innovation and adapt a localization strategy
What was and not working?
YES NO
■ Innovation: India-Centric Product Line up. Bottom mount ■ Poor After sale services
refrigerator become one of the most popular product
■ Not able to meet the target volume shares. (2008:
■ Global Brand Image Contributing to 2% of global revenue instead of
10%).
■ Growth in the consumer electronics market (2003: 30%)
■ High competition from Korean companies in
■ Local manufacturing help in reducing timelines for other price.
markets.
■ Premium price policy kept away from mass
market
■ While LG, Samsung & Videocon had high
penetration in market
■ Low market penetration
Haier’s Localization Model

Global
■ Haier started Three in One plan – First Manufacturing base in South Carolina.
■ Opened a design house in Los Angeles to realize true localization.
■ Introduced it’s first made in America product in 2010.
■ Later on Haier replicated same model in Europe.
■ Opened sales headquarter in Italy and opened two design centres in France & Amsterdam.
Haier’s Localization Model

India
■ Haier Outsourced production & started sourcing out low end goods from local manufacturers –
Color TV (First 5 years)
■ In 2007: Haier Acquired 40acre manufacturing capacity in Pune district. This was done for
assembling washing machines and AC’s
■ Establishment of factory and hub for supplying to Africa, Middle east & southern & western Asia.
Landscape of India’s consumer electronics market

■1980 – India’s govt held tight protocols against foreign investments – Import
controls, High tariff rates
■1991 – Change in policy opened market for foreign investments.
■2000 to 2004 – 8.3% GDP, House appliance sector grew between 11% to 14%
annually & growth expected to expand at at least 20% between 2005 to 2010,
Household income rising, low penetration in Home electronic smarket
■2005 – Color TV penetration.(Biggest in category - 21.3%)
■Potential in Rural India market.
■Vendors enhanced manufacturing capacity (new plants, production lines.

Drawbacks:
 Heavy taxation,
 Since 2005, the market has been plagued by price war & that resulted low margin.
 High competition: Key Players, LG & Samsung were keeping prices very low
Korean Companies Strategy
Key Players: LG and Samsung
Entered market in mid-1990s

Samsung LG
■ Started with premium products ■ Low pricing strategy with basic-function
products
■ Later crossed into mass market and released more price
sensitive products aiming premium & large volume ■ At start, most of its revenue came from non-
categories. urban areas
■ Heavily invest in R&D to produce new innovated ■ Later, speed into medium end segment by
products offering feature rich products
■ Brand communication:
“Aspirational Brand”
■ Heavily invest in R&D to produce new innovated
products

As a result of these strategies, the key players were able to gain high market share and
revenue.
Evaluate Braganza’s decisions and actions.
What were his analysis?

■Restructured man power with 30% new employee

■Planned to add 100 direct dealers & 1000 indirect dealers to Haier’s distribution network
■Focused on dealer retention & treated dealers as Haier’s first customer
■Single dealership in selected locations:
■Planned to open more experience centers to improve customer satisfaction
■Added up to 700 retail outlets to Haier’s existing 4500 across the nations.
■In-store promotion budget: US$ 2.7m
■Strengthen after-sale support: Ensured that customer issues areree resolved with 6 hours in
Metro cities.
■Planned to open service stations “InstaCare” in 8 cities. (First 2 were launched in: Delhi and
Mumbai
What were his analysis?

■ Repositioned Haier’s Pricing Strategy – Closer to the masses.

■ Launched 25 new products – LED Tvs, dish washers, etc. Laid down plan for laptop and camera
in near future
2010
Haier invested USD22.2mn to upgrade its factory capacity
Haier launched a marketing campaign program “You Inspire Us”
John Abraham as Haier brand ambassador.
Going Forward…

■ Target Market: There lies a big opportunity in the rural areas on India. Haier can tap
this market according the need of the consumers living there
■ Innovation: Haier should focus on innovating new products through R&D. This is one
of their USPs and can bring a growth to it’s current market share
■ Distribution: Haier needs to enhance its distribution network
■ After-Sales support: Customer is important.
■ Introduce Discounts and loyalty programs for its dealers.
THANK YOU!