Established in 1984, Haier is the world's No. 1 major appliance brand. It has transformed from an enterprise that manufactures household appliances to a platform that incubates entrepreneurs across industries. In the Internet age, Haier aims to become a Networked Enterprise which overturns its self-contained and enclosed systems and fits into the Internet as a node that can connect various resources, with a view to building post-e-commerce ecosystems based on user-value interaction with the goal of co-creation and mutual benefit, creating value for all stakeholders.
To forge itself into a truly Networked Enterprise, Haier has embarked on a course of self-disruption in six aspects: strategy, organization, employees, users, compensation and management. This process has created a dynamic system and accelerated transformation of the entire organization. Strategically, Haier establishes a user-centered ecosystem for co-creation and mutual benefit to add value for all stakeholders; within the organizational structure, Haier has evolved beyond a traditional enclosed system to an open node distributed on the Internet and replaced hierarchies with a networked organization. This process has allowed Haier to transform its staff from employees and passive performers to entrepreneurs and dynamic partners, aimed at meeting the individualized needs of users by means of community ecosystems and experience. In terms of compensation mechanisms, "paid by users" has superseded "paid by the enterprise", driving employees to become entrepreneurs who create value for users while realizing their own; as for management innovation, Haier has achieved self-evolution in leading goals through exploration into nonlinear management.
Haier's entrepreneurial platform is made up of two listed companies: Qingdao Haier (SSE: 600690) and Haier Electronics (SEHK: 01169). The main focus of the Haier Group is innovation across three platforms: household appliances, investment incubation and finance.
• Household Appliances: Focus on interconnected factory interfaces, with customization resulting from a highly integrated microenterprise system. Drive product iteration by leveraging user resources and a constant dialogue and connection to networked appliances.
• Investment Incubation: With "Integrity First" as the core principle and community as the basic unit, build tailor-made platforms and develop user resources with mutual trust and lasting relationships, driving transformation and upgrading microenterprises via capital marketization throughout all processes.
• Finance: Relying on massive online user resources and Haier's industry-leading advantages, develop a value addition system of shared success for all stakeholders.
These three platforms can provide a series of entrepreneurial resources, including manufacturing, logistics, VC investment and incubation, human capital and other systems for entrepreneurs, enabling them to achieve innovative growth leveraging resources from within Haier's ecosystems.
Through its exploration into the Internet Model, the Haier Group has achieved steady growth. In 2015, Haier achieved global revenue of RMB 188.7 billion with a compound growth rate of 6% over the nine years, and total profits of RMB 18 billion with a 20% year-on-year growth rate and 33% compound growth rate over the same period. Online trade volume reached RMB 157.7 billion, a year-on-year growth of nearly 200%. With the rapid development of Internet finance, trade volume on the Internet platform totaled over RMB 70 billion. By the end of 2015, Haier's platforms have attracted over 4,700 first-rate external resources, RMB 3 billion in VC funds, 1,330 VC institutions and 103 incubators, setting the stage for 1,160 projects. Over 3,800 Haier microenterprises and nearly one million “micro-stores” on Haier's platforms are socializing their capital and human resources to great effect. More than 100 microenterprises boast annual revenue of over RMB 100 million, and 29 have received VC, and 14 are valued at over RMB 100 million. Due to Haier’s transformation through decentralization, disintermediation and removing “insulating walls” between units, headcount has also decreased 45% from employment highs, despite Haier's platforms managing to create over 1.3 million jobs. On May 12, 2016, the State Council of China declared Haier one of the leaders in “mass entrepreneurship and innovation”, as a result of the company’s outstanding achievements. Haier was the only home appliance enterprise selected for this honor.
Haier's Internet transformation is based on an exploration of the "win-win” “Rendanheyi” model. That model has since evolved into "Rendanheyi 2.0” - an ecosystem for co-creation and winning together. Within this model, "employees" (“Ren”) have become "stakeholders" and "user value" (“Dan”) has become "user resources". Additionally, "win-win" (“HeYi”) has been upgraded to "all-win". The ultimate goal of this transformation is to add value for all stakeholders within the ecosystem. Having solved many management issues of the Internet age, this management model has been recognized by many noted business schools and management scholars, who, based on their long-term research, conclude that Haier's exploration is cutting-edge and moving towards the future. The Harvard Business School and Wharton School of the University of Pennsylvania have even added Haier's practices to their case library for teaching and research purposes.
Haier's model of innovation has not only been acknowledged by leading management experts, but also verified in practice. In 2011, Haier announced the acquisition of Sanyo's white goods business in Japan and Southeast Asia. In 2012, Haier completed the purchase of New Zealand’s iconic home appliances company Fisher & Paykel Appliances (F&P). On January 15, 2016, Haier's globalization opened a new chapter with Haier signing a memorandum of strategic cooperation with GE to integrate GE's home appliances business, increasing their global workforce to 73,000, which set not only a new example for business cooperation between large Chinese and US enterprises, but also a new model of cooperation that rises above price-based trading. Haier's global brands include Haier, Casarte, Goodaymart, AQUA, Fisher & Paykel, Leader and GE Appliances, which provide users with unparalleled experiences in markets all over the world.