Haier Group's Strategy in the US Market|Business Strategy|Case Study|Case Studies

Haier Group's Strategy in the US Market

            
 
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Case Details:

Case Code : BSTR072
Case Length : 12 Pages
Period : 2003
Organization : Haier Group Co.
Pub Date : 2003
Teaching Note : Available
Countries : USA, China
Industry : Consumer Appliances

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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EXCERPTS Contd...

Going High-End

Most analysts felt that Haier would feel the real competition only when it entered the high-end market. In the compact refrigerator segment, Haier did not face much competition from established players in the US, who did not focus on the low margin segment.

However, the major US players were keeping track of Haier's activities. Commenting on the competition from Haier, GE Appliances Chief Executive, Jim Campbell said, "I take it very seriously. They may be producing only 200,000 refrigerators per year now, but that's going to get bigger." On the negative side, some analysts felt that Haier lacked the brand image to make a dent in the high-end segment. They pointed out that in general US consumers were brand-conscious, and this was especially true in the case of high-end products. The lack of a positive brand image in this consumer segment would probably make it difficult for Haier to succeed in the high-end markets. Analysts felt that Haier had an additional weakness in its distribution and service centers...

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Future Prospects

Despite a few reservations, analysts too were, by and large, upbeat about the company because of its strong performance in breaking into the American market in a short time. Many believed that the company was capable of achieving its sales target of $1 billion by 2005.

Said Nicholas Heymann of Prudential Securities, "Over five years, it could become a force." With quality products and lower prices, it was felt that Haier would be able to garner a sizeable market share in the US. Haier's experience in the geographically vast and diversified Chinese market would serve it well in catering to the US market.

However, a major worry for Haier was how to fund its expansion plans. Increasing competition in the domestic markets was bringing Haier's finances under pressure. According to Fortune magazine, Haier's net profit for the six months ending June 2002, declined by 45% and its sales declined by 3.7% during the same period...


Exhibits

Exhibit I: A Note on Chinese Consumer Appliances Market
Exhibit II: Financial Information of Haier Group
Exhibit III: Haier Product Profile in US Market


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