5-707-459
NOVEMBER 16, 2006
TEACHING NOTE
Haier: Taking a Chinese Company Global
Introduction
The case chronicles the origin, growth, and global expansion of Haier, a leading Chinese white
goods and electronics firm. In the first 20 years of its existence, Haier survived price wars and
industry consolidation to emerge as one of China’s strongest and most international brands.
Discussion of the case should consider the sources of Haier’s domestic success, its rationale for going
global, and its particular approach to international expansion.
Haier’s evolution and strategy can be traced by first identifying its core skill-set: branding,
product innovation, responsiveness to customer demands, market segmentation, exploitation of
niches, and development of distribution channels. This internal skill-set should first be considered in
Haier’s home market, relative to the company’s domestic rivals. Haier’s global expansion can then be
evaluated by examining the extent to which this skill-set was or could be replicated in particular
international markets. In other words, do Haier’s strengths in China translate overseas?
Haier’s globalization strategy raises several related questions. The company understood that some
of its domestic strengths vis-à-vis multinationals, such as distribution, would diminish as China’s
retail infrastructure developed. How did competition with multinationals in China and overseas
impact Haier’s approach to globalizing? Much of Haier’s success in China can be attributed to its
intimate understanding of its home market. How did (or could) the company acquire and leverage
local knowledge in other markets? Unlike many companies based in emerging markets, Haier chose
to globalize to developed countries early on. What drove this approach and was it a prudent strategic
decision? Haier’s globalization strategy should also be considered in light of the “three thirds”
strategy—Haier’s plan to derive one-third of its revenue each from products made in China for
China, products made in China for export, and products made overseas for overseas markets. Is this
plan feasible for a growing white goods and electronics firm such as Haier?
In both its domestic growth and international expansion, Haier has sought out competitive voids.
Because of its origin in China, the company has also encountered institutional voids—the missing
intermediaries of the capital, product, and talent markets that facilitate transactions in advanced
economies. These voids can be seen as obstacles and opportunities for Haier. For example, the
patchwork of China’s undeveloped distribution infrastructure made it more difficult for Haier to
, 707-459 Teaching Note-Haier: Taking a Chinese Company Global
bring its goods to market. The company’s innovative approach to filling this void through its own
logistics arm, however, set Haier apart from both domestic and multinational rivals. “Spotting
Institutional Voids in Emerging Markets” (HBS Note 9-106-014) offers a conceptual foundation on
institutional voids. “Strategies That Fit Emerging Markets” (Harvard Business Review, June 2005)
applies the framework for identifying institutional voids to different emerging markets and examines
the impact of institutional voids on multinationals’ corporate strategies.
Haier is an important example of an “emerging giant”—a large, growing company from an
emerging market country that is projecting its business globally. A broader look at similar firms can
be found in “Emerging Giants: Building World-Class Companies in Developing Countries” (Harvard
Business Review, October 2006). Other examples of emerging giants are examined in “TCL
Multimedia” (HBS Case 9-705-502), “Bharti Tele-Ventures” (HBS Case 9-704-426), “ICICI’s Global
Expansion” (HBS Case 9-706-426), “Tata Consultancy Services Iberoamerica” (HBS Case N9-705-020),
and “Teva Pharmaceutical Industries” (HBS Case N2-707-441).
The case material can be supplemented with video segments. Haier founder and CEO Zhang
Ruimin was interviewed by HBS Professor Lynn S. Paine in 1998 (HBS Case Video 9-399-514). (The
McKinsey Quarterly also published an interview with Zhang Ruimin in 2003.1) Michael Jemal, CEO of
Haier America, participated in a videoconference with HBS Professor Tarun Khanna and Professor
Krishna Palepu in 2006 (HBS Video Supplement 9-707-801). The videoconference is divided into six
segments which might be interspersed through class discussion. Suggestions for how the clips might
be incorporated in class follow in the teaching plan.
Suggested Assignment Questions
1. Why was Haier so successful in China?
2. Was Haier’s decision to globalize into developed markets early on a good strategy?
3. Can Haier build on its success in niche products to become a dominant global brand in high-end
white goods?
4. Is Haier’s “three thirds” strategy a viable or wise approach?
Teaching Plan
First Pasture: Domestic Success of Haier
Discussion of the case should begin by noting the context in which Haier emerged as a company.
The Chinese white goods industry has consolidated from 300 refrigerator manufacturers in 1984,
when Haier was established, to just a few major players today. How did Haier survive and emerge as
the industry leader?
Haier’s core competencies can be disaggregated and organized by looking at the company at each
step of the firm value chain: product development, production, distribution, marketing, and finance.
Each link can be probed by asking how the approach taken by Haier reflected or was the result of
institutional voids in China.
Product development Haier was very sensitive to local needs in China as it developed its
products. The company was quick to adapt its products according to customer demands. In adopting
this approach, Haier filled the void of the absence of credible market research in China.
2
NOVEMBER 16, 2006
TEACHING NOTE
Haier: Taking a Chinese Company Global
Introduction
The case chronicles the origin, growth, and global expansion of Haier, a leading Chinese white
goods and electronics firm. In the first 20 years of its existence, Haier survived price wars and
industry consolidation to emerge as one of China’s strongest and most international brands.
Discussion of the case should consider the sources of Haier’s domestic success, its rationale for going
global, and its particular approach to international expansion.
Haier’s evolution and strategy can be traced by first identifying its core skill-set: branding,
product innovation, responsiveness to customer demands, market segmentation, exploitation of
niches, and development of distribution channels. This internal skill-set should first be considered in
Haier’s home market, relative to the company’s domestic rivals. Haier’s global expansion can then be
evaluated by examining the extent to which this skill-set was or could be replicated in particular
international markets. In other words, do Haier’s strengths in China translate overseas?
Haier’s globalization strategy raises several related questions. The company understood that some
of its domestic strengths vis-à-vis multinationals, such as distribution, would diminish as China’s
retail infrastructure developed. How did competition with multinationals in China and overseas
impact Haier’s approach to globalizing? Much of Haier’s success in China can be attributed to its
intimate understanding of its home market. How did (or could) the company acquire and leverage
local knowledge in other markets? Unlike many companies based in emerging markets, Haier chose
to globalize to developed countries early on. What drove this approach and was it a prudent strategic
decision? Haier’s globalization strategy should also be considered in light of the “three thirds”
strategy—Haier’s plan to derive one-third of its revenue each from products made in China for
China, products made in China for export, and products made overseas for overseas markets. Is this
plan feasible for a growing white goods and electronics firm such as Haier?
In both its domestic growth and international expansion, Haier has sought out competitive voids.
Because of its origin in China, the company has also encountered institutional voids—the missing
intermediaries of the capital, product, and talent markets that facilitate transactions in advanced
economies. These voids can be seen as obstacles and opportunities for Haier. For example, the
patchwork of China’s undeveloped distribution infrastructure made it more difficult for Haier to
, 707-459 Teaching Note-Haier: Taking a Chinese Company Global
bring its goods to market. The company’s innovative approach to filling this void through its own
logistics arm, however, set Haier apart from both domestic and multinational rivals. “Spotting
Institutional Voids in Emerging Markets” (HBS Note 9-106-014) offers a conceptual foundation on
institutional voids. “Strategies That Fit Emerging Markets” (Harvard Business Review, June 2005)
applies the framework for identifying institutional voids to different emerging markets and examines
the impact of institutional voids on multinationals’ corporate strategies.
Haier is an important example of an “emerging giant”—a large, growing company from an
emerging market country that is projecting its business globally. A broader look at similar firms can
be found in “Emerging Giants: Building World-Class Companies in Developing Countries” (Harvard
Business Review, October 2006). Other examples of emerging giants are examined in “TCL
Multimedia” (HBS Case 9-705-502), “Bharti Tele-Ventures” (HBS Case 9-704-426), “ICICI’s Global
Expansion” (HBS Case 9-706-426), “Tata Consultancy Services Iberoamerica” (HBS Case N9-705-020),
and “Teva Pharmaceutical Industries” (HBS Case N2-707-441).
The case material can be supplemented with video segments. Haier founder and CEO Zhang
Ruimin was interviewed by HBS Professor Lynn S. Paine in 1998 (HBS Case Video 9-399-514). (The
McKinsey Quarterly also published an interview with Zhang Ruimin in 2003.1) Michael Jemal, CEO of
Haier America, participated in a videoconference with HBS Professor Tarun Khanna and Professor
Krishna Palepu in 2006 (HBS Video Supplement 9-707-801). The videoconference is divided into six
segments which might be interspersed through class discussion. Suggestions for how the clips might
be incorporated in class follow in the teaching plan.
Suggested Assignment Questions
1. Why was Haier so successful in China?
2. Was Haier’s decision to globalize into developed markets early on a good strategy?
3. Can Haier build on its success in niche products to become a dominant global brand in high-end
white goods?
4. Is Haier’s “three thirds” strategy a viable or wise approach?
Teaching Plan
First Pasture: Domestic Success of Haier
Discussion of the case should begin by noting the context in which Haier emerged as a company.
The Chinese white goods industry has consolidated from 300 refrigerator manufacturers in 1984,
when Haier was established, to just a few major players today. How did Haier survive and emerge as
the industry leader?
Haier’s core competencies can be disaggregated and organized by looking at the company at each
step of the firm value chain: product development, production, distribution, marketing, and finance.
Each link can be probed by asking how the approach taken by Haier reflected or was the result of
institutional voids in China.
Product development Haier was very sensitive to local needs in China as it developed its
products. The company was quick to adapt its products according to customer demands. In adopting
this approach, Haier filled the void of the absence of credible market research in China.
2
