January 22, 2008 4:00 AM PST

China's Haier eyes U.S. living rooms

China's Haier eyes U.S. living rooms
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It was a sales call saved by leftovers.

An executive at an electronics distributor brushed off a pitch for a meeting, recalled Richard Hasenfus, director of business development at Haier America. A few minutes later, he called back and told Hasenfus to come in. He had something to show him.

After the first call, the executive went to heat up his lunch and saw that the brand name on the company microwave was Haier. Back at his desk, he looked at the mini-fridge: Haier again.

Although few Americans recognize the name, there's a chance that the name could become more familiar to shoppers over the next five years. The fourth-largest appliance maker in the world (and a producer of cell phones and other devices in China and other emerging nations), Haier is trying to expand its presence globally and go upmarket. The company has been selling air conditioners, fridges, and other household items in the U.S. since 2000. But in 2006, it began selling LCD televisions. In November, it began selling music players.

Haier at a glance

• The company was founded in 1984 in Qingdao, China, but its actual history goes way back. Its roots can be traced to a fridge factory in the early part of the 20th century. The government then turned it into a state-owned enterprise, which formed the basis of the current Haier.

• In 1999, it opened a U.S. division and became the first Chinese company to open a factory in this country (in Camden, S.C.).

• In 2006, it signed a deal to be a sponsor for the NBA to help promote its TVs in the U.S.

• The CEO is Zhang Ruimin, a former party official. One of the turning points in Haier's history came early on when he ordered the destruction of some defective fridges. He even smashed a fridge with a sledgehammer on his own. Quality since then has been a constant company theme. Interestingly, Samsung executives often attribute their company's turnaround to a similar cell phone smashing event.

• In November, it signed a strategic alliance with Intel to boost its PC division. The deal may become a prelude to more actively export PCs.

Some analysts say the company may also try to branch into PCs here. In China, Haier is ranked seventh, but it saw shipments rise 67 percent in the third quarter.

Graduating from washing machines and Chinese cell phones to consumer electronics in the U.S. won't be easy, but it's also not impossible. Back in 1999 and 2000, Americans viewed Samsung as a low-end purveyor of tube TVs. By 2004, it started competing for primacy in consumer electronics with Sony.

A few years later, LG went from the back shelves at Home Depot and Fry's Electronics to fashion shows. The Legend Group tried for years to break out of its domestic Chinese market. Finally, by buying IBM's PC unit, the company, now called Lenovo, pulled it off.

"Haier has a fairly good reputation in China, but that is among local brands, whereas multinational brands are often viewed at a premium," said Bryan Ma, an analyst at IDC. "In that sense, one could argue that it is similar to Lenovo's position before the IBM acquisition as one of the best local brands in the market."

So far, Haier's moves follow lockstep into the strategies forged by its predecessors. Like Samsung and Lenovo, Haier has sought out visible sports partnerships to market its products. In 2006, it became an official sponsor of the National Basketball Association. (Haier also tried to make a name brand acquisition in appliances, but its attempted takeover of Maytag in 2005 was foiled by Whirlpool.)

Similarly, Haier is trying to incorporate novel technologies and features into its products rather than emphasize the low-cost advantage it derives from being a Chinese company.

The Ibiza music player, for instance, contains a Wi-Fi chip that directly streams music from Rhapsody, the online music service from RealNetworks. This puts it one step ahead of Microsoft; the Zune only has Wi-Fi synchronization, according to Haier. Only a few other manufacturers actually have direct streaming so far. (Haier beat Philips in that regard by a few months.) In addition, Haier's high-end LCD televisions come on a swiveling base, a small plus.

Another product, due in China soon, is a cell phone that can conduct two calls simultaneously. It has two SIM cards and two standby modes. If you own two cell phones--which a large number of people in Asia and Europe and a growing number of Americans do--this reduces your hardware burden by half.

Haier

But Haier's push isn't completely identical to its predecessors. Before their meteoric rises, both Samsung and LG were two of the dominant producers of memory, flash chips, and flat panels, some of the most crucial components required for PCs and TVs. The two emerged by marrying their components to industrial design and carpet-bombing style advertising.

Haier doesn't have nearly the same back-end expertise. Nonetheless, it can't be dismissed as a lightweight. The company has 240 subsidiaries and 30 design centers and production facilities. It even has a U.S. factory, a facility in Camden, S.C., that's been making air conditioners for more than seven years.

"We were the first Chinese company to open a factory in the U.S.," said Shariff Kan, executive vice president of marketing for Haier America. "We created jobs here."

Haier also sits on many of China's national technological standards boards as well as produces some types of chips. The company even serves as a contract manufacturer. Some of its phones and TVs are actually already in the U.S.--they are just sold under different brand names.

And despite a common belief that it takes years for an Asian company to understand western markets, Haier has already achieved a few small successes in reaching middle-class and upper middle-class Americans. After margins began to erode in the mini-fridge market in the early 2000s, executives huddled and came up with the household wine cellar, which essentially is a modified mini at a higher price.

"We created a category. You can put them in the kitchen with no install required," Kan said. "This wasn't a product from China. Haier America came up with it."

Haier also introduced portable air conditioners to the market.

CONTINUED: What's next?…
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24 comments

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Haier mistreats employees
I read in a magazine years ago how Haier mistreats its employees. For instance, in the refrigerator factory, a worker who commits a mistake making a fridge will be made to be embarrassed and scolded in front of his/her co-workers the next working day. Sure, they may change their ways, but a company does that only to make themselves look cool to the people and increase sales. I don't trust Haier. Not ever.
Posted by ronch79 (14 comments )
Reply Link Flag
China sucks!
I have completely stopped buy anything made in China, unless I made a mistake and didn't look at a label. For LCD TV's, Phillips does a pretty good job and they are a US company.

I no longer trust China, simple as that.

I am sure there is plenty of good people there, the local public, but the government is far forse in China when compared to Russia, as bad as they are.
Posted by RompStar_420 (772 comments )
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Years Ago
"I read in a magazine years ago how Haier mistreats its employees. For instance, in the refrigerator factory, a worker who commits a mistake making a fridge will be made to be embarrassed and scolded in front of his/her co-workers the next working day."

Years ago, almost every USA company mis-treated their employees. Now, very few do. Companies change because the managers are replaced over time.

Also, I like the idea that bad workers are pushed to perform better. I don't agree with that method, but quality is important.
Posted by regulator1956 (577 comments )
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Haier
You're kidding. How do you think the employees of Enron feel? Or those of Tucson Electric Power that lost their life savings because management made an unwise acquisition and screwed over its employees? Or any of hundreds of companies here in the US that do worse than "embarrass it's employees"? Get real, you're idea of mistreating employees is warped when compared to what Americans do. Ask any of America's 17,000 sex slaves. We ain't that innocent.
Posted by danielz40 (35 comments )
Link Flag
Our Haier Washer Lasted Just 6 Months
Three years ago my wife and I lived in an apartment and we got a Haier portable washing machine to clean my wifes nursing scrubs. The thing was a total piece of junk. It leaked like crazy and after only six months the drum broke off and could not longer spin. The warranty was worthless because I could never find a real person to talk to and they never answered my e-mail with anything but automated responses. I'd never buy that brand again.
Posted by katznaperr (23 comments )
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Improvement
So that was 2005 ? If you read Haier history line, from 2006, Haier's quality already saw a big improvement since their quality is now heavily emphasized.
Posted by bigandcute (9 comments )
Link Flag
Haier is great
I bought a portable Haier air conditioner 3 years ago, and it's working like a champ.
Posted by pwoon (790 comments )
Link Flag
Haier min fridge
My friend is running a hostel and most of the fridges are Haier mini fridges, now they are 5 years-old and yet still running well.
Posted by bigandcute (9 comments )
Link Flag
Haier quality is indeed greatly improved
Haier's quality has improved alot in recent years, their products are greatly welcomed by Comet, I don't know about their other products but their fridges work for really long, my friend is running a hostels with full of Haier mini fridges and the last for up to 5 years now and still running.
Posted by bigandcute (9 comments )
Reply Link Flag
Wow ... "mini-fridges" still running after ... 5 years!

That is a PERFECT description of HAIER: all they can do is mini-fridges, and you're very lucky if the things run for 5 or 6 years.

Anything else ... FORGET IT. Unless you like throwing hundreds of dollars into the garbage.
Posted by zyx-xyz (41 comments )
Link Flag
Another Crap From China
Guys, just go to any electronic store and see the diffrence between the Haier TVs and other brands like Sony, Samsung and Visio. Although Haier stuffs are a lot cheaper then other brands. But belive me their picture quality is pathetic.

I won't suggest anyone to buy Haier electronics.
Posted by abhi_jais (2 comments )
Reply Link Flag
I bought a haier washer from comet and it was a complete waste of money. it would not spin, kept saying unb. I had two of these in a month and it was the same. I had to pay more to buy from a better company. I am really angry. I will never buy Haier again!
Posted by marvinsmate (1 comment )
Reply Link Flag
I like Haier products,almost all my appliances is Haier brand,the quality is very good,all these products include TV,fridges,washer and so on works fine,and up to 6 years now and still runing,no any fault.
Posted by ohshmate (1 comment )
Reply Link Flag
February 12, 2014
------------------------
Scouring the internet for either repair or parts for a HAIER front-loading washing machine (if you could call it that, as it barely washes clothes), stumbled across this paean singing the praises of HAIER.


You are very welcome to swallow the many shill paid-for-placement articles sprinkled across the 'net, if you're gullible:

(1) "Still not convinced a company based in China is ready to go mainstream in America [ . . . ] Go into the Cellar at Macy's, where the department store sells appliances as lifestyle accessories, and look closely at a few of the coffee and panini makers ... !" (see above article)

(2) "the President of HAIER wanted to emphasize quality to the employees, so he took a sledgehammer to 9,999 substandard refrigerators!" - - - in every article, the number of the "sledge-hammered low-quality refrigerators" grows and grows: 99 in one article, 999 in another article, 9,999 in yet another article, like that fish in the fisherman's "fish story": "it was 999 inches long and 999 pounds, I swear!" (see other "shill articles" spread over the 'net)


HAIER is junk, junk, JUNK, even after almost 20 years of trying to penetrate the global market outside of mainland China. The Chinese are in NO way comparable to the Japanese or South Koreans, when it comes to manufacturing.


As a matter of fact, the Chinese are probably more comparable to the North Koreans or the old Soviets ... "we make it, and we make it however we want, and you WILL buy it". SEE: Trabant, Yugo, 10 million rubber galoshes but not 1 loaf of bread (or, in China's case, not 1 kilo of rice) ... in the shops. And HAIER is NO exception.


And while the "business magazines" shill HAIER, the consumer review boards give HAIER, at best, a "great!" but only for $99-items like dorm-style refrigerators. Anything else ... white goods, consumer electronics ... they all get very low marks for quality - - - google HAIER and check the boards yourself.


On occasion, the real consumers who actually purchased some HAIER products might write a review along the lines of, "it was a piece of junk which didn't even last a year, but it was cheap so I just thought of it as a throw-away disposable item".


And that's HAIER for you: disposable, one-use, or two-use, or three-use "applicances" ... equivalent to a disposable cell-phone. And that pretty much applies to ALL Chinese manufacturing, right ... ?
Posted by zyx-xyz (41 comments )
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