The rather lengthy ‘core values’ page of Chinese manufacturer Haier’s website is not exactly an exciting read, even if it does feature a picture of an airborne bald eagle. Yet while this home appliance maker’s mission statement might underwhelm, its figures cannot fail to impress.
In the past seven years, the company has grown to become the world’s largest home appliance manufacturer, while between 2010 and 2015 revenues jumped by 45% to $30.3bn. And unlike many of its Chinese peers, Haier is going to great lengths to not only increase sales but also to make the company logo recognisable on a global level. “Our goal in terms of international expansion is to become a well-known brand,” says Ma Chunyu, Haier's vice-president of procurement.
The company is doing this largely through increasing crossborder investment. Since 2013, it has announced nine greenfield project in countries such as the Philippines, India and Poland, and according to greenfield investment monitor fDi Markets data, it was of the most one of the most active international investors among Chinese consumer electronic firms.
Haier is also expanding its presence in countries that other investors have been wary of until recently. In April, it announced it was opening a new refrigeration machinery production factory in Kama Industrial Park (KIP), located in the Russian republic of Tatarstan. The new facility is expected to create 500 new jobs by 2017, while the total value of the investment is put at $55m.
Yannick Fierling, CEO of Haier Europe, says the new operation confirms the company's focus on the localisation of production. And the strategy seems to be paying off in Russia. According to figures from Haier, despite the sharp slowdown of the Russian economy, over the past six years the company's revenues from this market have grown tenfold.
Crucially, when making decisions on expansion, Haier looks not only at market opportunities but also at the support available from local authorities.
“We chose the location of the new factory for a specific reason. The proactive attitude of the local government, the transparency of the Tatar business industry and the lucrative investment outlook are some key appealing factors for Chinese investors,” Sun Zhenhua, general manager of Haier Russia, said following the launch of the new factory.
Haier has also made the most of incentives offered by the industrial park’s special economic zone status. Although the company does not reveal the extent of the assistance it received for investing in Tatarstan, the KIP says that investors setting up operations in the zone can expect below-market facility rental fees and infrastructure support.
Haier is expanding its presence not only in developing markets such as Russia, but also in developed ones – and the US is the company's primary expansion target. In recent years, Haier has undertaken all kinds of FDI-related activities in the US, from opening greenfield projects such as the new technology and design centre in Evansville, Indiana, to the expansion of its manufacturing facility in Camden, South Carolina, at an estimated cost of $72m. It has also relocated its North American headquarters from New York to New Jersey.
In June, the company made its biggest US play to date with the acquisition of GE Appliance, the Louisville-headquartered home goods division of General Electric, for an estimated $5.4bn.
Following the acquisition, the company’s focus will be to integrate GE Appliance into Haier's operations, according to Mr Chunyu. “The development of Haier in the US currently focuses on two aspects: on the one hand, the implementation of the localisation strategy and making Haier a well-known international brand; on the other hand, integrating with GE Appliances and benefiting from the synergy effects,” he says.
Haier's US expansion shows not only its willingness to flex its muscle in a highly competitive market, but also how the company goes about its international development, by starting small and ending up acquiring one of the local market’s major players.
“Haier’s business in the US began with export trade by opening a local trading company responsible for marketing of Haier products,” says Mr Chunyu. After that, the company chose refrigerators (one product group out of its vast offering) and decided to grow its share of that category in the US market. “Last year, Haier built a new R&D centre in the US, took refrigerators as the breakthrough product to develop in the market and strengthened its product development, including developing big-volume refrigerators to suit the local market,” adds Mr Chunyu.
Increasing recognition and sales of a given product group is one aspect of the company's growth strategy, but since 2012 Haier has also been implementing its networking strategy. This includes launching an open innovation platform focusing on interconnecting devices, and connecting its existing factories into a global supply chain.
Given its resources and experience in entering new markets, it is clear the company will be looking for new expansion targets. Regarding investment, Mr Chunyu says the key focus for Haier is to fit with the group's strategy and discover market opportunities. Based on the company's expansion drive so far, it is likely to look for expansion opportunities both in developed and up-and-coming markets.
It seems the motto 'go big or go home' encapsulates the company’s core values – with or without a photo of a bald eagle.