Case Analysis Haier

1355 words - 6 pages

After successfully breaking the stereotype of “made in China” in the 90’s and establishing itself in the overseas market as a quality brand, Haier decided to venture into India in 2004 owing to the potential market share it could amass. T.K. Banerjee, appointed as president of the Indian operations, set out to acquire 20% of the white goods market over a 5 year period and to place Haier in the top three companies in the industry in 7 years. However, these targets were far from being reached after the specified time period.
The key issue was that the estimated growth had not been achieved. And according to the case, there were numerous aspects that seemed to have contributed to it.
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By 2004, these companies had already amassed much of the market, making it harder for Haier to establish itself [1]. Secondly, T.K. Banerjee failed to steer the company efficiently, and to build marketing and sales strategies that would have made Haier successful. This is evidenced by the successful revival of the company shortly after Eric Braganza took over as CEO. Thirdly, in pursuit of speedy success, Haier changed course in mid-2006 and stated that it would begin to focus on the bottom-of-the-pyramid market (rural market) [2]. Braganza shifted the company’s focus back to the mid to high end products in 2011 which helped in increasing its profitability.
Haier’s entry into India was an unconventional one, in the sense that it had first established itself in the first world market and then chose to venture into developing markets. It positioned itself as a global brand and its product prices were placed at a premium to that of its competitors’. It also placed emphasis on constantly innovating and improving its product designs to suit local needs. It is exampled by how an anti-mouse board was added as a feature to a washing machine model, after it was reported that mice were biting into the rubber and destroying it [3]. However, these competencies by themselves were not successful in harnessing the Indian market. Its turnover remained close to stagnant from 2005-2009. Therefore, Eric Braganza made zealous changes to the strategy, on taking over in 2009. He discovered that marketing and sales were the major shortcomings and immediately took steps to mend it. The company began to focus on dealer retention. Dealers were offered good products and competitive pricing, and single dealerships were undertaken to promote brand loyalty. Measures were taken to improve after sales service which was previously the responsibility of the dealers. Also, aggressive branding and marketing campaigns helped in propelling the image of the company. Understanding fan fervour towards Bollywood actors, John Abraham, a popular movie star, was brought in as the brand ambassador to endorse the brand. During this period, several new products and products lines were also launched. In 2011, Haier introduced its entry into three new product categories in India i.e. laptops, cameras and home theatres [4]. These approaches helped Haier to increase its sales gradually and become more profitable.

However Haier, until 2014, hasn’t achieved the growth it requires to attain its aim of being among the top 3 by 2018 [5]. It’s nowhere in league with the big players as evidenced by the following data [6]:

Top Electronic companies in India:
Company | Revenue in Rs. (Crores)
(2013-2014) |
Samsung India Electronics | 40,392 |
Videocon Industries | 18,157 |
LG Electronics India | 11,580 |
Sony India Private Ltd. | 10,044 |
Bajaj Electricals | 4,030 |
Whirlpool of India | 2,835 |
Panasonic India | NA |
Source: Registrar of Companies (RoC), BSE
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