Case Application Page Page 2) Higher and Higher hurts Chinese brands, with the biggest challenge to You may not be familiar with the Haier Group (sounds Chinese companies being to change the impression of like "higher"), but if you've ever shopped for a refrigera Chinese products as cheap, poor value, poor quality, and tor, microwave, wine cellar, or air conditioner at Wal- unreliable Mart, Bed Bath & Beyond, Lowe's, Home Depot, or The Haier Group started as the Qingdao Refrigerator Target, you've undoubtedly seen, if not purchased, the Plant. When Zhang took charge of the government- company's products. And Haier's name surfaced in U.S. controlled company in 1984, his first action as CEO was to business news headlines in late 2005, when it made a bid take a hammer and smash 76 refrigerators because of their to purchase domestic appliance maker Maytag. Today, poor quality. Why? To drive home the point that product Haier exports its products to more than 160 countries and quality was going to improve. At that time, the company regions, and its annual revenues are over $12 billion. had only one product and 800 workers. Today, the com- Haier Group is China's largest home-appliance maker pany has over 50,000 employees in various locations mak- and CEO Zhang Ruimin has ambitious goals for his com- ing some 15,000 different products in over 96 categories pany. Whereas the United States has General Electric, ranging from air conditioners to mobile phones to vacuum Germany has Mercedes-benz, and Japan has Sony, China cleaners and more. It has manufacturing facilities in has yet to produce a comparable global competitor. 13 countries including the United States and throughout Zhang is hoping to change that. Haier enjoys enviable Europe, the Middle East, Africa, and South Asia. In addi- prestige in China (a survey of "young, fashionable" tion to its manufacturing facilities, Haier has 18 research Chinese ranked Haier as the country's third most popular and development and design centers around the world. brand behind Shanghai Volkswagen and Motorola, with On average, Haier innovates 1.3 new products per day. Coca-cola fourth), but Zhang isn't satisfied. He wants to Continuous innovation is the soul of Haier's corporate cul- gain worldwide recognition, build the company into ture. And the company's products are now known around China's first truly global brand, and be listed on the the world for quality and innovation. Fortune Global 500. But accomplishing those goals may In Zhang's push to make the brand global, Haier mean losing the "Chinese-ness." In an online survey began sponsoring an Australian basketball team now conducted in 2005 by Interbrand, 79 percent of the known as the Melbourne Haier Tigers. It also recently respondents believed that a "made in China" label signed a sponsorship deal with the Wests Tigers Rugby League team in Australia, and has become the marketing Pogo(3) partner of the NBA in the United States. And in its biggest strategic coup of all, the Haier Group has been selected as the official home-appliances sponsor of the Beijing 2008 Olympic games. This type of exposure is likely to go a long way toward Zhang's strategic goal of becoming a truly global brand