Haier Group Profile
Haier was founded in 1984. In the last 28 years, through its entrepreneurial and innovative spirit, Haier has transformed itself from an insolvent collectively-owned factory on the brink of bankruptcy into the number one global home appliance brand. In 2012, Haier’s global revenue and profit reached 163.1 billion CNY (25.8 billion USD) and 9 billion CNY (1.42 billion USD) respectively. Profit growth was 2.5 times revenue growth. Based on the statistics of Euromonitor International, a world leader in strategy research for consumer markets, Haier has been the number one global home appliance brand for four years in a row. On the 2012 World’s 50 Most Innovative Companies list published by the Boston Consulting Group, Haier was the only Chinese company in the top 10, as well as the top-ranked consumer product retailer.
Haier is known for disruptive innovation in its product solutions and management model. As an open platform company, Haier provides leading home appliance solutions to its users. Qingdao Haier (600690.SH), referred to internally to as the 690 Platform, uses disruptive innovation to create smart appliances for its users with the aim of becoming the leader in the home appliance industry. Haier’s five R&D centers around the world have forged strategic partnerships with first-class suppliers, research institutions, and prestigious universities to create an innovative ecosystem composed of over 1.2 million scientists and engineers connected by virtual and physical networks. By the end of 2012, Haier had filed 13,952 patent applications accumulatively and had been granted 8987 patents. Haier Appliances (1169.HK) creates a commercial ecosystem based on an interactive platform and a delivery platform. By leveraging the synergy of marketing, virtual, logistics and service networks (“quadruple play model”) to build competitiveness, it can provide delivery and installation services to users within 24 hours and create the best user experience thanks to the connectivity between virtual and physical networks. The competitive advantages of the quadruple play model have helped its distribution channel Gooday attract famous domestic and international brands, while its open logistics platform for over-sized items serves China’s top five e-commerce retailers and home appliance and furniture manufacturers.
In terms of management, Haier uses its innovative Win-win Model of Individual-Goal Combination, which aligns employee goals with user needs, to inject vitality and creativity into the organization by allowing employees to create value for users and themselves. Haier has transformed its organizational structure from a pyramid into an inverted pyramid and then further flattened it into a dynamic network-based organization composed of innovative ZZJYTs (self-management units). Every node in this network is driven by users rather than leaders, and opened to external resources so as to enable Haier to meet the changing needs of users. As it is considered to be a potential solution to the management challenges in the Internet age, Haier’s innovative Win-win Model of Individual-Goal Combination has attracted the attention of world famous business schools and management gurus, and has been included in the case collections of business schools for teaching and research purposes.
Innovation is the key to Haier’s long-term sustainability and health. Since 2007, Haier’s profit has been growing at a CAGR of 35%. Thanks also to a negative 10-day cash conversion cycle (CCC), Haier is outperforming its peers by a mile.