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The Haier Model

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The Haier Model

Reinventing a Multinational Giant in the New Network Era

LID Business Media,

15 min read
10 take-aways
Audio & text

What's inside?

Once small and struggling, China’s Haier became a multinational giant by constantly reinventing itself.

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Editorial Rating

8

Qualities

  • Comprehensive
  • Overview
  • Background

Recommendation

A small, struggling Chinese company in the 1980s, Haier became a multinational giant through its strategy of constant reinvention. Business professor Yangfeng Cao offers a full report on Haier and its leader Zhang Ruimin. To drive home the message that quality mattered, Zhang once ordered his workers to demolish 76 flawed refrigerators with sledgehammers. Haier is now becoming a network organization and giving its customers a central role. Yangfeng’s text is rich and detailed, so much so that it can become overwhelming. getAbstract recommends his thorough report to those interested in the evolution of the Chinese market and in Haier’s strategies for corporate growth.

Summary

Taking Over in Qingdao

Zhang Ruimin, the CEO of the Haier Group Corporation, built a small manufacturing plant into a giant, international consumer electronics and appliance conglomerate. In 2009, Haier became the globe’s largest manufacturer of household appliances, a position it retained for eight years. In 2016, Haier sold more than $30.2 billion worth of merchandise.

China granted foreign businesses access to its domestic market in the 1980s in return for their technology. In 1984, the Qingdao General Refrigerator Factory, which became Haier, allied with Liebherr, a German refrigerator manufacturer. When Zhang and his team arrived at Qingdao at the end of December 1984, the company was struggling with large inventories and high turnover.

When Zhang took over, he instituted new rules covering many details, including employee use of the bathrooms, attendance at work, and “smoking, drinking and sleeping.” Zhang posted the rules at the entrance of the Qingdao plant. When an employee violated a rule about taking things from a workshop, his manager fired him within two hours. This decisive termination established how Zhang intended to lead. He ...

About the Author

Yangfeng Cao, PhD, founded and directs the Institute of Global Entrepreneurship & Innovation in Hong Kong. He is also a professor of practice at the Guanghua School of Management at Peking University.

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