Zhang Ruimin: Achieving Excellence through Reinvention of Business Model and Corporate Culture at Haier




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BACKGROUND

The origin of Haier dates back to 1955 when a group of people in China formed a handicraft-producers’ cooperative, a collective enterprise under the Chinese industrial classification. In 1958, the handicraft-producers’ cooperative changed its name to ‘Qingdao Electric Machinery Factory’ and started making fans, motors, and other electric products. During the Cultural Revolution (1966-76), the company’s name was changed to ‘East Wind Electric Machine Factory’. In 1979, the company merged with a small machine factory and was renamed Qingdao Home Appliance Factory. The same year, the company began manufacturing no-frills washing machines.

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From 1979 to 1983, the Qingdao Home Appliance Factory produced around 58,000 washing machines under the White Heron brand. However, the washing machines did not find too many takers given their poor quality and unattractive appearance. In January 1984, the company started making refrigerators, and subsequently, its name was changed to ‘Qingdao General Refrigerator Factory’. But things did not really change for the better even then. By the end of 1984, the company had incurred a debt of RMB 1.47 million, and was teetering on the brink of bankruptcy

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